How to Escape from the Endless Networking Loop

Today I'm featuring some words of wisdom from Horsesmouth senior editor Nicole Coulter, written in response to a great networking question/challenge we received this week from Peter, a new Horsesmouth member. 

Peter wrote:

"My biggest challenge is converting prospects I meet on the golf course to clients. I moved my family (lived in same town 40 years) to [a town where I didn't know anybody] for lifestyle change 2 years ago. I moved into an affluent private country club. I'm a low single handicap and meet and play with many different groups of players and seem to be well liked. I get asked "what do you do" a lot, and "I'm a financial planner" falls out of my mouth. I believe I just wasted an opportunity to differentiate myself right there. I need help crafting a pitch that creates more curiosity or interest from prospects."

Nicole Coulter offers this response:

"Getting out of the endless networking loop is difficult for many advisors. From what you've described, it sounds like you need to develop an effective way to Get Beyond Small Talk—and Get Down to Business. I think there are valid ways to introduce financial subjects that people care about—even in casual settings such as a golf course.

Here are a couple of suggestions:

• One advisor this week told me when people ask him what he does for a living, he says, 'I reduce stress.' People are naturally curious to know how he does this. He proceeds to tell about his process of creating investment plans, and making sure all their financial bases are covered, etc. Think of a tangible or intangible benefit your services provide and work that into a compelling description of what you do for a living. Another example: 'I help busy people accumulate and distribute wealth.'
• Another advisor gets out of the endless networking loop by saying sincerely: 'You know what? I like you. We've known each other awhile, and I think it would make a lot of sense to work together. Why don't we sit down sometime and see what kind of plan we could come up with?' Bold, yes. But this advisor actually has quite a few mutual fund wholesalers as clients exactly through this strategy. And since they undoubtedly know hundreds of other advisors they could have turned to, it's a tribute to his effectiveness.

Of course, one of the best ways to win new business is by being genuinely interested in learning about the other person, asking salient questions about their life, family, business, etc., and offering ideas and suggestions when the opportunity presents itself. The key might be to go into the networking situation with an idea of what you want/need to know about people, and then keep a networking log so you remember facts about them, their children's situation, problems they might have mentioned about work, etc. Then bring up the subjects when you see them again: 'So, how is your son doing with the new baby? Did your company find a new insurance vendor? Did your brother sell his business?' Etc." It's long-term targeted approach."

The "network mapping" approach Nicole describes above is also at the heart of the Automatic Referrals process.  Try it—it really works.

And if you, like Peter, are searching for a better way to get attention when people ask what you do, here are some resources that may help (free registration required):

5 Steps to Your Own Red-Hot Elevator Statement
When you create a sizzling elevator statement, you motivate prospects to ask for more information and come to your office to start working with you. It's not easy—it'll take a day or so of hard work. But here are the step-by-step details on how to do it, plus seven sample statements to get you pointed in the right direction.

Brag Your Way to Your Next Prospect
Nobody likes a blowhard, but learning to talk about your accomplishments will help generate interest and get you more face time with potential clients. Advisors in a recent Horsesmouth discussion forum shared their own "brag-a-logues."

7 Steps to a Compelling Elevator Pitch
Want to get and keep prospects' attention?  The secret is saying just enough to hit a nerve—and not much more than that.

Some networking essentials

The Street.com recently featured an article from Entrepreneur magazine, "Upgrade Your Networking Mind-Set," that provides a nice, encapsulated reminder of some of the most important networking principles:

• The law of reciprocity or 'givers gain' approach. Don't worry so much about what you're getting out of your networking relationships, at least not early on. Focus exclusively on giving instead. You'll be amazed at the results.
• Network diversity. "Look for groups that don't target people just like you. In this way, you'll broaden the net you seek to cast for referrals." Bust out of your networking rut.
• Farming mentality. "For networking to yield extraordinary success, your mentality must be that of a farmer... It's a long, drawn-out process. There's no quick return."  Networking is a powerful method, but it takes real time, energy, and patience to do it right.

The Entrepreneur article contains a number of other useful tips for making your networking efforts more effective: seek to become visible and credible; understand and articulate your value in a targeted way; and sit down for one-on-ones with people you know superficially to explore possible deeper connections.

And to throw in my own two cents: Do try to think of networking as a process, not an activity.  The farming metaphor really is apt (something of which I'm acutely aware these days, as I'm finally harvesting the tomatoes, beans, and squash from my garden that I spent the last two months tending). You have to find the best location, cultivate the soil, plant the seeds, water and fertilize them, and be patient before any harvest will be possible. 

Don't rush it (why bother with unripe fruit?) and don't expect results too quickly.  Your efforts really will pay off in time.

Advisor question: How do I make my referral thank-yous memorable?

During our recent webinar on Morningstar Advisor, "How to Trigger Natural Client Referrals by Conquering Referral Anxiety" (replay available here), my colleague Sean Bailey and I were unable to answer a number of questions submitted by the advisors in attendance due to time constraints.  So I'll be answering those questions here on the Automatic Referrals blog.

This one is from Linda T.: "When I receive a referral, I send the client a thank you after I have met with that referral.  Are there any ideas you have for how to make that thank you memorable to ensure I get more referrals?"

Linda, it's great that you're aware of how important it is to say thanks for referrals.  Not only is it basic manners, but it really works.  At a bare minimum, you should be sending a handwritten thank-you note on fine stationery—but many advisors do find that a small but memorable thank-you gift can have a very positive impact. (In fact, I just spoke with the head of a brokerage firm last week who told me the firm has actually begun sending referral thank-you gifts (in the advisor's name) such as barbecue tools and MP3 players, and that while he initially thought the idea was "kind of cheesy," the clients are loving it and the referrals are flowing.)

We actually addressed this question on the blog a couple of months ago, during our Blog-a-thon and referral clinic, with the help of successful and very creative independent advisor Jay Eshbach. Check out his post, "How to Provide a 'WOW' Factor to Thank People for Referrals."

The one thing I would add, Linda—and this is my golden rule for all gifts all the time—is to try to take each client's tastes into account.  Yes, you can offer the same cool thing to everyone, and they'll appreciate it... but they'll appreciate your gift more, and feel even more special, if it reflects an understanding of who they are and what they care about.  That takes more effort, of course.  But if you've received an account worth thousands or tens of thousands of dollars to your bottom line thanks to a client's generosity, isn't it worth a little extra work and thought?

If you're drawing a blank, here are a couple of articles (free registration required) full of innovative ideas for creative personalized gifts:

20+ Ways to Build Client Relationships With Gifts
Why wait for the holidays to let your best clients know you're thinking of them? Here are more than 20 ideas on how to strengthen ties through gift giving year-round.

Holiday Gifts for Clients: Where to Buy the Best
Don't get caught like a reindeer in the headlights when it comes to shopping for client gifts this holiday season. These innovative ideas will not only please your clients, they just might generate some prospects as well!

How do I Get Clients to Refer "Up"?

We're continuing to revisit some of the great questions we received during our Referral Clinic and Blogathon in May and June.

Ginita Wall will be responding to today's question, which was sent in by Caragh, an advisor in Syracuse. A CPA, CFP® and CDFA practicing in San Diego, California, Ginita is co-founder of the non-profit Women's Institute for Financial Education and author of eight books, including The ABCs of Divorce for Women.

Caragh's question: My client has quite a few friends and associates who are much wealthier than her, but she is more comfortable introducing us to people closer to her worth level. How do we get her comfortable with referring us up?

Ginita Wall's answer: Well, let’s look at it from her perspective. "Who am I to give advice to people who are more successful than I am?" she is probably thinking. And in a way, she’s right. So the trick is to move it from a professional referral plane to a more social one.

Here’s an idea: When her birthday rolls around, tell her you’d be happy to host a celebratory luncheon in her honor at a local eatery for her and five of her friends. And you might even suggest some names of her friends (if you know them) that include the wealthier ones, as well as those nearer her income level. You are looking for an introduction, and a social context is great.

Here are some other social events that have been successful:

• charter a boat for a ride around the lake
• take a special group tour of the local Wild Animal Park
• sponsor a spa day in a local hotel
• afternoon tea at a local hotel

Anything that will get her off the plane of thinking of introductions being in a strictly business context is great.

Good luck!

Editor's note: One advisor, Phoenix-based wealth manager Becky Gaylor, actually used an idea like this as a full-on marketing strategy. For one year, she hosted birthday parties each month for top clients, at a budgeted cost of roughly $1,000 per event. She phoned the clients a month in advance and offered to host a party for them and 10 to 12 guests as a way of saying thanks for being one of her best clients. Five years later Gaylor says she's still getting referrals from these events.

You can learn more about Gaylor's strategy and other great marketing ideas in Nicole Coulter's Horsesmouth article The Best Marketing Money I Ever Spent (free registration required).

Meeting "Ivy League Moms" by referral

According to HNW Wealth News, researchers have uncovered a brand-new demographic niche: "Ivy League Moms."   These are highly educated women who have left high-powered careers to stay at home with the kids for a while.  They're affluent, they are quite involved with the finances in their households—and guess how you need to find them? 

Yup.

Direct mail "won't work" to drum up business" in this niche, according to consultant Ekaterina Walsh, the author of the study. "Ivy League moms tend to use referrals to pursue most of their needs, whether for hairdressers, doctors or schools."

Walsh goes on to explain that special events can be quite effective with this demographic segment,

"but they have to be 'made over,' Walsh says. Going to a local restaurant will work if it's painted as a night away from the kids, and providing childcare for the event is a plus. These women crave adult conversation, so tacking on a cooking class, book discussion or even a second workshop based around their issues, such as re-entering the workforce, can draw their attention."

Take a glance at your client list. Do you have any "Ivy League Moms" in your book?  If so, you can bet they know others just like them.  If you have even a few, consider a special "invite a friend" event. Think about holding it in a unique place (free registration required), and/or partnering with another businessperson (what about a spa owner? High-end hair stylist?  vineyard owner?) to make it special and memorable and make your guests feel pampered. That's something stay-at-home mothers also crave!

You can also try a daytime event at a location where children can come along, but make childcare available.  Partner with the owner of a high-end toy store or children's clothing store, for example, or a Gymboree franchise.

The article describes some specific financial topics that may appeal to this demographic.  And don't forget that many "Ivy League Moms" have started part-time businesses from home, too, so this niche could still work for you, even if small business advice is your real area of expertise.

Finally, while you should always acknowledge client referrals, Walsh's research found that a nice "thank-you" is especially important with this group.

"Any referrals these moms send the adviser's way must be rewarded. 'Send a thank you card and maybe offer them a free trial of an ID-theft protection service or waive fees on the account for three months,' Walsh says. 'Any client would appreciate that, but it's a short cut to the heart of Ivy League moms.'"

Interested in this niche? Here are some additional resources that you may find useful (free registration required):

Case Study: Wine Tasting—How to Attract Affluent Clients
This top producer is sipping the rewards of a recent dinner and wine-tasting campaign, which yielded more than $15 million in new business. Not bad for a couple of hours of networking and less than $1,200 in marketing expenses.

Rookie Case Study: How to Build a Niche Serving Women Investors
When this successful insurance advisor made the leap into full-fledged financial planning, she focused on building a specialized practice for women. Here'show the rookie is making it work.

Money Clubs—A New Way to Reach Women Investors
Looking for a way to tap into the women's market? The new Money Clubs could be the resource you need. Here's how to get involved.

The difference between a "working by referral" business and a "word-of-mouth" business

I just read a short but astute interview in Real Estate News online with a business coach named Kim Ortega, in which she explains the difference between "word of mouth" marketing and referral marketing.  Here's how she boils it down (but do read the interview for more detail):

A word-of-mouth business is defined by salespeople who are passive and wait for referrals to come their way.... You are playing a waiting game versus having a plan of action.... In a working-by-referral business, you have a confident expectation that your actions will produce incoming business. You know who your advocates are, and you have a structure in place that allows them to help you build the quality of your business by asking them to introduce you to the type of client you want to work with.

In the long run, you work harder in a word-of-mouth business, not smarter. Word of mouth depends on chance. You will eventually learn your beloved friends and clients are not concerned about sustaining your business. You are the one who must step up and make the effort.

If you've already read Automatic Referrals, this should sound familiar. Only about 20% of your client base—your "raving fans"—will proactively refer to you. 

Why not the other 80%?  Well, it's not because they don't WANT to refer to you. It's because THEY'RE NOT THINKING ABOUT YOU.

You, of course, are hyper-aware of the need to build your business—and it's only natural to project our own concerns into other people's heads. But your clients have their own problems. In their eyes, you're not a  businessperson worried about making this month's asset goal or mortgage payment. As far as they're concerned, you're the financial expert who helps them manage their money so they can meet their asset goals or make their mortgage payment on that third house they just bought.  And that's pretty much all most of them care about. They're not even thinking much about their friends or extended family, much less you and your business.

Now, none of this is to say that you can't encourage clients to spread the word about you also.  A captivating e-newsletter (free registration required) is one way to do this—especially one that appeals to women (women are much more likely to forward articles and information to their friends and relatives if they think there's value there). 

Telling clients "not to keep you a secret" is another effective way to encourage word-of-mouth business development. But don't think that word of mouth can replace true referral marketing. Think of them as separate and distinct initiatives, and focus the bulk of your energy on the referral side, because that's where the biggest opportunity is.

If you're sitting back and expecting your business to grow by passive "word of mouth," you've got a long wait ahead.  Get proactive. Start building your business "by referral" instead, and take control of your own growth.

More on client service expectations and referrals

I wrote last month about how the REAL reason for lost clients (and referrals) is the failure to communicate about clients' service expectations. 

Nicole Coulter has an excellent article on Horsesmouth today about this very topic, and how to deal with this sticky topic.

Nicole writes:

Setting clients' expectations is a process, and one you must begin even while you're prospecting. The process breaks down into two areas of responsibility: (1) profiling new clients; and (2) communicating with existing clients. You've got to do well in both areas to ensure that you and your clients are on the same page throughout the relationship.

Remember, the first step in getting more referrals is keeping your existing clients happy and, ideally, turning them into raving fans.  And setting appropriate expectations is 90% of that battle.

Read the rest of the article to learn how to get started on the right path (free registration required if you're not already a Horsesmouth member):

6 Ways to Manage Clients' Expectations--And Retain Their Business
Follow a systematic process to make sure you consistently deliver what your clients and potential clients expect, not only in the first meeting but throughout the client life cycle. (Plus, see great examples and checklists you start using now.)