I was a friends house yesterday when the topic turned to referrals. One of the guests asked the host for an attorney, when the host responded with an interesting story.
Here goes:
So the host was working on a real estate deal a few years ago and one of his clients needed an introduction to an attorney. So the guy worked with the attorney and surprise surprise the attorney fucked up. So the client calls the host and starts complaining about the lawyer and insisting that he fix it. Apparently this client thought that the referral was an extension of the host services and the host was his goto guy re the full experience. Now the host who has nothing to do with the situation besides having been a nice guy and making a referral, found himself knee deep in this mess that considerably outweighed the benefit of making the referral in the first place. In the end and after 6 months of dealing with bs, the host actually said that he eventually had to pay the lawyer an extra few grand just to clean up the mess.
So what was the net net from the situation. Lawyer made some money. Client got his work done. Guy making the referral got fucked!!
So now three years later, the host still isn’t over it and stands by his principle of “I don’t make referrals”!!
It was interesting hearing this story, especially since I’m personally into a very ‘help the world go round by making lots and lots of referrals’ mode. I figure if I can make an introduction, I increase the likelihood that some kind of positive transaction will consumate. I do assume however that whoever I introduce will do their due diligence on each other. But maybe they don’t.
I’m trying to think what happens when somebody makes an introduction to me. Some questions come to mind: why did they make the introduction? How qualified is this introduction? How obligated am I to follow up with this introduction? What is the person on the other end of this introduction expecting from me?
But then the biggest question of all - if this referral either works out or doesn’t work out, how big of a reflection will my experience be on the person who made it in the first place?
Here are my rules:
1) qualify any referral before I make it. I like to do some kind of light screen on both parties to make sure that the interest of both parties are aligned.
2) I think through the positives and negatives of making the introduction and if the positives outweigh the negatives, I’ll usually make the introduction.
3) as far as my personal obligation in regards to the two parties working together, I’ll usually set the expectation during the qualifying call that I’ll be hands off beyond the introduction but will do what I can to help out in the event that something goes wrong. With that said, if I smell that somebody is going to be trouble or expect me to do their work for them, I don’t like that and will usually not make the introduction.
Now go help the world go round and make some introductions!!