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Practice Management > Building Your Business

3 Keys to Generating Effective Referrals

By Tracy Clements

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Referrals are a powerful way to generate new business – and agents know it. According to a 2007 Agent Media* study, 66 percent of agents named referrals as the most effective way for them to prospect for new clients.

But how can you get these referrals? There is one compelling and strategic method — delivering service that can propel your clients into referring you to prospects. When people refer your business to family, friends, and colleagues, they typically do so in order to share the positive experience that they have had with you. In this increasingly impersonal age, your need to exceed client expectations is a critical factor in differentiating yourself from the competition. Stellar service doesn’t happen by accident – in fact, it’s quite the opposite.

Ideally, you should spend at least as much effort, time, and money building a long-term relationship with past customers as attracting new ones. Your referral-based business can then mature into a long-term strategy that can help you build and maintain profitable and meaningful relationships with your clients. It’s important to not only focus on your own client base, but also to take the time to develop your relationship with other advisors, benefiting from their knowledge and skills. In particular, you should always maintain a top-level service platform in an affluent marketplace, as it is an integral part of your business and is essential to maintaining long-term growth within the industry as a whole. Servicing clients often takes a back seat for many reasons, with the two most common reasons being lack of time and personnel.

A strong referral base presents a good yet challenging opportunity. A strong foundation helps shift your focus toward the new business coming in the door and away from the old business on the books. It is crucial to not lose sight of how you arrived here, taking into account both the advisors and clients who have helped you excel.

Now, consider whether your current business model is scalable. Can you handle the influx of new clients while trying to service existing ones? Investing in a proprietary database management system that keeps track of all clients, their needs, and their schedules will help ensure policy retention. Most importantly, hiring the right people can allow you to offer the finest client experience. Taking this approach not only helps create a profitable network, but it also allows companies to take on new business while servicing the old. In the end, this approach can create a profit center at both ends of the spectrum.

Cultivating proper structure allows you to successfully interact within the high-net-worth arena, which is necessary to competently service large financial portfolios. Not only are partnerships the key to success, but hiring the right employees also contributes to future accomplishments. There are three main strengths a team needs to possess in order to remain successful:

  1. Streamlining client requests. Ideally, your company should be the first and only stop for a client seeking financial advice and products. When a client calls for assistance, you should be the only call they make. While it is beneficial to maintain relationships with your clients, it’s also extremely important to build and maintain partnerships with carriers or other outside resources you work with daily. Developing these relationships will work in your favor in two ways: It will likely result in a quicker turnaround time for requests and build positive personal and professional relationships. Keep in mind, however, that a request isn’t going to go smoothly every time, so if something is amiss, a quick and total recovery is just as important.
  2. Dependability and loyalty. When your clients contact you, they depend on you to complete their request quickly and correctly. Since your reputation hinges on the confidence that clients instill in you, it’s imperative to have a reporting system, excellent organizational skills, and a quick response time to handle all their needs. Because affluent clients in particular tend to be sophisticated, they set their expectations higher than most. They need to know when calling upon you that you will be professional, courteous, and consistent. Those three characteristics all factor into your clients’ loyalty.
  3. Maximize your resources. Clients expect prompt, creative problem solving and attention to detail from you. Properly servicing your clientele requires ongoing performance evaluations and policy reviews. By conducting these important tasks, your clients’ certainty that you are going above and beyond their initial expectations helps build loyalty and trust. Clients expect that you will continue to provide a high level of service once you sell them a policy or provide them with a specific service.

Most producers operate with the mindset that sales is about taking care of your customer, solving their problems, and offering solutions that make the most sense. Any sales organization must have a staff in place that is capable of contributing to and developing a high-level service platform. If you have taken the time to hire the right support people and invest in the proper technology, you must then leverage your knowledge and ability, essentially leveraging your assets.

Should you commit to changing your culture, be aware it will take time and you may face numerous challenges and obstacles along the way. In the long term, making small changes to your service platform will result in positive transformations in your future business. Internally, your staff morale will increase, client satisfaction will be higher, and you may see a long-term increase in your company profitability — financial architecture at its finest.

Tracy Clements is senior account manager of client services for the life insurance firm Financial Architect Partners. She can be reached at 617-259-1900, ext. 236 or [email protected].

*Agent Media is the publisher of the Agent’s Sales Journal.

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