Generating business referrals is the ultimate in marketing. They’re credible, powerful – and they’re free. But how do you undo the damage when referrals go wrong?

I love business referrals. I’ve started and grown my business based on this very method, and I’ve shouted their virtues from the rooftops. I’m always thinking of people I can introduce to each other, and I gladly accept all referrals sent my way.

So recently, when I was referred a client by a highly admired industry leader, my ego shoved its way to the front of the queue, pushing back my loyal friends Sense and Reason.

But this match turned out to be doomed. The relationship ended in tears, a shortfall in my pocket and a few sleepless nights. My forever running late friend, Hindsight, chides me that I should have listened to that persistent little voice in the back of my mind.

But I didn’t. Because I was scared of saying no in the first place, I had now placed my reputation on the line.

Then, not a week later, someone I’d waxed lyrical about failed to show up to a meeting I’d suggested with a colleague of mine. I didn’t just feel embarrassed – I also felt responsible for his slackness. And again, I felt my reputation was damaged.

So I vowed to do everything possible to prevent business referrals from going wrong in the first place.

Business referrals will still go wrong though. Every situation will be unique and must be addressed individually, but the following steps are a guide to help you manage this delicate situation next time it happens to you.

Apologise

Whether it be for mistakes you’ve made or for the situation itself, an acknowledgement that things have progressed in a less than ideal fashion is the beginning.

If you’re worried about admitting to your mistakes, be more worried about the ramifications if you don’t. Done well, an apology may also elicit something unexpected: an upset client turned raving fan.

Compensate

From a full refund to a hand-written note, compensating your client should be up for careful consideration.

But do be careful in matching the level of compensation to the severity of the situation. A mismatch can be as insulting as the crime committed.

Want more articles like this? Check out the attracting new business section.

Onward

If the situation has been resolved and you’re both happy to continue your relationship, then leave the situation in the past. Don’t bring it up again. Don’t use it as ammunition. A bit like marriage, really.

If you can’t move forward without looking back, then you need to ask yourself whether this client relationship is for you.

Don’t bad mouth the other party

This is a tricky one. If a client or supplier has been unscrupulous, they don’t deserve to be protected. Expose away. But there’s a time and place to do so – and it’s certainly not to your clients.

There’s a big difference between exposing with dignity (and without emotion) and bitching.

Keep in mind that your clients might just be wondering what it is you say about them behind their backs.

Communicate with the person who sent you the business referral

How do you bring the topic up tactfully with the person who thought they were doing you a favour by sending you this referral without looking like you’re pointing the finger at them?

If you don’t bring the situation up, are you jeopardising your relationship with them (along with any future referrals)? Is your reluctance to be upfront inadvertently implying that you are the guilty party in the whole sorry mess?

And if you are the one at fault, how do you explain your actions and salvage your relationship with the referrer?

I’m still working on the best way to address this awkward situation. What I do know is it’s a tough call.

Move on

This can be the most difficult – yet crucial – step in the process. Recognise that things could have been handled differently, take note of how, and then forget about the situation.

If you don’t, not only will your business suffer, your health could to. Through my angst, I suffered from a heart condition for several months, even though I was only 28 years old.

Life happens, I’m learning!

So how have you handled business referrals gone wrong? Did you manage to salvage your relationship? We’re all ears.