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3 More Ways to Get Referrals Without Asking

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I can summarize my strategy to get your clients to volunteer more referrals in seven words: Advice, TOMA, Engagement, Promote and Thank You.

I covered two of those parts — Advice and TOMA (top-of-mind awareness). You can find part one of the series here.

To summarize: If you fail to provide good investment advice for, let’s say, a year or so, you can survive if your relationships are solid. Referrals will, however, dry up, so advice is vital. While good investment advice does not guarantee referrals, bad advice will bring them to a screeching halt.
TOMA, like all the ingredients in this recipe, also is critical. It’s defined as “that thought which first occurs to someone when presented with a category.”

Suppose your client’s brother-in-law says, “Liz and I are not happy with our financial advisor. Do you have someone you could recommend?” Your client, who works with two other advisors, better think of you first! When TOMA kicks in, you get the referral — not the other advisors.

Who Refers?

Onto the third word, engagement.

It’s maddening, isn’t it? You have done a great job for Bob and Liz Barking. Their portfolio has grown consistently with only occasional dips. He is the managing director of a midsize law firm, while she is an ophthalmologist. Between them, they are earning high six figures.

But nary a referral has passed their lips. They are happy, but they do not refer. Why?

First of all, they might have referred you. You just don’t know it. Here are the numbers.

“Seventy-seven percent of clients give their advisor an average satisfaction rating of eight out of 10 or higher. Ninety-three percent of clients are somewhat or extremely likely to continue working with their advisor. Eighty-three percent are comfortable providing a referral. Twenty-nine percent provide a referral.”

There you have it. Let’s say Liz told her brother-in-law to call you, but he never called. In Liz’s mind, she provided a referral.

These numbers were discovered by Julie Littlechild, president and CEO of Absolute Engagement, who released them several years ago in her pioneering survey, “Economics of Loyalty.” The numbers were updated in “The Rules of Engagement,” which focused on Canadian investors. (More details on this research can be found online.)

In my experience, there can be some minor differences between American and Canadian investors, but these should not affect the conclusions you can draw from her data. For all intents and purposes, let’s say the data apply equally to American advisors.

Twenty-nine percent (or 23% or 24% depending on the year) of your clients are providing referrals.

When I first read this, my initial reaction was, “This cannot be true.” I have been in this industry a long time, and I have never heard of an advisor getting 29% of clients to provide a referral — not even close.

I sent an e-mail to Julie, and we communicated after that. She explained: “The bigger issue is likely to be that they felt they provided a referral — which could have been a mention to a friend, but the introduction may never have happened, which may be a different issue.”

In the clients’ minds, they referred you. Your client Liz told her brother-in-law to call you. He never called. She provided a referral, but you never got it.
There are two numbers here you need to manage: (1) clients who provide referrals; and (2) referrals that arrive. How do you increase this referral activity? Get clients to tell their friends about you, of course, and one way to do so is by staging special events.
In “The Rules of Engagement,” Julie analyzed advisor perception during the financial crisis. There were six important drivers, one of which was “added value above and beyond investment performance.”

In my experience, when you have strong service and investment model, events are essential to boost referral activity.

Consider this: When Liz’s brother-in-law needed some investment advice, how did he know to talk to Liz? Why not his cousin? His attorney? Any of a host of successful people he knows?

The likely answer is that he knows Liz and Bob are successful. But he also knows a lot of successful people. He trusts Liz and Bob, too. But, again, he trusts a lot successful people. So, why ask Liz and Bob?

It’s most likely that Liz and Bob have said something to him that indicates how happy they are with their advisor. Referrals are created at least in part by happy clients spreading the word. It’s called “word of mouth.”

What do your clients talk about? “I get really great service from my financial advisor.” I don’t think so. “We beat the S&P by two points last year.” Really?

I think in social situations people tend to talk about what they do in their daily lives.

Brother-in-law: Hey Liz, did you guys do anything fun this weekend?

Liz: We went to a shredding party Saturday morning.

Brother-in-law: A what?

Liz: Our financial advisor hires a shredding truck every year a week or two after April 15 and has a pancake breakfast. There’s even a kid playing the banjo. Bob and I get rid of all that stuff we don’t have to keep anymore. It’s a lot of fun. Bob even met a guy he’s going to go duck hunting with next winter.”

Your role is to educate and at times entertain your clients. Another goal is to build deeper client relationships. By bringing clients together, you can see groups of them at the same time.

Thus, to increase referral business, be sure to engage your clients by scheduling fun and educational events.

Promote Referrals

Julie uses the term “referral gap” as the gap between motivation and action.

In a blog post, “Clients Who Refer Were Asked for This,” she writes that “… 85% of clients say they are comfortable, and 51% go a step further and say they are likely to refer in the next 12 months.” But only 29% refer. She defines the difference between motivation and action as the “referral gap.”

I define the “referral gap” as the difference between the 20-plus percent of clients who refer and the 3–5% or so of referrals who actually show up.
If you are providing good investment advice and great service, your clients are referring.

Liz did tell her brother-in-law, but he never called or showed up. That’s the “referral gap.”

Julie points out that there are two motivations people have to refer you. The stronger one is, “Clients are more motivated to help their friends than to help you grow your business.”

But they are motivated to help you, and they can really do so by referring and giving you the contact information of their referrals.

You: OK, Bill, how can we close that gap?

Me: Create a referral consciousness. I define this as “the state of mind in which a client, when encountering a referral opportunity, thinks of you first and provides the name of the contact.”

You: How do we do that?

Me: Repetition, repetition, repetition. In countless conversations, you gently and persistently remind your client that you value their referrals. I call this “promote referrals.”

You never ask directly for them. It doesn’t work. You remind them that you truly value referrals in meetings, phone calls and a P.S. in your monthly drip letters.

You: Hey Liz. Sometime in the new few months or year or so, you are going to run into someone who tells you they are getting an inheritance or bonus or proceeds from a property sale. We call this a lump sum. All too often, their kids or their friends will get them to do something stupid like buy a boat or invest in a tanning franchise. They really should talk to me. Can I send you a couple of my business cards in case a friend or relative mentions something like this?

Liz: Sure. I don’t know anyone like that right now.

You: I understand. But sooner or later, a good friend or associate will mention his good fortune to you. What would really help me help your friend is for you to give him one of my cards and tell him you are going to have me call. I will put a couple of my cards in the mail to you, OK?

Action: Send a hand-written note with two business cards. Send a laminated business card that she can keep in her purse. On the back of it, write “Help me help your friends by e-mailing or calling me to discuss their opportunities.”

(On my “real referrals” website, you can download “Referral Conversations.” There are a lot more conversations just like this one.)

Thank You

The very day your client sends you a referral, send them a “Thank you” gift and note.

It should be phrased like this: “Dear Liz: Thank you so much for referring me to your brother-in-law Muggle. I am honored. Here is a gift certificate for some movie tickets. Take a couple of your friends or your kids and have a fun night out on me!”

Resources on “real referrals,” including sample conversations, can be found online at, which includes part one of this series.

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