Referrals Refined, Part I: Identifying Who Can Help Grow Your Business
In the first of a three-part series, Head of Knowledge Labs® Professional Development Michael Futterman outlines a process for determining which clients are most likely to be sources of qualified referrals.
“It feels awkward.”
“I don’t want to look like I need the help.”
“They aren’t going to like being asked.”
“I always forget to do it.”
There are few topics that generate more excuses, evasions and explanations than referrals and how to get more of them. Ironically, as consultants, it’s also one of the most common questions we hear around the topic of “How can I grow my business?”
It’s no secret that existing clients are the easiest way to gain new clients. After all, they know your business and whether you’ve done your job. They trust you. And they likely socialize with other people who have the level of assets and type of lifestyle that you (if you are doing your marketing correctly) already understand and cater to.
Still, the common refrain in the industry has been, “Don’t ask for referrals,” the argument being that it cheapens your brand and clients don’t like it. Even our firm has advocated a strategy of “ask for advice, not referrals.” The concept behind this strategy is that when you ask for advice, you’re giving clients a sense of stewardship for your business by offering them a way to participate in building it. In essence, you’re catalyzing their imaginations, which is your greatest asset for quality client acquisition. And while I’m a strong advocate for following this approach, it won’t be effective if you don’t have a process in place first.
The Importance of Process
In addition to the obvious and self-preserving instinct to avoid discomfort, one of the main reasons many of us don’t ask for referrals is because we don’t have a process for doing so. We think simply putting “we always welcome introductions to your friends and family” on our stationery or our business cards will do the trick. Or that asking “Hey, do you know anyone who would benefit from my services?” once in a while will somehow cause a lightbulb to go on in our clients’ minds and they will magically reveal 10 qualified clients who are just waiting for an introduction to a financial professional like you.
But those techniques don’t work for three main reasons:
- They don’t help identify the most likely clients to offer referrals.
- They fail to activate clients first.
- They lack specificity in what the client should do and how we are going to follow up.
The first step of identifying clients who are most likely to offer referrals can help you focus your energy and effort on the types of individuals you want to replicate. These are your favorite clients to work with – the ones who are warm, grateful and generous – because they also love working with you.
Maybe these are clients you’ve identified as “connectors” who enjoy making introductions. Or perhaps they’re the clients who are always looking to help others by donating time and energy to causes they are passionate about. Or they are simply pleasant to work with and are always showing great appreciation for you and your staff.
Beyond these characteristics, it’s important to ensure that these favorite clients can provide qualified referrals – that is, prospects who are going to fall above your “profit/loss” threshold when you calculate how much your time is worth.
To get started with the identification process, I suggest doing the following:
- Download a list of client households and sort them by revenue.
- Working from the top of the list, identify those who fit the criteria outlined above (warm, grateful and generous).
- Refine your list further: Do the clients on your list share a common interest? Are they in an industry that you have expertise in? Do you want more clients like them?
For many, these will seem like obvious steps to take. But what some may fail to appreciate is that this exercise represents a more refined and curated approach to growing your practice. It is essentially a process for determining who you permit to become a client. Treat your business like the doorman at an exclusive club: Admit people selectively based on how they fit with the clients you already know you enjoy working with. Do this and your practice will forever be interesting and engaging.
Harvard professor, business strategist and author Michael Porter has proposed that the reason people resist making choices is because, “in choosing, [we] focus on what they give up rather than on what they gain.”1
I agree with Porter, and I’d like to turn his assertion on its head: Yes, choosing forces us to focus on what we give up, but when it comes to referrals, it can also help determine who should not be helping grow your business, which is perhaps just as important as identifying who should be helping.
In part two of this series on referrals, we’ll explore the process further and focus on the value of activating these key clients so that when the time comes, they will be eager to help.
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