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Practice Management > Building Your Business

The ‘Why’ of Getting Referrals Is as Important as the ‘How’

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Over the years, I’ve read much on the topic of gaining referrals from centers of influence. Many articles read as if there is some magic formula or process that if only you would follow, referrals will come. Moreover, those formulas usually involve strategies such as monthly luncheons, joint events, mailers, etc. Clearly, referrals top the list pertaining to the ‘quality’ of prospective clients. Ideally, if we could get all of our new business this way, we’d save a lot of time and money marketing our services. Therefore, referrals should be the goal of every advisor. 

Most of my business comes from referrals. I admit, it has taken a while, and it usually comes in spurts, but the most important thing is that they occur. Year to date, I’ve received two referrals from a local CPA, one from an estate planning attorney, one from a local insurance agent, and several from clients. 

Why would a CPA, an estate attorney, or anyone else refer someone to you? It’s rather obvious that they must be confident that you are competent, trustworthy and are going to provide their client with a positive experience. After all, when they make a referral, their reputation is on the line. Therefore, the most important thing an advisor can do to prime this source of business is to simply be the right kind of person. 

Most important is your integrity. Will you look out for the client? Will you make the referring party look good? Here’s what I mean. When they refer someone to you, they are using their judgment. If you fail to meet expectations and their referral is displeased, it reflects poorly on the referring party and brings their judgment into question. The best way to assure that the referral is going to get what they expect is to be the right kind of person. And this, in large respect, is something that is learned early in childhood, not in a sales training class. 

Many advisors have entered our business because of the tremendous financial potential. Companies with a focus on the bottom line capitalize on this and hire the best salespeople they can find. Then they train them further in the art of selling. I’m confident that this approach will exist for a long time. I happen to believe it’s entirely wrong. Selling and making money is not the most important thing. Serving clients is. Not that I am against making money. Quite the contrary. However, if money is the main focus, the person making the referral may eventually see through the facade and stop referring. 

What’s the right approach? Focus on client service…period! If you do this well, then the money will follow and you will have plenty of referrals and a thriving business. 

Just some food for thought.


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