How to Enhance Your Business through Referrals

How to Enhance Your Business through Referrals

By Ann O'Brien | January 5, 2016

Enhancing your businessProspecting to find qualified leads is one of the most time-consuming and difficult challenges facing financial professionals today. Yet, finding new clients is the cornerstone of building a thriving and successful business. Finding enough qualified leads that eventually develop into clients ultimately helps you achieve your own career and financial goals. Referrals are often the key to building a professional practice.

The key is having your current clients do the marketing and advertising for you. Referrals can be an effective way to build your business, and once you have a referral process in place, it creates its own momentum. Of course, since only people who are completely happy with you and your services will want to refer their friends and associates, you need to make sure that your most affluent clients are beyond satisfied. Your clients must be so impressed with you that they want to refer everyone they meet to you.

According to research conducted by Russ Alan Prince and Karen Maru File, every 100 very satisfied clients produced 66 referrals in one year. Every 100 generally satisfied clients resulted in 26 referrals, and only 15 referrals came from every 100 dissatisfied clients. (Source: Russ Alan Prince and Karen Maru File, “What Clients Can Do,” Financial Planning, May 1998 pp. 172-175.)

Why are referrals such an effective method in gaining new business? Look at it from a different point of view. Picture yourself searching for an advisor to help you make the best decisions concerning your money, since you do not have the experience or time to devote to the process. You’ve never worked with a financial advisor and are anxious to find a good one. How do you go about finding that person? Do you look in the Yellow Pages or check the Internet? Wait for a solicitation by phone? Before entrusting your life savings to someone, you would probably talk to a couple of your friends or trusted business associates to find out if they could recommend someone.

One advisor who had all the business she could handle informed her clients that she would no longer actively seek new business, but would continue to take referrals. As a result of this new policy, referrals started pouring in. Why? Her clients began to think of themselves as part of an “exclusive” club. They now had a club where new members had to be introduced to become clients and work with this particular advisor.

To get your own referral program rolling, you need to implement a referral process and use it from the very beginning of every new client relationship. Since clients generally do not make it a habit to give referrals, explain to them how much time, effort, and expense go into searching for new business. Let them know how much you value and appreciate referrals. Most people do not realize the amount of work that goes into prospecting, and once it is explained to them, many would rather have you focus on their financial affairs than put your energies toward searching for new clients.

You also need to continue to build client rapport and strengthen relationships by obtaining feedback regularly and conducting client reviews. Keep asking for feedback until you can find something tangible to improve upon. Don’t forget to use this opportunity to mention referrals in a casual way, while asking if you can help with anything else.

Finally, ask your clients for a referral. There are many different ways to do this and some work better than others. Keep in mind that when it comes time to suggest someone as a referral, many of your clients may “go blank.” They simply cannot think of anyone on the spot. You need to simplify your request by asking specific questions to guide your clients. Try focusing on the benefits of the services you are currently providing to a particular client. This can be helpful since people tend to associate with others in similar situations or who have the same personalities. You can say something like: “We do a lot of business with retired persons, such as yourself, who are also looking for tax breaks. What other retired people do you know who would be interested in doing the same?” When asking for referrals, feel free to use tools that trigger your clients to remember names, being as creative as you dare.

The last step in the process is thanking the client for providing you with referrals. Thank them as soon as possible with a handwritten note or a small gift of appreciation. You can let your clients know when you met with the referral and whether the meeting went well, but do not give out any personal or confidential information. Realize that there is a social cost involved in giving out referrals, and be sure to thank your client a second time, especially if you conduct some business with the person your client suggested.

Another avenue for obtaining qualified leads is through professional business contacts, such as lawyers, accountants, and insurance agents. Since many of these advisors work with affluent clients, their services may complement yours. To start generating quality referrals from these professionals, you need to understand their needs to develop a mutually beneficial relationship.

When targeting business contacts, certain agents and attorneys are better candidates for providing referrals. Insurance agents who are just building their business have not yet tied themselves to certain investment advisors and would be interested in anyone helping their practice grow. You can get in touch with new agents by working through wholesalers or insurance brokerage networks. On the other hand, attorneys who are at the peak of their professional career make better targets since they have already established themselves professionally and realize the benefits of referrals.

When you open a new account, make a habit of asking your new client the names of his/her other advisors. If the client doesn’t work with anyone else, you can suggest your business contacts. Always remember to nurture your relationships with your professional contacts and treat them just as you do your affluent clients.

Referrals are a great way to build your business. Just remember to ask for them daily, setting a goal each week for the number of referrals you want to attain.

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