How to generate referrals: Six proven tactics

(June 2005) Referrals are the lifeblood of the successful financial practice. A steady stream of referrals is an indicator of success and client satisfaction. On the other hand, sporadic referrals are an indicator of business stagnation, and sometimes even contraction.

Securing a steady stream of referrals must be a top priority. But how do you do that? You must encourage clients and centres of influence to become comfortable talking about you. The more comfortable clients are talking about who you are, what you do, and how you do it, the more persuasive they will be when they communicate that message to friends and family.

Listed below are six tactics for getting clients and centres of influence to deliver your value message to their friends and family. All of them revolve around the idea of stimulating conversation — about you.

Ask for referrals The simplest tactic of all is one that far too many advisors overlook. Contrary to popular belief, most clients are more than willing to refer those professionals with whom they share a close personal connection. The key word here is personal.

Rule #1 when asking for referrals: You should first ask for a referral the moment a prospect becomes a client. Rule #2: Ask continually throughout the relationship. Ask your clients about their friends and family. Get to know their interests and hobbies. Take an interest in their children, their work, and their hobbies. A strong personal relationship will make it easy to ask for referrals.

Ask for testimonials One "back door" referral tactic is to ask for testimonials instead. Once clients have written a testimonial for you they will feel more comfortable when talking about you with close friends and family. In fact, since you have been given a copy of the testimonial, you’ll be able to acknowledge the great words they speak of you and ask them to simply repeat them to other like-minded people.

Create a "Network Hub" Target prospects who are the "hubs" of larger professional networks. You leverage your referral power by working with these people.

Niche market business owners, for example, directors and board members of professional associations, corporate executives, fund raisers and local celebrities are natural communicators and "plugged in" to their respective communities. Your relationship with them serves as a natural introduction to all the people in their respective networks.

Develop and articulate your unique business process — and communicate it to clients Clients should believe that you are unique and your way of delivering wealth management and client service is absolutely different from others. By articulating that unique process, and educating your clients about it, you become distinct in a commoditized and crowded marketplace. A unique story makes it easy for clients to communicate that distinction to friends and family.

Get published One of the best ways to generate referrals from centres of influence is to submit an article or column to a newsletter or magazine. Having your name in print builds professional credibility, and can serve as an effective icebreaker when trying to establish initial contact with members of a given professional group. This can lay the groundwork for a more detailed discussion, and hopefully a new business relationship later on.

Create a "referral club" A referral club is an extremely effective tactic, particularly for established advisors or those who provide "niche" services. Cultivate a group of top professionals in your region including accountants, lawyers, real estate professionals, bankers and mortgage brokers. This "best of the best" group functions as a closed-door association that encourages members to make referrals within the group. It’s easy to see how a few lunch meetings with group members could result in dozens of qualified referrals in a short period of time.

Keep in mind that the key to generating referrals is to be authentic. Be true to yourself, and don’t try to be someone you’re not. While all of the tactics above have been proven to work for real-life advisors, it’s important to discover what works for you. Simply being yourself is the most effective referral tactic there is.

Jeff Thorsteinson is the creator of the YouFoundation, an organization that has helped advisors build world-class practices through innovative concepts, tools, and systems since 1993. Contact strategicadvisor@youfoundation.com or 1 800-223-9332, ext. 21, for more information to help you build your referral business. Or visit the website at www.youfoundation.com.

(06/24/05)