Don't build your design studio on just referrals and word of mouth
Most of my clients have built their client base in an organic way, where one client led to the other.
And you see this often with creative businesses because the deliverables are so tangible. So when a business owner likes what they see when they look at a website or brand that you have created, they instantly have a pretty good understanding of your capabilities and what you can deliver.
If they then also hear from the business you have created your deliverable for how great it was to work with your one client can easily lead to another.
And this is a great way to slowly grow a design studio until it's not.
So let's look at a few reasons why I am not an advocate for relying on referrals or word of mouth only and what you can do instead.
In this blog, we'll get into:
Reason 1: Relying on referral business is limiting your design studio's development
Reason 2: Relying on referral business is a reactive strategy vs having a proactive strategy
What to do instead of relying on referral business
I think having referral business or clients come from word of mouth CAN be a great source of business for your design studio as long as it's part of your lead generation strategy, not the only one. Here are the 2 main reasons why.
Relying on referral business is limiting your business development
The reason why a lot of businesses are really positive about getting referral business (I am just to call it referral business for this blog post, but I mean both referral and word of mouth), is that it's often the same type of business. Meaning the same type of projects like when one website leads to another website. And the projects often have similar budgets.
Which is great if your business never changes. But in the type of small business that we run, this is often not the case. Over the years, you will learn which service you love to offer and which you don't, you'll learn who your ideal clients are and who are not, and you'll most likely increase your pricing over time.
These can all be small changes over a long period of time where your referral business changes with you. But what if, like a lot of my clients, you want to make a big change?
Like going from offering deliverables like brand and website design to offering your knowledge and experience in brand strategy-related services? Or when you offer photography and brand design and now only want to offer brand design?
These are big changes. And when your design studio mostly runs on referral business, all of a sudden the referrals only come in for the type of projects and price points that you don't want to offer. And if you don't know how to put a strategic plan in place to make a pivot like this work, your design studio and the client projects that you can take on can easily become a drain.
My client Cait, was in a similar position where she wanted to stop working with the niche that brought in more than half of her yearly revenue. But she did not know how to make that change and because this niche paid the bills she kept on taking on these projects. Leading her to tell me during one of our initial conversations that when she hired me, she was at the point where she was either going to give it one more go and hire me or quit. That was how heavy the business felt for her.
With the help of detailed insights into where her revenue was coming from, clear financial goals, restructuring of her services, increased pricing and a lead generation plan covering more than just referral business, she was able to replace the revenue from the client projects she did not want to take on anymore within one year.
So I am not saying you won't be able to make the changes you are looking for in your design studio with just referral business, but to make this happen, you will need to create more sources of business. And this leads me to my next reason for not being an advocate for relying on referrals or word of mouth only.
Relying on referral business is a reactive strategy vs having a proactive strategy
When you've grown your client base organically through referrals or word of mouth only your lead generation strategy has been reactive. Meaning that besides being great to work with and delivering great websites and/or brands causing past clients to refer new clients to you, you have had little influence on when new projects come in.
Which doesn't really matter if you have no income goals. But like most of my clients, you most likely have income goals. Maybe you haven't set a monthly revenue target (which I do advise you to have - you can read more about this in my how to set up your revenue budget as a design studio article) but you might have a figure in mind that you want to make each year or know that you want to increase the monthly contribution that you make to your family's expenses.
And if you passively rely on referral business how are you going to make sure you reach this monthly revenue budget? Because you will never know when the next client project comes in. And then I am not even talking about the quality of the project like it being a good fit in terms of budget and type of client.
What I see happening with clients that are in this situation is that when you never know when the next piece of business comes, have a way to be proactive about getting new clients or have built up a financial buffer in your design studio that allows you to still contribute to your families expenses when business is slow (and I often see all these 3 things happening at the same time) you take on every project you can get. No matter how far the client or project is removed from being an ideal client project.
And this is totally understandable when you're in that phase of business. But this is why one of the biggest changes I work on with my clients is to go from being reactive in your design studio to being proactive.
But this does not just relate to lead generation. This goes from being clear on financial goals, how many services need to be sold to reach these financial targets and how to build up buffers in your design studio, to having business processes in place that help to determine what needs to happen on a daily basis to move closer to your business goals and how to create several sources of business besides referral business.
Now you know the 2 main reasons why I am not a fan of relying on just referral business, let's look at what you can do instead.
What to do instead of relying on only referral business
I am assuming here that you want to make a change because you're looking to create a design studio that is sustainable.
Meaning that you:
Make enough money to contribute to your family's expenses to live comfortably
Don't have to work evenings and weekends to make your clients happy
Don't constantly feel stressed or behind causing you to not be present even when you're not working.
Have client workflows in place that allow you to serve your clients in the best way possible without having to reinvent the wheel every time and type the same email the hundred time
Have business processes in place that will allow you to break down your big-picture goals into actionable tasks so that they become part of your weekly planning
And to be able to do this you need (amongst other things) to know:
Your yearly revenue target and have it broken up by month
How many times do you need to sell each of your services to reach your revenue target
How you are going to sell these services
As a result of having grown their business organically and mostly relying on referral business, I see that most of my clients don't have an engaging social media audience, a regular newsletter and/or blog posts that can drive traffic to their website.
And I am not saying every business needs all of these, what makes sense for your design studio will depend on where you are in your business, your goals, the network that you have in place, the services that you offer and the ideal clients you like to work with.
But in my opinion, the best way to make your business sustainable and being able to be proactive when it comes to lead generation is making sure you have several sources that can provide business and several ways to nurture potential clients in their customer journey.
And this does not mean randomly posting on IG several times a day to grow to 10K followers or being present in Facebook Groups for hours hoping you can answer someone's question. In a customer journey, you literally start mapping out the journey a client takes from the first interaction to them working with you. Think about where they can see you for the first time, then what can they do if they are interested, and where can they go when they want to know more about you or your business.
All platforms (like IG, Facebook, Pinterest, your website, a newsletter) have a place in your customer journey. Once you become more aware of all the steps in the customer journey and how your clients go from one phase to the next, you can become more intentional in this process.
And you guessed right, if you get more intentional and adjust your communication based on where a potential client is within the funnel, you will see more and more potential clients move to the next phase within your funnel and in the end become your clients.
When you have these steps in place, you can start tracking statistics and conversions. How many of them actually move through this funnel? If they are not moving through there often, check in which stage they are getting stuck. Do they follow you on social media but not sign up for the newsletter? Are your blog posts driving a lot of traffic but are your visitors not going to your services? Do you get traffic to your freebie landing page but they don’t sign up for it?
Then pick one of these stages and determine how you can improve this stage. Do you need to create more visibility with the help of Pinterest? Or could you pitch yourself to be a guest on podcasts? Do you need to promote your freebies more? Improve conversion of the landing page? Add more call-to-actions or different call-to-actions to your website?
Decide what you are going to change, but just keep it at 1 change. If you change more than 1 element at a time (as in overhauling your whole landing page instead of changing the CTA) you won’t be able to track which of the changes is actually helping you to increase conversion it is making it worse.
Want to know more details about the customer journey? Continue reading The 4 stage journey all clients take before working with you
AND THERE YOU HAVE IT
There you have it, my reasons for not being an advocate for just building your design studio based on referrals and word of mouth. And again, I am not against this as a way to get new clients, as long as it is not the only way. So that you don’t get stuck when you want to change niche, change services or are planning a large price increase.
Because all I want for you is to be able to have a design studio that is sustainable, and that allows you to grow or change when this is needed without being stuck because you’ve been relying on just one source to bring in leads.
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