If you’ve been reading my column over the last three years, you know that I’m a huge advocate for asking for referrals. While I don’t teach an aggressive approach, I do advocate finding ways to be appropriately proactive. Sometimes it’s appropriate to promote the referral process by planting referral seeds. Sometimes it’s appropriate to come right out and ask for referrals — once you know that your client has recognized the value you bring to the relationship.
A reader of this column recently sent me an email asking the question “When don’t you ask for referrals?” It’s a good question.
There are three basic scenarios in which you should consider not asking for referrals.
1. Don’t ask for referrals when you’re in the midst of solving a problem.
After a recent seminar, an investment consultant came up to me and said, “How do I ask for referrals when a client’s account is down by 70%?” I told her two things, one of which I knew she didn’t want to hear, but needed to. “First, you can’t ask for referrals right now. You’re engaged in damage control. You need to focus on rebuilding your relationship with that client and making sure sound strategies are now in place. Second, you need to reconsider the financial strategies you bring to your clients — or what you allow them to do to themselves.”
Of course, you always want to make sure that a client judges your performance as something separate from the market, economy, price increases or anything else you can’t control.
2. Don’t ask for referrals if your client seems guarded.
When it comes to referrals, you have to take into consideration a client’s personality. One way to measure a client’s personality is a continuum from Very Open to Very Guarded. Obviously, a more open person will be more likely to play the referral game earlier in the relationship. A guarded person will take longer to warm up to referrals. Some guarded clients may never warm up to the referral process.
I don’t recommend asking a guarded person for referrals in the first or second meeting (while this could be easy to do with a very open person). When you do ask a guarded person for referrals and it’s clear they are uncomfortable with your request, you have to back off quickly.