Lead or Referral?  What’s the Difference?

Sometimes in networking, we use the words lead and referral interchangeably.  This is a huge mistake as they are both very different.  This week we are going to explore the difference and why it is important to know the difference for you and your fellow networkers.

Let’s Define…


A lead is when someone identifies a person or business who may need your products or services.  It is more of an idea that your services are needed.


A referral is when someone actually connects to you a person who needs your product or service and is actively looking for someone to help them.

Being able to recognize the difference is easier when you have real life examples to work with.  Let’s play a game.  It’s called “Lead or Referral”. 

Read the statements below to see if you can identify whether the dialogues and conversations are leads or a referrals:

Lead or Referral? 

“Hi Lora!  I have a referral for you!  I visited my gym on Facebook today and saw that they have no real presence there.  I think you could really help them!” 

This is a lead.  Even though they used the word “referral” in their dialogue, this is not a true referral.  This falls in the category of “lead” because it is an idea of someone who may need my product or services.  For me to find out if my services are needed, I would need to cold call the prospect.

Lead or Referral?

Phone conversation:

Lora:  “I was having coffee with my friend this morning and she mentioned that she was about to lose her health insurance.  She is very nervous and scared of what may happen.  I told her I knew someone who could really help her understand health insurance and walk her through the process.  I wrote her contact information down for you, she is expecting you to call.  I gave her your contact information as well.”

Dave:  “Thank you!  I will give her a call as soon as we get off the phone!”

This is a referral.  The dialogue is very different from the “lead” dialogue. 

A referral includes the following characteristics:

  • The identification of products or services needed
  • The products and services needed are actively being sought out
  • There is an introduction component where contact information is exchanged
  • There is a level of endorsement from the person who is connecting the two parties together (know, like, trust)
  • There is no cold calling involved.  Both parties are primed for contact

Both leads and referrals are important to building your business and knowing the difference is huge!  By having the ability to identify which situations are leads versus referrals you become a more reliable and valuable resource for your networking team.