You have all learned that the best and perhaps the easiest way to grow your client base is through referrals. Undoubtedly, clients acquired through referrals convert easily and quickly. There are numerous ways to ask for a referral. But, did you know that asking for referral explicitly could not be such a good deal for your practice?
Stephen Wershing, author of “Stop Asking for Referrals’ who coaches advisers on referral marketing says that asking for referrals is the biggest mistake which advisers make. According to Stephen, advisers should engage their clients in a ‘referral conversation’by discussing the solutions they can provide to their prospective clients.The idea is to obtain a spot in your clients brains.
Julie Littlechild, CEO and founder of Advisor Impact (a research firm) in her study of 1000 clients conducted in 2010 found that four out of five clients (91%) were comfortable providing referrals but only a quarter (29%) of clients actually provided a referral. The study seems to suggest that directly asking for a referral may not be entirely effective.
Most businesses including advisory get a maximum of their clients through referrals but not many of them have a formal strategy in place for getting referrals.
Stephen, in his presentation posted on his blog, shows that 48% of clients refer if their friends specifically ask for it and 58% people refer an advisor if their friends describe a financial struggle to them. Interestingly, a mere 2% of clients refer when advisers ask!
Stephen draws his point across by an analogy of a restaurant. People are most likely to refer a restaurant to their friends if they have a great time there. However, they would feel a bit annoyed if the waiter, along with the bill, brings a piece of paper and pen to get some referrals of people who like to eat out.
The key to getting referrals according to Stephen is by identifying your niche first.
You have to find what you are good at and for which kind of clients you can provide such solutions to. What is it that you can provide which other advisers can’t provide? There is no straightforward answer for this and you have to work towards it. Stephen says that words like trust, experience, customer service, financial planning do not necessarily differentiate you from other advisers.
For instance, you may say that you target women clients but that’s not a niche in itself. It’s just demography. You need to dig deeper and see if you can cater to working women in a particular sector or profession. There are advisers who cater exclusively to dentists, families which are expecting a child, people going through divorce, athletes, etc.
Once you define your ideal client and your differentiating factor, customize your referral pitch accordingly. But one thing to remember is not to ask directly “Can you refer me to three people who might think could benefit from our services”. Instead ask something like this “Do you know some people who are facing a similar challenge like you whom we can help out”
Finally, Stephen advises that advisers should become good at something, promote it and become known for it. If you manage to register a particular solution which you can help your clients in their brain, referrals will come in without you even asking for it.
