Referrals are one of the most helpful elements available when trying to build a business. They generally have a very high closing ratio, which some say is as high as 90 percent. This is because referrals are highly valid and add credibility to your reputation. Should a trusted business associate inform you of another professional who can help you, you’re probably predisposed to use this person–usually before you’ve even met them.
The trouble is that referrals are not very prevalent. For some senior advisors, they’re practically on the endangered species list. When they do come, however, they are almost like striking gold. Many successful advisors are not shy when noting that nearly all of their new business comes from referrals–often without having to ask for them.
To understand how to generate more referrals and obtain them without pushing too hard (or at all), it’s imperative to realize how they come about. And, more important, why some get them on a regular basis and others see only a few each year.
Making your calls
“I’ve relied on referrals since the day I started in this business,” says Michael Radler, CLU, a 29-year industry veteran and senior vice president at Mercury Wealth Management in Avon, Conn. “In my early days I’d make 150 calls each Monday. When I connected with a client, I’d ask if there was someone else I could help. I still do this because if you stop taking batting practice, your average suffers.”
Mark Snyder, ChFC, of Medford, N.Y. agrees. “We regularly ask for referrals. It’s part of our business model. When we track where new business comes from, a percentage can always be traced to referrals.”
A referral is, in its simplest form, an endorsement from a trusted colleague or business associate. That carries significant weight as the person providing your name is indirectly endorsing you. That’s a lot to ask, so it stands to reason you’ve probably done a good job handling that client’s business.
A social butterfly
So what’s the all-star referral gatherer doing that you’re not, besides raising the bar on production and service? In all likelihood, the referral-gatherer is a big-time social networker. Referrals don’t just happen. They need to be nurtured and cultivated with a multi-dimensional approach. It’s very likely he’s a regular at local Chamber of Commerce or Rotary Club meetings. He may also serve on boards of high-profile, local organizations such as hospitals, nursing homes and schools, where he comes into contact with people who may need his services. This is a form of center-of-influence marketing. “Referral marketing is the most powerful, cost-effective and targeted marketing you can do. The single most important factor is that you must first expect referrals,” says marketing consultant John Jantsch, based in Kansas City, Mo.
How do I get there?
“The first step is simply having the gumption to ask but, more important, when to ask. Seek referrals just after the closure of any sale,” says customer-service consultant Drew Stevens, Ph.D., of St. Louis, Mo. “The client is at their absolute emotional high and you want to strike when the customer is most satisfied and there is no dissonance. The second step is to ask for three to five referrals from the customer of [potential clients] they believe will be as attracted to the similar value that you provide.”
“You can’t get there alone … in fact, you can’t get very far at all,” notes Los Angeles-based Keith Ferrazzi, co-author of “Never Eat Alone: And Other Secrets to Success, One Relationship at a Time.” Relationships are the building blocks of business success and a very real builder of referrals.
Great networkers often maintain a lively promotional list, as well as a Web site. Are you regularly staying in touch with clients to generate interest, raise your profile and in turn build business? Check out what the other referral champs do. Are they working on a new e-mail blast? Setting up a client-appreciation event where guests are encouraged to bring friends? Booking lunch appointments? The idea of keeping oneself “visible” is one of the keys to getting referrals because it helps build the profile of you and your business.
“When you regularly do a good job, people will line up to help you,” says Radler, who suggests that senior
advisors cultivate relationships with like-minded professionals. “It’s one thing to be friendly with a CPA,” says Radler. “It’s much more valuable to provide him with information he’d have to spend time finding on his own.”
Radler also advises that it’s crucial to develop an expertise. His office specializes in getting answers to difficult questions concerning Social Security. “I’ve built relationships with Social Security experts, both locally and in Boston. Getting the answers is a real value to a client as well as to a lawyer or accountant. Service like this leads
No one likes to ask
No one likes asking for referrals. Some do it anyway. They get used to it and occasionally this basic strategy pays off. The trick is to establish yourself as front-of-mind with your customers, so when they’re asked who’s their advisor, they’ll automatically provide your name.
“We have specific forms where we ask clients to note names of friends, relatives or associates we may be able to help,” says Snyder. “When you’ve done a good job for 30-plus years, people can recommend you with confidence.”
How does one get to that point? “It’s an ongoing, never-ending process,” advises Snyder. “For starters, do what you say you’ll do. If you have an appointment for Monday at 9 a.m., don’t just arrive at 9. Arrive at 8:50. Being reliable is a form of honesty that carries a great deal of significance.”
“To build a real referral network you have to invest a lot of time helping others,” says business development consultant Thom Singer, in Austin, Texas. “The downside is the payoff takes a long time and you will run across many ‘takers,’ those who gladly accept your introductions but never return the favor.
“The upside is that once you’ve established your reputation as one who helps others, people will help you,” he adds. “It is part karma (do good and it comes back to you), and another part is the idea others will want to enter your sphere of referrals. The best way to get referrals is to give them. But it is not one-for-one. Those who get the most accept that they will give more but know it’s worth it.”