A referral is a personal recommendation and endorsement from someone, and a referral from a trusted source is cited as a key influence when choosing a product or professional services provider. It is also the biggest compliment we can give to any business.
A lead generation strategy which targets referrals from existing clients is one of the most effective ways to grow your business, at minimal cost to you.
A client referral program can provide the tools, discipline and skills to implement a structured referral culture.
When effective referral behaviours are adopted they become an important part of your day-to-day business operations.
It’s true, many successful financial planners and professional small to medium sized businesses gain most of their new clients through referrals from existing clients.
And each of these successful professionals use ONE strategy to gain referrals, they Ask For Them!
The way you ask for referrals will depend on your particular style and the relationship you have with your clients.
A referral generally occurs when someone has an immediate need and is looking for someone to satisfy that need – there is a sense of urgency to do something.
It’s important to understand that generating referrals is not a technique to obtain names. Obtaining referrals is a reflection of your worth. It provides an opportunity to promote your business and to build on your existing client relationships.
The key to success is to genuinely believe that the value you and your staff create deserves referrals. Until you and all your staff have this confidence, introducing referral tools will be ineffective.
Ask yourself these questions.
- Do I honestly feel that what I do and the value I create deserves referrals?
- If so, why? If not, why not?
If your business provides exceptional service, adds real value and manages client expectations, then of course you deserve to be referred. If not, then these are the areas you need to work on to make your business deserving of referrals.
- To align strategic alliances for greater market penetration
- Generate referrals from existing quality clients
- Attract qualified leads
- Meet or increase growth targets
- People like to refer – it provides them with a good feeling that they are helping others. It also provides reassurance that the referrer did the right thing in dealing with you in the first place
- Referrals can be a cost effective way to source prospects – it takes less time to acquire new clients through referrals than other methods
- Builds loyalty with referee – they are less likely to withdrawal from your services if they are a referee as they are happy with the value you create
- Conversion rates are higher – it is easier to convert a prospect into a client as they already have the perception that you have a good business, otherwise their friends/family wouldn’t have referred them
- If all things between financial planners are equal, with the exception that one planner has come in on the strength of a referral it is more likely that he/she will win the business.
- Referrals provide you with a point of leverage as they work on your behalf promoting your business whilst you are not there.
- Not understanding the types of referrals you are seeking – the wrong people end up taking up your valuable time
- Not having a process for declining the wrong referrals
- Not clearly communicating the characteristics to your staff and referral clients regarding the types of referrals your business is seeking
- Who are your existing referees now?
- Are they individuals or businesses?
- Are they bringing you a good amount of business?
- How do you acknowledge them?
- If you don’t know who they are, how will you find them?
Hints and Tips
- Do you ask new clients how they found you? You might be missing some important referral networks right under your nose.
- Start by acknowledging referees for the referrals of the recent past.
- Ask them for any feedback they have received on your service from these new clients and ensure any negatives are worked on quickly.
- Talk to the referees about your business and where you are taking it. Get them engaged in your journey.
- Ask referees how they would like to be notified if another new prospect they recommend becomes a client.
- Develop some simple processes to track new clients per referee and how you are going to report on this?
- Think about interesting ways to reward these referees for new referrals. It may be cash or a rebate, but it could also be a night out or tickets to the football or the movies. By knowing these clients you will identify what they will appreciate most.
- Think about trailing a referral arrangement prior to formalisation.
Example of costs to consider
- Rebates for referrals
- Gifts or rewards for regular referrals
- Preparation of a presentation on your business to be presented to other businesses (eg accounting or legal practice).
- Production of marketing material on your business that meets the needs of the referral network.
If you are interested in attending future webinars about how to grow your business with referrals and how Feedsy can make this easy then please let me know and I will make sure you get an invite.
0423 020 190