"Build a system that generates leads for you. That way, you'll never find yourself staring at an empty calendar without leads." At least, that's the approach most consultants and agencies take to attract entrepreneurs.

But now the experienced entrepreneur asks himself the question: “Why should I want more inquiries when I am actively recommended?”

And that's exactly what we're going to talk about today: comparing paid systems and referrals.

The background

Perhaps it's creeping into your industry as well: The market is slowing down. We can blame this on politics or simply on the entrepreneurial landscape's own sluggishness. The fact is, things are getting tougher.

Referrals are the best business, but how long will the flow continue? When push comes to shove, everyone thinks of themselves first.

That’s why we want to take a look at the advantages and disadvantages of relying on recommendations:

Cost

In terms of cost, it's a clear victory for referral marketing. Even when you factor in costs for your own network, gifts, and events, it's still cheaper than marketing expenses.

I don't even want to discuss this with you.

Quality

In terms of quality, we can also say that we can expect higher quality recommendations. There will probably be fewer than in marketing campaigns, but they will convert better.

We expect more leads from marketing campaigns, but their quality is rather mixed.

What we are getting at - predictability

Where marketing systems fail to address recommendations is predictability. You can never predict when a recommendation will arrive. One week, your target audience may be particularly active and actively searching for solutions, while the next week, it's completely dormant.

With marketing campaigns, you can roughly plan in advance how much advertising spend you will need before you receive an inquiry.

This predictability allows us to more accurately calculate expected revenue. We know how many leads we can expect, how many will convert to customers, and what our average customer value is.

That's why I always prefer the marketing system and use recommendations as the icing on the cake. However, I would never rely on them, because then I lose all planning security.

Feel free to leave a comment below with your opinion. I'm curious to hear which philosophy you prefer.