Referrals may be the most basic form of growth marketing, but they’re anything but simple.
The idea of asking your customers to tell their friends and family about your goods or services is presumably as old as commerce itself. But the transactional nature of business relationships can make asking for favors that fall outside the scope of traditional compensation awkward, to say the least. From a client’s perspective, they’ve already paid you for your work, why should they take time out of their busy life and put their personal reputation on the line recommending you when they get nothing out of it? In fact many people might even think, if they bring you more business (more clients), will that negatively affect their relationship with you by decreasing the amount of time available to work on their accounts.
The desire to avoid burdening or alienating clients is the single biggest reason why advisors do not ask for referrals. Indeed, surveys show that only 1 in 10 advisors are proactively asking for referrals. However, those who do reach out for referrals tend to reap major rewards—referrals are the number one source of new business for financial advisors. Simply making your clients aware you are looking to grow your business is often the easiest way to put clients in the referral-making mindset.
The key to making referrals work is to ask the right way. Here are some suggestions to help you optimize your approach to this important driver of business growth.
Make Sure Your Clients Are Satisfied
If you’re worried that asking clients to refer you might damage your relationship with them, ask yourself whether it might be because they’re not so impressed with your service that they can in good faith tell their peers to do business with you. This is possibly the biggest risk of asking for referrals, as it can bring to a head a situation that’s been simmering until now. It can cause clients to take a hard look at not only do they feel comfortable referring you, but do they themselves really need your services either.
So before you start asking anyone for a referral, take an honest look at your current practice. If you’re not getting outstanding results, hold off on the growth strategy for now, and instead work on improving your current service. One way you can do this is by gathering feedback. Asking for feedback during mid-year reviews, for instance, can help you gauge your clients’ opinions about your services.
On the plus side, improving service alone, even without actively asking for referrals, can help build word of mouth (i.e., the organic chitchat that occurs naturally between friends, family and colleagues that can influence your reputation and drive—or drive away—business.)
Be Selective With Whom You Ask
Not everyone has the time or the desire to be your advocate. But an advocate is what you need if you want people to share your information with their community. That’s why retail brands enlist advocates or “influencers” to drive business. These people love the brand and are connected with many other people that might like the brand, so it makes sense for brands to center their marketing efforts around these individuals.