There is little doubt that the best quality referrals come from your existing clients who are happy with your product or service. But will that be enough to keep your business growing at the pace you'd like? The answer would depend on the industry you're in. A friend of mine does computer networking and his business is 100% by referral, and that keeps him busy. For my business, while we get many referrals from our clients, if I relied on those alone, it would hardly be enough.
So the next question is – how do you generate other leads? Try to establish relationships with close spheres of influence. As a web design company, we have several "partners" such as SEO firms and IT firms, which do not provide the same service as we do, and often refer their clients to us. After a period of time, we have built mutual trust with these partners, and they have become excellent sources of referrals.
E-mail marketing may work well also. You can send monthly e-newsletters to your clients and lead lists. We always try to give some useful information in our e-newsletters, and not be purely salesy, if at all. This keeps people reading and retains their interest.
We also do a few tradeshows throughout the year, which is another avenue for generating leads. And … do not neglect the dreaded cold calls! Most of us hate doing them, and put it off, but they are so very effective. Do them yourself – allot some specific time each day – or hire someone else to do them.
Overall, use a variety of marketing methods, and you'll have good leads coming from every angle.