You should. Although in theory they whole point of networking is to create a qualified, two-way system of referrals, a referral in itself is not enough reason to do business with someone.
In reality, there are a lot of reasons why contacts give referrals. Maybe the referral sent business to your contact and now he is simply returning the favor. Or maybe your contact is just trying to impress you by helping you meet a need. It's even possible that your contact heard about the referral secondhand, through another contact.
The purpose of a referral is to put someone else's products or services on your radar. When everything is said and done, you will still need to apply the same vetting procedures as you would for any other vendor or service provider – with a few modifications.
What do you really know about the referral?
You should begin the vetting process by asking yourself what you really know about the referral. If all you have is the referral's name, then you really don't have much to go on. A personal recommendation from a reliable contact is good, but recommendations from multiple contacts and brand recognition are even better.
Has your contact used the referral's products or services?
Don't assume your contact is basing his recommendation on the fact that he has used the referral's products or services. You would be surprised how often people recommend products sight unseen. Unless he has firsthand experience with the referral's work, it's difficult to take his recommendation seriously.
Does the referral have a website?
The bottom line is that no matter how much you trust your contact, it's on you to conduct your own research. Start by exploring the referral's website and other marketing materials. If the cost of the product or service is significant, expand your research by making inquiries across your network.
Will the contact introduce you to the referral?
If the referral checks out ask your contact for an introduction. Personal introductions lay the groundwork for networking relationships and it's not uncommon for the referral to offer you a discount based on your mutual relationship with the same contact.