The Difference Between Referrals and Leads

In the world of sales, referrals and leads can be similar since both are looking for new clients for your real estate agency. But there is a marked difference between them. Therefore, it is important to understand them so that you know how to act before each one.

In this article we will explain the meaning of both terms, their differences, how they arrive or are obtained and what is the treatment that must be provided to finally convert them into sales.

A referral is not a lead

You may have heard or used the terms “referrals” and “leads” many times throughout your events or when networking. Also, you’ve probably heard the phrase “We not only provide leads, but we also offer quality referrals.”

Most people think that the leads are the same referrals, but that is not correct.

Unlike leads, referrals are targeted and especially reach you. A referral is someone who needs what you offer and who fits your customer profile. There is a greater potential for sales from referrals than from leads.

We will explain each of them below:


A referral is when someone directs or recommends a person offering a particular service to another in need. It is a qualified sales opportunity in which both parties have agreed to be featured. Consent is paramount in successful referrals.

Some other characteristics of referrals are:

  •  They are more likely to buy when they are referred by a friend or other customers.
  • They have a personal backing, an element of trust.
  • The time and work that you must dedicate to referrals is less.
  • Referrals come with less effort, once you train your team to recruit them, they can come at any time.
  • The closing rate that comes from referrals is higher than that of leads due to all of the above factors.

How do they get there?

Referrals come when someone gives you the name of a friend, colleague, or family member who needs your service. The most important difference is that referrals come with the “stamp of approval.” Consumers trust these recommendations, which is why they are a top-ranked source of reliability.

When you call a referral, most of the time they will already know who you are and what you do, through the person who referred you, and in the best of cases they may already be waiting for your call.


A lead is a contact that can come from various sources and they generally do not wait for your call. Provides you reasons or reasons to contact someone. When you get a lead, you have to get close to make the connection. It is a chance opportunity with potential.

Some other characteristics of leads are:

  • They are not qualified, they are not a real sales opportunity.
  • They have no personal endorsement and are not associated with any approval and trust.
  • The time and work you need to get leads are greater.
  • They don’t come without effort, you chase them.
  • The closing ratio that comes from leads is low due to all of the above factors.

How are they obtained?

A lead can come from any source, which means it can be someone who could benefit from your services, but has no idea about it yet . They are generally obtained from your networking relationships, events, meetings or when you make contacts with other people.

When you have good digital marketing practices, your leads are those who leave their data in exchange for some valuable content such as an eBook or some other element that may interest them.

Business Relationship

What treatment should be given to each one?

Like the person who referred you, the referral should also be recognized and appreciated, since they have the potential not only to be your customers in the future but they can also refer you to other people.

Reciprocating the generosity of referrals is key to keeping the cycle going, building the goodwill and relationships that will help your ongoing prospect conversions.

In the case of leads, they require more work and effort . You always have to be in contact with them and offer them valuable content so that they understand that you are there to solve their problems.

How to convert a referral into a sale?

Here are some elements that you should implement to convert more referrals to customers.

  • Treat them in a special way 

Do your best to let them know that they are special. Acknowledge the fact that you are honoring the recommendation by giving them access to something special, invite them to a unique event, or treat them differently.

  •  Close the loop 

There are cases in which a referral appears ready to buy, but you must have a process that allows you to discover how that customer feels in thought and motivation. Use a method to carry it gently. Let them know how you work, why you charge certain percentages, and how they will receive the most value by becoming your customer.

  •  Show appreciation and be communicative 

The last step to effectively converting referrals into sales is developing a way to show appreciation to your customer sources. Make some kind of offer to incentivize them as a token of appreciation.

How to convert a lead for sale?

Here are some tips to help you convert leads into sales.

  • Don’t keep leads waiting

Leads are a new product and they can’t wait until the next day. Your interest level drops dramatically after a short time, and you may switch to the competition.

  • Rate the potential customer first

All leads are potential sales customers. To provide a valuable first impression, it is important to rate them. You will not close a sale if you contact a lead who is not ready to buy.

  •  Be aware of leads

 Customer support begins before any sale is made. Keep your leads informed and show them that you care and that they will surely come back to you when they are ready to move on to the next step.

  •  Monitor your sales channel

 Your sales channel gives you a unique overview of the prospects you are working with. In a CRM system you can monitor at what stage of the sales process the prospects are and the activities that are carried out.

With the CRM that Zoho offers you can increase your commercial operations, since you will be able to approach new people more strategically and propose your products to them and thus maximize your sales opportunities.


Understanding the difference between referrals and leads can help you improve the sales and growth of your real estate agency. You will be able to understand each one and have an idea of ​​how to deal with them.

A clear difference between both terms can guide you to provide the expected level of service and build a quality relationship with all your clients since the objective is to build a stable and profitable business.

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