Why You Should Refer Your Competitors to Your Clients

(I dug this out of the old chest; it still holds up).

Refer your competitors to your clients in the sales process.

Yes, I do mean it. This is not a sarcastic title, or a clever trick. But I’ll warn you: your motives will affect your outcome.

Step One—check your objective. Is it:

a. To get the sale, or
b. To do the right thing by the customer.

Now multiply by 10 times – the next ten similar sales opportunities.

  • If your objective is always “get the sale,” then well before number ten, everyone will know you’re in it for yourself, short-term. You’ll have a reputation. You’ll win about the same percentage as your market share—say, 30% for sake of discussion.
  • If your objective is to do the right thing by the customer, then well before number ten, everyone will know you’re in it long-term, to help them. You’ll have a different reputation. And (can you say “paradox”?), your own success rate will get better—say, 40% or higher.

Option b doesn’t mean you’re not in it for yourself—just that it’s not your primary objective, and you’re willing to trust a longer-term process.

Step Two—admit you’re not always the perfect choice for every customer. (If this feels hard, and your market share is less than 100%, consider the implications of believing you’re always the best: either your customers are very stupid, or you can’t sell a perfect product.)

Let’s review. Your objective is to help your customer (which also gets you better sales numbers), and you admit that your product isn’t always the best.

Step 3: Therefore: shouldn’t you offer your customer informed advice about other alternatives? Shouldn’t you refer your competitors as a possible alternative?

The best reason to do this is—because it’s the right thing. But there are ancillary reasons:

  • Being willing to refer a competitor is the most direct indicator of your having the customer’s interests at heart. It makes it look like you care (note: don’t try faking this). 
  • In those rare cases where you convince someone against their better interests to use you instead of someone better suited for them, odds are that everything will unravel and you’ll regret it. Take one small loss and consider it an investment in good will.

Think this is suicidal? Try forwarding this blog to your existing clients, saying how crazy I am, and that you would never be so stupid as to point them to anyone but yourself, because…because…well, you try and explain it.

If you agree with me, and you are a buyer of goods or services, consider forwarding this blog to your suppliers, asking them to educate you regarding choices in their industry. And see how they respond.

  • The best ones have already done so. The next best will meet the test and give you some great info—be good to those suppliers, they just took a risk to help you.
  • And those who tell you there’s no need to review because they’re the best—well, you know what to do.

How do you say the words? Try this:

“We both win if you make the best decision. Given my understanding of your situation, if you haven’t already done so, you should also be talking to X and Y. If you do so, it’ll help our discussions.”

Is it a trust thing? You betcha.

How (Not) to Ask for Recommendations, Referrals and References

A while back I met a first-time author, who gave me a copy of their book. Shortly after, I got an email from the author’s publicist, saying:

“…We’d appreciate it if you would post your 5-star review of the book on Amazon…”


  • I don’t mind being asked to post a review of a book (though this ask was poorly done)
  • I don’t mind being asked by a publicist, as opposed to the author, if it’s done well (this was not)
  • But what frosts me is being told by a publicist what rating to assign the book – without even asking whether I’d read it, or even intended to read it.

Let’s break it down: what are the rules governing recommendations, referrals and references? And how many did the publicist violate?

How To Ask for a Favor

Rule Number One: Don’t ask for a favor – ask for the repayment of a favor already done.

The ideal way to promote your book is to start 6 months in advance by deciding whose help you’re going to want – and immediately start promoting them.  Comment on their blogposts; tweet their material; introduce them to others.

That way, when it comes time for your ask, they are simply discharging an obligation of etiquette, a favor they are more than happy to grant. (And lest this sound coldly utilitarian, note this is a description of what friends do for friends).

What’s true for books is true for referrals.  Haven’t done any favors for others lately? Then you’re going to come up short when you start trying to ask for favors.  Life is like that. Favors earned are favors granted.

Think that’s not fair? Wrong: it is very, very fair. It’s the essence of the matter.


Rule Number Two: Assume absolutely nothing.

Remember the saying, “Assume makes an ass of u and me.” Do not assume the person has the time, or the interest, or the inclination, to do you the favor you want.

In fact, make it clear you have no clue whether what you’re asking is reasonable. Say something like, “I realize this may be an inopportune time, or more complex than I realize, or there may be other reasons you can’t do this, and I assure you I don’t mean to be asking for an unnatural act on your part….”

By explicitly saying you’re not making assumptions, you give the other person all the degrees of freedom. You grant them several outs, should they choose to take them; you willfully give up the guilt-trip approach; and you humbly recognize that you are not in a position to judge them.

Let a favor be a favor, not a guilt-tinged, calculated script. A favor freely given is worth vastly more than an extracted behavior.


Rule Number Three: Don’t over-specify the favor. “Would you consider writing a review on Amazon?” is a perfectly reasonable statement. Asking that my review contain five stars is just insulting: it implies either that my ratings are for sale, or that I needn’t read the book to determine its value, both of which rankle the would-be favor giver.

“I’m not sure what the right next step would be, but would you mind having a look at Joseph’s resume?” That’s fine.  Compare it to, “I’d appreciate it you’d take Joseph’s phone call and meet with him, just for a half hour or so.” That’s over the line.

(A tour guide on the canal in Bruges, Belgium, after a delightful ride, said to me, “May I remind you the ten-franc tip is not included in the admission price.”).


Rule Number Four: Treat it like a big deal.  Because presumably it is. Which means, you won’t often ask it unless you’ve earned some favors in the favor bank already (see Rule Number One).

And if you have earned some favors – say so. You want to convey very clearly words to the effect of, “I value our relationship; it is strengthened by our mutual collaboration and reciprocal favor-doing. I don’t ask this favor lightly – and I don’t want you to treat it lightly. If you agree you can return this favor to me – or do this favor and I’ll owe you big-time – then we will be that much closer going forward. That’s how I look at this favor; how about you?”

Of course, those are not the words you’ll use; you’ll use words that are right for you.  But they’d better convey that kind of intent.


A favor asked and given is an invitation to a deeper relationship. Don’t be cheap in granting favors; and don’t be promiscuous in asking for them.

Referrals, references, recommendations; all follow another “R” word – reciprocity. What you give, you get. What you don’t give, you won’t get. To get, give. Pay it forward isn’t some dumb movie line – it’s how it all works.

Finally – a word to those of you still reading who are rolling your eyes upward and saying, “Charlie, you don’t get how ratings are done these days – the agent is just playing the game the way the game works, and you’ve got to play it to be in it.”

  • Yes, that is how the game works – for the masses. But being like everyone else is inherently un-strategic; you succeed only in failing to differentiate yourself.
  • And no, you don’t have to play that game to be in it.  The Trusted Advisor, to my knowledge, never once made it to the top of the best-seller list – any best-seller list.  And yet – sixteen years after it was published – it still ranks about #5,000 on Amazon on any given day. Not bad for a business book up against Harry Potter and Fifty Shades of Gray. I’ll take 16 years in the #5,000 slot any day of the week against a one-shot “number one” ranking. Which is all the ‘game’ does for you.

Really being “in it” means consistently playing a long-term game of substantive favors given and favors received. That’s the only game ultimately worth playing.

The Two Times You Should Refer a Customer to a Competitor

You may be thinking, “Wait—why would I ever want to refer a customer, potential or otherwise, to a competitor?” Good—this article’s for you.

In fact, there are two such situations. One won’t surprise you. The other is even more obvious—but even easier to miss.

Why We Don’t Give Referrals to Competitors

It’s not as dumb a question as it sounds. Competitors are those we compete against; what we win, they lose, what they win, we lose.

That certainly means we don’t want to lose direct competition. But as the idea of competition has become like mother’s milk in business, we tend to take it one step further: we want to prevent competitors from winning, even if we’re not directly involved.

So: we hate to lose, and we hate to see them win. Two distinct reasons we don’t give referrals to competitors.

The Competitive Gospel Applied to Selling

The Gospel of Competition says that the whole point of business, including selling, is to win.

The business strategists tell us that key to being successful is being number one or number two in your business.

The football strategists tell us winning is not the main thing, it’s the only thing.

The military theorists tell us the enemy of my enemy is my friend.

The problem with the Gospel of Competition is that, taken to extremes, it competes with the Gospel of the Customer.

The Gospel of the Customer Applied to Selling

The Gospel of the Customer says that the whole point of business, including selling, is to help the customer. If you succeed in doing that, then most likely you will also ‘win’ in the competitive market place.

Though if those two goals come in conflict, you’ve got a serious problem. What if the right thing for the customer involves helping your competitor? That turns out to be a serious question of business identity.

Competitive Referral Number One

The most obvious referral to send to a competitor is a very difficult customer. If you worship the Gospel of Competition, you can justify this on the grounds that it gets rid of a problem for you, and causes a problem for your competitor. Machiavelli would be proud.

But there’s a better reason for doing this—if you believe in the Customer Gospel.

If you believe the Customer Gospel, then you believe in relationships and trust, and the economic benefits for all that come about through collaboration and transparency.

A difficult customer for you, then, is likely to be a customer that doesn’t believe in those things. And a competitor for you is probably a competitor who also doesn’t believe in those virtues, at least not as much.

In that scenario, you do all three parties a bit of a favor, though you perhaps the most. You align transactional sellers and buyers, while focusing on relationship customers yourself. You gain competitive advantage—but everyone’s at least a little better off. That’s good.

Competitive Referral Number Two

The more—or less—obvious situation is when your competitor actually is better suited to serve the customer than you are. Then what do you do?

In this case, not only do you lose a sale (maybe), but you lose one to your competitor. If it’s an existing customer, you risk giving your customer exposure to a competitor—risking them leaving you forever.

Why would you ever do such a thing?

Because if you would never, on principle, give a lead to a competitor—even if they are better suited than you—then you cannot be trusted; you have just said, in principle, that you would always put your own selfish interests ahead of those of your customer.

I once heard a physician make this point directly:

“In my 25 years as a doctor, I have never heard a pharmaceutical rep from any company ever recommend a drug from any other company. Consequently, I don’t trust any of them.”

What’s at stake is your trustworthiness. It depends heavily on your willingness to take the long view, and focus on your customers’ needs ahead of your own—rather than continually trying to gain competitive advantage at every transaction.

And–paradoxically—in the long run, you probably end up getting the competitive advantage as a collateral effect anyway.

Making a Referral By Transferring Trust

I provide a lot of referrals to clients and colleagues and have built my own business development and executive coaching business through referrals from others to me. What makes those referrals so powerful?

Here’s an example of a referral I made. A few years ago, in my in-house legal role, I had a working relationship with a lawyer I liked and trusted. I introduced that lawyer to a colleague in another company who I thought could benefit from working with this lawyer as well. As a result of my introduction, the colleague retained the lawyer, and that relationship is still going strong after several years.

The Trust Transfer Process

Referring someone we know to another person we know happens all the time. On the personal side, think blind dates or babysitters or doctors. It’s part of the networking process. What makes it work? Something I call “Transferred Trust.” The Trust Equation gives us the formula to enhance our own trustworthiness. But what happens when we make or receive a referral? How do we transfer that trust to another, and if we’re on the receiving end, for what do we look or listen?

Here are the steps from my example, simplified:

  1. I trust a lawyer.
  2. I have a colleague who trusts me.
  3. My colleague needs a lawyer.
  4. I describe the lawyer I trust to my colleague, and shared why I trusted him and made the referral.
  5. My colleague trusts the lawyer I trust, enough to engage him based on my introduction.

Trust Transfer and the Trust Equation

Let’s dissect this referral in terms of the Trust Equation (from The Trusted Advisor by Charles H. Green, David H. Maister, and Robert M. Galford, Free Press, 2000):

Trustworthiness = Credibility + Reliability + Intimacy

The quality and degree of trust transferred will directly depend on:

  • The depth of the referrer’s trustworthiness
  • The trustworthiness factors shared with the person receiving the referral

If I shared that the lawyer always got back to me quickly, I transferred reliability. If I gave an example of how the lawyer showed that he cared more about doing the right thing for me as his client than getting more work for himself, I transferred that he had low self orientation. If I described something the lawyer did that helped my company save money and time, I transferred credibility.

And while it’s up to the referrer to transfer trustworthiness, it’s up to the person referred to retain that trustworthiness through his/her own interactions.

How Transparency Works with Referrals

Be careful. You put your own trustworthiness on the line when you transfer trust. How often do we get referrals with transferred trust and are disappointed? If you think there is a good match, but you don’t know much about the person you are referring, be sure to be transparent. It’s ok to say “I know this person to be honest and forthright, and she’s really smart but I’ve never worked with her, so you’ll probably want to talk to her yourself.”

This models transparency, together with low self-orientation, while transferring some intimacy (safety) and some general credibility.

Try this out yourself in a business or social setting. Think of how you refer doctors or contractors, business colleagues and professionals. Pay attention to both referrals shared with you, and to those you give. And practice transferring trust.

Does Your Customer Trust You? The Acid Test

Most salespeople will agree—there is no stronger sales driver than a customer’s trust in the salesperson. And, I suggest, the best way to be trusted is to be trustworthy—worthy of trust. You can’t fake it.

Is it possible to know if your customer trusts you? Is there one predictor of customer trust? Is there a single factor that amounts to an acid test of trust in selling?

I think there is. It’s contained in one single question. A “yes” answer will strongly suggest your customers trust you. A “no” answer will virtually guarantee they don’t.

The question is this:

Have you ever recommended a competitor to one of your better customers?

If the answer is “yes”—subject to the caveats below—then you have demonstrably put your customer’s short-term interests ahead of your own. This indicates low self-orientation and a long-term perspective on your part (I’m assuming sincerity), and is a good indicator of trustworthiness.

If you have never, ever, recommended a competitor to a good customer, then either your product is always better than the competition for every customer in every situation (puh-leeze), or—far more likely—you always shade your answers to suit your own advantage. Which says you always put your interests ahead of your customers’. Which says, frankly, you can’t be trusted.

Here are the caveats: don’t count “yes” answers if:

a. The customer was trivially important to you
b. You were going to lose the customer anyway
c. You didn’t even offer a product in the category
d. You figured the competitive product was terrible and you’d deep-six them by recommending them.

The only fair “yes” answer is one in which you honestly felt that an important customer would be better served in an important case by going with a competitor’s offering.

If that describes what you did, and it is a fair reflection of how you think about customer relationships in general, then I suspect your customers trust you.

If not—well, then why should they? Would you?