Why You Need a Referral Strategy and How to Develop One

Why You Need a Referral Strategy and How to Develop OneMany advisors are uncomfortable asking clients outright for referrals, finding it hard to strike a balance between being aboveboard about wanting to acquire new business and being pushy or needy.

If that sounds like you, then you need to change your mindset because there are only three ways to gather new clients: From existing clients, people you know who are not yet clients, and people you don’t know yet. The best way by far to find new clients is via referrals.

According to 2018 Affluent Research findings, the majority of wealthy clients initially become aware of their advisors via word of mouth. They’re unlikely to respond to ads or be receptive to advances from unknown advisors. That’s why if you don’t put referrals at the heart of your business, you might be missing out on attracting higher net worth clients.

If you’re looking for ways to keep your appointment book full, check out ’12 Prospecting Ideas for Financial Advisors’ mp3 compilation.

Here are a few things to remember when putting together a referral strategy.

#1. You need to work hard before you can earn your referrals

People are generally unwilling to recommend someone they’ve only received mediocre service from. They may not pull their account with that person or company, but they wouldn’t recommend them either. They don’t feel they warrant a referral – plus – they don’t want a friend or colleague to be disappointed with their recommendation.

In exactly the same way your clients won’t refer you unless they feel confident their friend, colleague or family member would be delighted with your service. So, before you can ask for a referral, focus on cementing your existing client relationships.

Be passionate and committed. Be trustworthy and go that extra mile to make clients feel special. Do this consistently and you will become highly referable.

#2. Put your clients at the heart of your referral strategy

When you ask for a referral don’t see it as asking for a favor. By asking for a referral you’re seeking to provide a valuable service to a client’s friend, family member or peer – a service that could change their lives for the better.

Ask clients if they feel you have provided them with great service. If you’ve put in the relationship groundwork, they will undoubtedly confirm it.

If you need help building strong relationships with clients, check out the mp3 compilation, Mastering Client Relationships: What Elite Advisors Do.

Then ask them if they know of anyone who could benefit from your advice. If you’re doing a great job for your clients, it surely makes logical sense that they would want this same service provided for the people they care about. Perhaps they know someone who should be saving for retirement but isn’t?

As an incentive you could offer a complimentary review for any prospective client they refer you to. If you can, get your client to call their friend when you’re together (maybe at the end of a productive meeting) because there can be no better endorsement than that.

#3. Be proactive and monitor your approach to gathering referrals

Make a set plan to periodically remind your roster of clients that you’re looking for referrals. Then monitor and track the progress and success of your referral strategy. As in everything to do with your business, if you aren’t keeping tabs on your success metrics, you won’t know how to change things for the better.

If you are wondering where you should focus and what your most critical activities should be, watch the Webinar Replay, Sticking to The Basics: All You Need for Success.

The bottom line is that asking for referrals should be a big part of growing your client list. If you’re not devoting time and energy to this essential task, then you risk missing out on an important way to reach potential clients. It takes perseverance and a willingness to encounter discomfort to build a creditable business. Asking for and getting referrals is a bittersweet part of your job. If you haven’t already done so, take some time to develop a referral strategy right away.

Watch this one-minute video to learn how Don Connelly 24/7 will help you hone your prospecting skills and get more referrals.

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  • I’ve known and worked with Don since 1991 when I became Putnam’s Top Bank producer in the country. His advice is invaluable. I remember his line, just give us a small piece of your business and I did. Well in the next 3 years because of him, Putnam’s service and long menu of funds, I went on to become Putnam’s Top Bank producer 3 years in a row. It was he, Bob Goodman, Lou Tasiopoulos, Mike Vessels and so many others that helped me achieve wonders and make a name for myself and Putnam.

    • Thanks for reading and for leaving your comment, I’ll pass it on to Don – I am sure he’ll appreciate your kind words!

  • Thanks, Brian. That’s awesome.

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