Should you refer business to your competition?

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I love it when a client sends me a question that makes me go, "hmm."

I’ve posted an example -- see what you think and post your ideas in the comments section.

"Seth, if I'm asked about a project that isn't a good fit, and I think that it's a good fit for one of my competitors, should I refer it to them? I've been hesitant to because:

1. It greatly reduces the chances that the prospect will ever hire me since they'll create a relationship with my competitor, and
2. The prospect may send future referrals to my competitor, helping my competitor and potentially hurting me.

I have no problem referring to those who aren't competitors (either because they offer different services or work at very different budget levels), but I'm not sure if I should refer prospects who aren't a good fit, or just tell them, "good luck finding someone."

What do you think?

Before I attempt to give an answer to this, let me first lay out a bias that will influence my answer. I have previously written about the scarcity vs abundance mindsets and how they affect your worldview and thereby affect the way you design and show up in your business. If you read that post, it will be obvious that I hold to the abundance mindset and that will affect the way I answer this question. For those who didn’t read that post, the Abundance Mentality, is the belief that there is plenty out there and enough to spare for everybody. It results in sharing of prestige, recognition, profits, and decision-making. It opens possibilities, options, alternatives, and creativity.

This is both bias and belief because I can't scientifically prove to you that this answer is the right answer, and I can find anecdotal evidence pointing to both the positive and negative points of this issue. But, it's my belief that holding onto the abundance mindset will give both you and I a much better outcome over the course of our lives.

By the way, all this is also based on the assumption that the competition in mind is one that you respect and would trust yourself. If you don't respect and trust your competitor, then you should never refer a potential client.

So, looking at this question through the perspective of abundance, here’s how I see it.

1. There is plenty of business to go around.

2. If your competition is truly a good fit for the prospect, then you will give them the greatest value by referring them to your competition. Giving the best value to your prospect shouldn't be underrated, and it will come back to benefit you in many ways such as being seen in the marketplace as a trusted resource.

3. If they find your competition on their own, which they will have to do in order to satisfy a need, then they will most likely never come back to you. In this scenario, the competition did something of value, and you never even tried to help them.

4. If you do provide an honest referral then that leaves you in a very positive position in their minds. As far as future work goes, this leaves you in what I call the "on-deck circle." This places you next in line if they have any future needs or if that competition isn't able to meet future needs.

5. It's a gutsy move that exudes confidence. It says: I know the value that I have and what I bring to the table. I also know my limits, and I am not scared that others have different strengths.

Give it a try sometime. If you don't think you should take the project, then tell the prospect that you may not be the best fit and give them the contact information for a competitor who you would trust. You can even tell the prospect that they are your competition. People will respect this move both for its courage and its integrity. They can tell that you are looking out for them even at your own expense, and that kind of reputation tends to get around.

If you want to engender some further goodwill in your industry, go ahead and tell your competitor of the prospect you are sending their way. Shock your competitor with your confidence and integrity-- it may come back to benefit you in some strange ways in the future.

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