Last time we started to review your marketing by explaining the importance of brand searches and being found online easily by those looking for your business.
Brand searches play a huge part in successfully generating more referrals from existing clients, because someone referred to your business is likely to Google you.
They might want to carry out some basic due diligence, find out more about your business or simply get your contact details. Whatever their reason Google, and what they find on their search, plays a huge part in whether they decide to get in touch or not.
Which brings us neatly to the subject of referrals.
We’d probably all agree that referrals are the best type of new client enquiry:
- They probably have an immediate need for your services
- They will already have heard positive things about you from an existing client and are therefore likely to be ‘pre-sold’ on working with you
- Like tends to attract like, so they’re more likely to be among your target clients
Clearly referrals don't come for free - there’s a cost in terms of time and budget to develop an effective referral strategy. Yet the cost of generating new referrals is lower than that of developing enquiries from other sources.
What’s more, clients are overwhelmingly happy with their adviser or planner and so are open to the idea of referring them to others. Our research through client surveys reveals that:
- 96 per cent of clients are happy to recommend their adviser or planner to others
- 99 per cent say that working with their planner or adviser has helped them achieve their goals
So, happy clients who are getting value from their adviser or planner. Job done. Surely, you can sit back and wait for the referrals to flood in?
Despite being happy, our research shows that relatively few clients regularly refer their adviser or planner to others:
- Around 40 per cent have made a recommendation in the past 12 months
- 29 per cent have recommended their adviser or planner, but not within the past year
- 37 per cent have never recommended their adviser or planner to someone else
These stats raise a couple of questions.
Firstly, if clients are happy to refer you to others, why aren’t they doing so in greater numbers?
Secondly, a significant number of people who are referred to by an adviser or planner never make contact. Assuming the average adviser or planner has, say, 150 clients, that means they are referred on by around 60 existing clients each year. You might be the exception, but no adviser or planner I know receives 60 referrals a year.
If you did, you could probably stop all other marketing immediately!
In many ways, those stats should come as no surprise as too few firms have a strategy in place for:
- Generating greater numbers of referrals
- Monitoring the number of referrals received (you can read more on this here)
- Thanking clients or professional connections for making recommendations
Those two questions demonstrate why you need to think strategically about developing referrals. Sadly, they won’t simply fall into your lap.
So why aren’t clients referring you on?
We believe there are 12 potential reasons why clients might not refer you on to others.
- Not asking or informing
We know (because they have told us) that many advisers and planners simply don’t ask for referrals. Clients can therefore be left with the false impression you don’t want to be referred to others.
- Clients are concerned
Some clients might be worried that by referring you to others the quality of service they receive from you will be diluted.
- Not knowing who to refer you to
Some clients might be worried about referring the wrong type of people to you and therefore make no introductions at all, for fear of getting it wrong.
- Clients don’t know the value you add
If clients don’t know who to refer you to, they consequently won’t necessarily know the value you add to each type of client you work with. That makes it harder for them to refer you on to others.
- Unhappy clients
We know most clients are very happy with the service they receive. However, on the odd occasion service levels dip, the likelihood of being referred on will reduce.
There may be other clients who are happy with the service and value they receive, but for whatever reason have doubts and therefore don’t recommend you to others. If this is the case, your client survey will help get to the bottom of this.
- You’re not making it easy to refer you on
The easier you make it for clients to refer you, the more likely they are to do so. There are far more effective ways of making it easy for clients to refer you on than leaving them with a stack of your business cards.
- Clients are referring, not introducing
We know most of the people referred to you never get in touch. There are many reasons why this might be the case:
- They go elsewhere for advice
- Their online due diligence makes them feel uncomfortable
- Things change and the need for advice diminishes
- They forget!
To eliminate this problem, clients should be trained to introduce, via an email or phone call, rather than refer.
- They are worried about looking bad
If a friend refers you to another professional who subsequently fails to deliver as expected, who do you complain to? That’s right, the friend.
The same is true for your clients. You know you'll respond quickly to their initial enquiry, listen attentively to them during meetings and deliver potentially life changing advice. Your clients, on the other hand, might be worried that despite being happy with your service, things might go wrong.
- Online invisibility
People referred to you are likely to conduct some basic online due diligence. If they can’t find you online then the likelihood of them getting in touch is drastically reduced.
- Failing to impress online
Assuming point nine isn’t a problem, if you can be found but fail to impress, or worse, leave a negative impression such as poor Google reviews, this will again reduce the chances of them getting in touch.
- Out of sight, out of mind
The more frequently you can contact or be in front of your clients, adding value, reminding them of the great work you do and keeping them informed, the better. This will continue to build your brand, strengthen relationships and emphasise why they work with you, increasing the chances of them referring you to others.
- Not saying thank you
Clients who refer you on should be warmly and sincerely thanked. That might be a call, a handwritten note or a carefully chosen gift. Either way, their efforts should be recognised.
And on a related subject…
To incentivise or not?
We often get asked by clients whether they should incentivise clients for referring them to others.
Historically our response has been to suggest thoughtfully thanking the client rather than incentivising. However, we’ve probably been imposing our own preconceptions, which is wrong, and have changed our view.
Over the past few months, we’ve seen how some firms have successfully (and elegantly) incentivised clients. The incentive is usually in the form of money or vouchers either paid to the client or to their preferred charity.
I know many advisers and planners who are immediately uncomfortable at the thought of incentivising clients in this way.
But, if it’s done right, it seems to work. We therefore recommend asking your clients about whether an incentive, either paid to them or a charity, would increase the likelihood of them referring their adviser or planner on to others.
Why guess what their preference is, when you can ask?
Referrals are the best type of new enquiry you can possibly receive, so why do so many advisers and planners leave it to chance when it comes to generating referrals?
I suspect it’s because they think giving a great service is enough. It isn’t.
Sure, it’s got to be the bedrock of your strategy. But to turn clients into advocates and increase the number of referrals and introductions you receive, you must think strategically, addressing each of the potential issues we’ve highlighted above.
Why leave something so important to chance?