I think businesses built on referral networks will struggle in the future.

I have been thinking about referrals. I met a bathroom remodeler a few years ago. No website, business page, or social media. All work was from other people talking about him. I thought “hell yeah”. No lead flow costs. No Google business page verification woes. No website to manage. Now, I don’t think that is as great as it sounds.

I get it. During Covid, if you were a contractor who had tools and a pulse – you had customers. During a big boom of construction and labor, availability was the selling point. In these times a good website or marketing plan does not matter. A homeowner might take a few hours to vet someone to find out that they just got booked out another 3 weeks. So instead you had to chase…

However, how are things when booms slow down? When buyers became cautious and price aware? People start doing their research. They start digging into the business. Who is he? What does he do? How do I know he will do a good job for me?

This was the research that was done by a friend who then told you about a person they recommended. This is why nothing came close to a referral lead. If not a referral, the alternative was to read reviews, browse sites, read about the business. Verify that they are licensed and insured. That was all done by a person.

With AI, that barrier has been removed. You can choose any AI platform, drop the business name and have it do the research. Hours of research compressed into a few minutes. You can compare the recommended business but also have AI show the ones that it recommends. If your friend told you about a CRM that would work for your flower business, but after some research an AI shows you a CRM that is built specifically for flower businesses… which one would you choose?

Also, there is no constraint on what a person can ask. People can ask things they would never ask a business directly or dare challenge a friends authority.

“Why shouldn’t I hire this company?”
“Tell me something bad about this business”
“Who can do a better job?”
“Is [insert name] a scammer?”

The more people start searching this way, the more we will see referrals hold less weight. Chances are, you won’t even notice it. After all, you can’t track referrals like you can track SEO or Ads. You’ll just stop getting them.

To make a hiring decision, we need to determine this:
“Who are you?”
“What do you do?”
“How do I know that you will do a good job for me?”

AI will be able to provide that information quickly. You can get all the information compiled cleanly. With a referral you must trust. AI will also be able to lookup any lawsuit, lein, complaint on Facebook, etc.