There are times when goodwill between competitors can go a long way, not only in terms of healthy competition, but in the eyes of your customers. When you are too busy to fit the customer’s time frame or faced with a challenge or demand that you cannot satisfy, referring them to a competitor who can satisfy their immediate needs will earn you credibility in the eyes of that client. That client will most likely come to you rather than your competitor with his or her next order.
It is not just direct competitors that you need to get to know and send referrals to, but people in your industry who offer something different or an alternative to your product. For example, when a “Steel Roofing” company has a customer who cannot afford their product, they often recommend a good traditional roofer. When a clothing store does not have anything to fit a larger client, they know what “Big and Tall Store” to send them to.
One example of a healthy small business referral from a competitor occurred to one of our office-space-for-rent tenants Ian Payton. Ian is a portrait and product photographer who has done a few weddings, but he does not try to compete in the wedding photography market. A a number of times a year, couples who are looking for engagement photos will contact him. Most of these couples are referred by their wedding photographer, who does not take engagement photos. Ian is currently carving out his niche and getting customers from his competitor who are not “direct” competitors.
Yes, this may sound like something out of the movie “Miracle On 34th Street” where Macy’s sends customers to Gimbles because they don’t stock an item. When you demonstrate to a customer that you want to help them (even if it means sending them to your competitor), you will not only earn their loyalty, but also gain customer credibility and reliability.
As tempting as it may sound, it is never a good idea to refer a bad or over-demanding customer to a competitor. Your competitor will thank you in kind when you send them a difficult client, by sending you their own problem clients. This is the last thing you really want.