There is one more strategy that we have not discussed but it is very important. Julie Littlechild notes that another common driver for a referral is helping a friend. Most referrals start with someone discussing a problem and the client suggesting the advisor as a solution.
Unfortunately, many of our clients may not actually know what we can help with. They may have trouble distinguishing between the problem and the tool for its solution. In the words of Theodore Levitt, a Harvard professor: “People don’t want a quarter-inch drill. … They want a quarter-inch hole.”
So the clients may not be aware of what you offer them unless you train them to recognize signals by doing certain things. For instance, you could discuss:
• Assisting their parents with their retirement.
• Making substantial contributions to a charity
• Dealing with a chronic illness in the family
• Wanting to “get off the treadmill … ”
Unfortunately, most clients don’t actually recognize the signals and miss opportunities.
Referrals That Don’t Arrive
Finally, all the numbers we have seen so far suggest that there might be some “leakage” in our referrals. It may be that referrals “check us out” but never actually engage. Some of the leaks may be due to poor follow-up on our part. For example, only 38% of firms in the industry track their leads, according to our 2019 survey.
Who Makes Referrals Happen
We started with a strong statement that referrals should be prioritized over “corporate” marketing, but this is where we need to state that referrals are marketing. For a referral to arrive, we need to make sure that prospective clients who are looking us up actually find a picture they are comfortable with. This is where our website and other presences should shine. Do we tell a compelling story of who we are? Do we seem relatable? Do we speak to our expertise in the specific market we specialize in? Time and again, advisor websites are bland and unrelatable. They don’t need to “sell” to prospects, but unfortunately they often “un-sell” those who actually want to reach out.
Finally, we need to ask the question: Who is responsible for referrals? Even more important, if referrals are the No. 1 opportunity for growth, why do we look at “business development” as being very different and separate from serving clients? This has also been the conundrum that frustrates me a lot when working with the emerging leaders in our G2 program. If 50% of new clients originate from existing clients, how can someone be “great” at service but not be a “business developer”?
Referrals are key to the growth of our industry. They are not, however, just the passive result of “doing a good job.” On the contrary, a strong pipeline of referrals is the result of purposefully creating special moments for clients and training them to tell a story that reflects well on who they are and where they belong. In the words of David Maister: “If your clients are not telling their friends about you, maybe your work is not as great as you think it is.”