I believe that, right this minute, you’re sitting on a mountain of latent referral potential. And, I believe that you can double – or even triple – the number of new clients you attract through client referrals simply by tapping into that existing opportunity.
If that kind of growth sounds too good to be true, read on. If, however, the thought of that many new clients strikes fear in your heart, focus on getting the infrastructure right and come back to this some other time. I’ll be here.
Rather than spending too much time trying to convince you with my own views on the topic, today I’m going to let the numbers do the talking. And these are the kind of numbers that matter, because they come directly from the people who make referrals – your clients. (The data is drawn from the on-going research we do among investors, in this case the input from just over 1,000 US investors in 2015.)
Here’s what we know.
1. Clients are comfortable referring.
Seventy-eight percent of clients say they are somewhat or very comfortable providing a referral to their advisor. It’s just that they don’t. Being ‘comfortable referring’ is a necessary, but clearly an insufficient, driver of actual referral activity.
2. Huge numbers of clients are already referring.
Thirty-three percent of clients said they provided a referral to their advisor in the last 12 months. The same is probably true in your business, however it’s likely that you didn’t meet the vast majority of those referrals because they were never introduced.
3. People who refer do so more than once.
The clients who said that they referred last year referred an average of two people. Ten percent of clients said they referred four or more people!
4. A referral is different from an introduction.
Just 19 percent of clients, who said they referred, made a direct introduction. The others mentioned your name or shared your contact details. Nice, but not good enough.
5. Clients don’t refer because you ask them.
Only eight percent of clients said they referred because their advisor asked for a name. Nearly four times as many (43%) referred because a friend or family member had a problem and they felt you were the solution.
6. The problem isn’t investment returns.
When clients spot a referral opportunity it’s typically not due to a problem with investment returns. Going through a major life change (18%), concerns about being ready for retirement (31%) or being unhappy with the current financial plan/no plan (27%) all beat out poor investment returns (11%) as the problem clients were trying to solve when they referred.
7. Clients don’t know who to refer (and you may not be helping).
Only 16 percent of clients say their advisors have described the kind of client they are hoping to add to the business. We need to help them out a little.
8. Clients would refer more often, if only they knew who to refer.
Thirty percent of clients say they would refer more often if they knew who to refer. See #7.
9. Clients don’t need to be asked for a referral before providing one.
Seventy-eight percent of clients say they wouldn’t necessarily wait to be asked before providing a referral – if they thought you could help. People are more comfortable talking about money than you might think.
10. Clients are ready to refer, right now.
Just over a third (36 percent) of clients can think of someone who needs you right now. We need to make it easier to refer.
We’re Trying to Solve the Wrong Referral Problem
The data seems clear. When it comes to referral growth, we’re focusing on the wrong problem. It’s easy to focus all of our energy trying to understand how we can get more referrals. If, however, more than a third of your clients are referring today, that’s not exactly the problem. There are two far bigger issues.
- How we can tap into the referrals that have already been made and translate those into introductions?
- How can we tap into our clients’ propensity to refer and make those referrals easier and more meaningful?
And while I could devote many hundreds of words – and too much of your time – to this topic, I’ll offer up one strategy. There are many strategies that will work so this is simply an example of how we may need to think about referrals if we’re going to leverage the real opportunity and tackle the problems the data uncovered.
One Referral Idea
- Create a one question poll that you send to all clients to understand the big issues. You can do this for free using www.surveymonkey.com. The question should get at the big issues on the minds of your clients. For example, it might be one of the following:
- When you think about your financial future, what is your biggest concern?
- When you think about your children and their relationship with money, what is your one biggest concern?
2. Select the top three concerns and find one outstanding article that addresses each issue (or write some of your own). Now you’re adding value and creating shareable content.
3. Identify the clients who raised those concerns and send them the one article that focuses on the one issue. You’re demonstrating that you listened.
4. Suggest those clients pass the article on to any friends and family who may share the same concern. Now you’ve increased the chance of an introduction.
If you want to take it one step further….
5. Identify the one biggest issue and invite clients to a webinar on the topic. Create an invitation they can easily forward to others. I provided some specific ideas of cheap and easy technology to make this happen in a recent post. Now you’re connecting with people who provide their contact details to participate.
This is one strategy among many but I suggest it to focus in on two of the biggest challenges we face – translating referrals into introductions and focusing on solutions. By offering something of true value, that is directly tied to the issues that your clients have identified and is easy to share, you’ll make the process a lot easier.
Thanks for stopping by,