11 Best Practices for Gathering Referrals

11 Best Practices for Gathering ReferralsPeople trust recommendations from people they know, and the lifetime value of a new referral customer is higher than of a client acquired in another way. Despite this, advisors shy away from asking for referrals – citing that to be one of their most awkward tasks.

The good news is that, if asked at the right time, most clients would be happy to advocate on your behalf. Less than a third of advisors ever ask though. Don’t act like the majority – because referrals are at the core of growing your business. In this post we’ll look at some best practices for gathering referrals.

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#1. Create a referral strategy

Don’t, like so many advisors, rely on growing your business via ‘accidental referrals’. This is too big an aspect of your business to be left to chance. Be disciplined about the ‘how, when and why’ of gathering referrals.

Set timely reminders on your calendar so you remember to ask for referrals on a regular basis. Then monitor and track the progress of your efforts. If you don’t know what your success rate is, you won’t know how to change your approach and become better.

And don’t give up on a referral campaign too early. Like a cake in the oven, it needs time to bake.

#2. Know when to ask

Until you’ve established trust and rapport over time with clients, they will be unlikely to refer you. They won’t put their necks on the line and refer someone who could potentially embarrass them. Once they know you, like you, and have confidence in your abilities, they will be ready to recommend you to others.

It can take years to build up this level of rapport with clients – but it’s essential that you wait until you’re in their inner circle before broaching the subject.

#3. Learn to become referable

Put all your efforts into finding out your clients’ goals and become an enthusiastic advocate of theirs. Make clients feel that they are your number one priority. Show you care, because if you care more than people expect, you will naturally become highly referable.

Treat your clients like members of the family. Call them for a catch up. Go that extra mile like the advisors who help clients with big purchases of a car or real estate. Or the advisor who hires a social worker to help with a client’s health commitments.

Friends don’t discuss money. People won’t refer ‘the professional’ you to their friends and family. They will refer the ‘real’ you – the ‘you’ they like. Let clients see the person you are – don’t talk about portfolio balancing, talk about where you grew up. Become the person your clients would love to include in a dinner party with friends. They don’t want you there because you can talk numbers, they want you there because you’re charming and tell fascinating stories. The fact that you’re a financial advisor is an aside – and if someone at the party happens to be on the lookout for a good advisor, then all the better.

If you differentiate yourself by being the most caring advisor, you will get more referrals than anyone else.

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#4. Make it easy for your clients to refer you

Reinforce to clients that there’s only an upside to referring you. If referred, you will provide their friends and family with the same 5-star service that they’ve come to expect from you.

#5. Have a niche

You will become significantly more referable if you have a specialization and become the ‘go to’ advisor in that sector. You will become known for what you do. A great heart surgeon has no need to advertise his or her expertise, they’re the first choice for any patient wanting a heart surgery.

If you, too, provide outstanding service to a specific group of people, you too will be known as the best in the business – and the natural choice for people in that sector.

#6. Don’t ask all and sundry for a referral

Don’t ask every single one of your clients for a referral. Be selective when you ask for referrals and only ask clients you have a strong relationship with.

Also, be realistic about the prospective business they could give you. Asking a client who only awards you a small percentage of their investments to manage will prove fruitless. You need to speak to your high worth clients with high net worth friends and colleagues.

This also makes sense because wealthier people tend only to hire someone via referral. They are unlikely to go to seminars, or source someone online. They will only trust an Advisor referred by someone they trust.

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#7. Shift the focus from you to your client

Don’t put off asking for referrals because it seems too ‘salesy’ or appears to diminish your client’s opinion of you. If you ask in the right way, you won’t look desperate or need to feel you’re burdening clients or making them uncomfortable.

Shift the focus from yourself onto the person you’re asking. Let clients know that you accept referrals as part of a full-service commitment. Do they know anyone who could benefit from some solid financial advice? If so – you’re happy to help.

You could back this up by adding you are happy to provide anyone they refer with a free hour consultation. This gives the impression that, while extra business will not harm you – it’s more a case of adding an extra level of support to them, their families and peers.

It might help you to create a written ‘referral statement’ you can practice in advance. Start by asking a client if they feel you add true value to their lives. Are they happy with your service? Once you receive an answer in the affirmative, ask if they know anyone who would also appreciate having this same added value in their lives. By practicing in advance what you are going to say, you will become more confident and comfortable when introducing the subject of referrals.

#8. Build confidence in your own abilities

Until you’re 100% confident in yourself – i.e. that you are a great source of advice, knowledge and wisdom – you won’t be able to confidently convey your worth.

In reality, you may have expertise and truly add value to your clients’ lives. But if you don’t secretly believe this yourself, you will lack confidence and come across negatively.

Make it your aim to overcome your fears and insecurity because fear will cripple your career. Reinvest time in yourself and your education, and practice your soft skills. Always remember you’re not selling products; you’re selling yourself.

Rise above negativity. Develop a strong self-image. Dress smartly and present yourself as bright and confident. If you believe in yourself, you will become someone clients will be proud to introduce to their friends.

#9. Thank people for referrals

It pays (and is common courtesy) to thank people properly.

Show appreciation and let clients know when their referral works out or give them an update. Be sure to clear it with your Compliance department first, but you could select an appropriate gift – not something expensive, but something that resonates with a particular client. For example, if you know they’re diabetic, buy them a box of diabetic chocolates.

Personalization is key when it comes to saying thank you and a handwritten note will also go a long way.

Caring more than people expect you to care is one thing that they don’t teach you in training but is paramount for your success as a Financial Advisors. Get the mp3, A Blueprint for Success: What They Don’t Teach You in Training, to find out what exactly are the basics you need to master for success and how to go about mastering them.

#10. Create a board of directors

Create an informal board of advisors. Ask your favorite clients if they will do you the big favor of serving on your board to help you grow your business. Tell them you value their opinion and would love to hear any ideas they might have on how to meet people like them.

Do they think you should be holding more seminars? Can they take you to meet the people you need to meet?

Ask for advice, not referrals. Explain to clients that you would love to do business with more people like them, so ask them if they could help you market yourself to these people. They might say they know just the person you should speak to. People are flattered when you ask their opinion and most people will be willing to help.

11. Create a loyal client advocate program

Don’t be afraid to say that you grow your business by word of mouth.

Hold a dinner for clients who give you a referral during the year. On the invitation tell them that you consider them your most important clients, that you grow your business via referral and that you appreciate the efforts they’ve made on your behalf.

Be sure to clear any initiative with your Compliance Department first.

Don’t gather referrals on a wing and a prayer – good things won’t happen by chance. A successful client referral program should be the lifeblood of your business so never treat referrals as an afterthought. Create a strategy; maintain consistent effort and the payoff will be worth it.

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