Judge people by the company they keep
Doing so just might benefit your organization

You have no doubt been told, “Don’t judge people by the company they keep.” Maybe this rule works in social situations (although doubtful), but it definitely doesn’t work in business.

Whether you are seeking business referrals or deciding how to allocate your charitable contributions, you must indeed judge people by the company they keep. Since at least the sixteenth century (and some say going back to Plato), the phrase “birds of a feather flock together” has often meant a sage warning.

Not all referrals are good ones

“First of all, prospective customers who are referred from your fans are probably going to be nice people. Since birds of a feather flock together, assuming you sell to customers who are pleasant, they’re likely to refer others of their ilk. Who wouldn’t like to spend all day selling and writing orders with delightful customers?” wrote Michelle Nichols in BusinessWeek.

However, some referrals are downright bad. Avoid soliciting leads from your most annoying or unprofitable clients or customers. Otherwise, you will receive poor recommendations that will, at best, aggravate you and, at worst, consume too much of your time and fail to generate a fair profit. A referral program is one of the best means of building business because generated leads are usually qualified (likely customers who can afford to pay) and the person making the recommendation offers vital testimonial value.

When establishing a referral program, be careful to first assemble an ideal profile of your best customers and clients. Identify common traits among these that result not only in reasonable profit, but true satisfaction. Do not ask for referrals from those who dispute every charge, unnecessarily tie up or mistreat your staff, demand discounts or free gifts, operate or act unethically or undervalue your products or services. Think about those customers you enjoy working with and who help the bottom line.

Once you have identified the kinds of clients or customers you seek, put your best foot forward when asking for referrals. If you are targeting a relatively small number of people, arrange lunches and assemble literature (“leave-behinds”) that match the quality your referral source and prospect expect you to deliver. In some settings, you may need to consider a more polished loyalty or rewards program — perhaps taking advantage of emerging online social networks. Every situation is different, but there may be ethical concerns or regulatory compliance issues if you provide incentives. When in doubt, seek professional advice.

Charity begins at home?

You probably volunteer, support financially or donate in-kind services to non-profit organizations. If you don’t, you should. It says quite a bit about your values and business. Chances are those civic and charitable groups occasionally purchase goods and services. Do they do business with you when funds permit, or do they think you are only good enough for freebies? You should not be ashamed to insist on reciprocity. Go ahead and judge these organizations by the company they keep — literally.

Take this a step further. Chances are some high-profile board members governing the charities you support also manage companies with whom you would like to conduct business. They may think you are good enough to serve the charity, but not good enough to supply their firms. This is unacceptable.

A worse situation arises when these board members work against your business in some way. Perhaps, some represent existing clients who are troublesome or don’t pay their bills. Consider helping only those civic and charitable organizations that truly value your work. Judge these groups by the company they keep. There are many other deserving organizations that will truly appreciate your efforts.

Submit your comments to creative@cocoboston.com.

Is your boss ethical?
Participate in an online poll and see what others say

Visit COCO+CO.’s Web site to participate anonymously or view poll results.