What to Do About Sub-Par Referrals?

Welcome to Day 10 of our Referral Clinic and Blog-a-thon.  We asked advisors to send us their toughest referral challenges. Now we're featuring the best, along with solutions from top referral experts and veteran financial advisors. 

Today's winning question comes from Edward K., a regional advisor from Atlanta. Thanks, Edward!

Top advisor Gregory D. Gardner, CFP will tackle Edward's question. Greg is president of Dallas-based The Gardner Group, a comprehensive wealth management firm specializing in high net worth investors. Gardner is also actively involved with his alma mater, Southern Methodist University, where he played football. He is the chairman of Planned Giving for SMU Athletics, and also serves on the university's Planned Giving Board.

Question: "I've always tried to paint a vivid picture when I tell my clients what kind of new clients I'm seeking. I'll even say a minimum asset size of $200,000. I still continue to get some referrals with accounts under $100k. How do I decline to work with these folks without creating ill will with the referring clients?"

Greg Gardner's answer: I went through a phase of being referred "downward" by some of my better clients. We were getting a lot of referrals, but they were introducing me to their debt-ridden children and administrative assistants. We were doing a lot of charity work, explaining how to get out of credit card debt, etc.

After re-reading Nick Murray's The New Financial Advisor, I remembered why it was so important to stick to my firm minimum. For every client I brought on under $400,000… the next one would have to be that much larger. That made me reiterate my value proposition with my very best clients. For every minute I'm dealing with someone with $50,000... I'm not dealing with you.

I have taken on several steps to help improve this situation. I've done a better job lately letting clients know who we're going to work with and who we're not. We reworked our brand image to make them understand they were referring people not just to me, but to a process and a company. I explain to them how many families I believe we can manage. 250 relationships is our magic number. I tell them not to worry, we still have room to grow. It puts them at ease. They don't want to be passed on to paraplanner for their investment questions.

Unfortunately, the downward referral still happens from time to time. One client referred me to one of his employees, a guy making $75,000 who had $35,000 in assets. Taking on that person didn't make sense. I still talked to the referral on phone for an hour.  I gave him some free advice, but I didn't take him on. I told my client I work with people like him, who have $1 million in net worth and $500,000 in investable assets.

That being said, you gotta take the children of your clients--regardless of account size.  I always meet with relatives of clients. From there, I usually spend 3-5 hours educating them on why they should NOT work with me until they are out of debt, investing faithfully in their 401(k), and some financial basics are established. This eliminates the operational headaches that smaller clients often bring us.

Next, I have brought on a junior wealth advisor to help with these smaller clients, if and when it makes sense. We also employ technology. Lower-tiered clients who come in via referral often report surprise at the high level of contact we provide--weekly e-mail market updates, a monthly electronic newsletter, and an annual face-to-face review. Based on their experiences at other firms, they didn't think we'd have time for them. Even clients with $10,000 invested with me are getting contacted by us frequently. They can opt out if they want to, but with technology, we can deliver that level of service at no additional cost or time commitment.

So, I have the technology and systems in place to handle the smaller accounts. However, just like you, I only have 168 hours in the week.

Got questions or thoughts about today's challenge or Greg's response? Post a comment.

My Clients Won't Set Up Direct Communication With Referrals

Welcome to Day 8 of our Referral Clinic and Blog-a-thon.  We asked advisors to send us their toughest referral challenges. Now we're featuring the best, along with solutions from top referral experts and veteran financial advisors. 

Today's winning question was submitted by D. Jones, an independent advisor from Golden, Colorado. Congratulations!

D's question will be answered by Michael Brizz, creator of the Referral Mastery System. Since 1988, his Center for Professional Achievement has been helping financial advisors elevate their business to operate "by referral only."

Question: "I frequently have clients who seem to want to refer to me but will only ask for marketing materials rather than setting up more direct communication. While marketing materials are good, I feel there is no substitute to direct communication. What do you recommend?"

Michael Brizz's answer: You are right to want direct communication. Without direct communication, the odds of securing an appointment fall significantly. 

Your setup is very important.  In the Referral Mastery process, we make sure the following is in place before we discuss the actual introduction method—make sure the client:

1. can articulate your value
2. knows precisely to whom you want to be referred, and
3. understands why it is beneficial for the referral to meet you.

If you have done these steps, your client will want to make sure you and the referral connect.   

When you have completed the steps above, the next step is to develop a method of introduction that is comfortable for the client and workable for you.  It is important to have an open discussion about this and that you are open to different forms of introductions.  Pay attention to the shared interests of the client and the referral. 

Here are some examples.  We have a client this week that is going on a fishing trip to Costa Rica with a client, and one purpose of the trip is to arrange a power introduction between the advisor and a wealthy investor.  Another advisor client of ours just got back from a golfing trip to Hilton Head with a client and a group of referrals. 

This is much different from just having a name and a number or having a client give someone your marketing piece. Strive for quality personal introductions. 

You need to balance quality of connection with practical limitations.  Just because the client suggests you come along on an ice fishing trip to Alaska in January doesn't mean you have to go.  However, you very well might go if the quality of referral is high enough.  There will be plenty of time to develop rapport as you sit around that hole in the ice waiting for something to bite. 

The introduction does not have to be exotic.  Just yesterday, I suggested to my advisor that he come to my house for a picnic so he can meet a wealthy friend of mine.  I will make a point of briefing the advisor and setting up the conversation so the two of them will talk about investments.  They will have a warm and comfortable conversation over brats and beer on my deck.  They will have time to establish rapport and I will bet that my friend's curiosity about investments will push the conversation until they talk about specific investments and about Ed's technical methods of managing money.   

The higher the quality of referral you want, the more attention you want to pay to the method of introduction. Where at all possible, you want a personal introduction.  Agree on a method where there is time to have a conversation so the referral will feel comfortable with the next step - agreeing to the next conversation.

The meeting does not have to involve a week in Costa Rica.  It might be a cup of coffee at Starbucks.   It could be a 3-way conference call.  You want to make the connection happen in a way that is comfortable for both the client and the referral.  Pay attention to the shared interests and more direct communication will happen. 

Got questions or thoughts about today's challenge or Michael's response? Post a comment.

Getting Clients Comfortable Discussing Referrals With Friends

Welcome to Day 7 of our Referral Clinic and Blog-a-thon.  We asked advisors to send us their toughest referral challenges. Now we're featuring the best, along with solutions from top referral experts and veteran financial advisors. 

Today's winning question was submitted by Bill C., an independent in Roswell, Georgia. Well done, Bill!

Bill's question will be answered by Chris Holman, a 20-year industry veteran and the president of Affinity Networking Systems, Inc. His sales prospecting nuggets and client acquisition strategies can be found on the Prospecting Professor. Chris is based in Minneapolis, Minnesota.

Question: "Most of my clients are more than happy to provide referrals, but it's obviously not on the top of their mind when they are amongst friends or colleagues, so they rarely bring up the topic. Or they don't know how to bring up the subject without getting personal. Do you have specific recommendations, dialogue suggestions, etc. to help my clients feel comfortable addressing the issue amongst friends and thus being able to effectively refer business to me?"

Chris Holman's answer: In the referral-dynamic between Advisor and Client, there are 6 sticky points that seem to continue crop up.

• Downside vs. Upside. From the client's perspective, what is their upside to referring their best friend, their mother, or a business colleague, to you? A thank you card? A free dinner? An 'attaboy?' In comparison, what's the downside? From the client's perspective, the downside and the worst case scenario of providing a referral—is that the referral doesn't go well, and the client loses a valuable friendship. If nothing else, the advisor should recognize and acknowledge that the client's downside outweighs the upside, when it comes to providing referrals. This acknowledgement lets the client know that you are empathetic to their concerns.


• Introductions vs. Referrals. In some cases, the term 'referrals' causes the client to freeze up, whereas 'an introduction' is much more benign-sounding. If this is the case, even though it is a semantic difference, so be it. You might find it helpful to remind your clients that you are only asking for an introduction anyway, not a lifetime commitment.


• Loose Lips Sink Friendships. It goes without saying, but I'll say it anyway. Are you completely discreet when it comes to your professional relationships? More importantly, are your clients aware that, should they provide a referral, you will guard client privacy (theirs and everyone else's) at all costs?


• Follow-Up and Thank You. Surveys have shown that one of the single biggest reasons that clients stop providing referrals is the lack of follow-though and thanks. After receiving a referral, be sure to thank your client appropriately, and inform them that you have followed through with your contact to the person who was referred to you.


• Be Specific. In some cases, it helps to remind your client as to what you will do, in specific steps, with the person who is referred to you. Some clients may have the mistaken impression that, when provided a referral, you will 'hound' this person with calls and letters—until they surrender. Outline the specific and professional steps that you take with all prospects that you are introduced to you—and this concern evaporates.


• A Touch of Class. Thank You Notes are a start, yet you might think of something even better. One advisor who I know sends out a gift certificate to the client's favorite restaurant—for BOTH the client and his 'significant other.' Another advisor learns the client's favorite charity, and makes a donation to that charity in the client's name. Either way, a creative 'thank you' is very effective.

Got questions or thoughts about today's challenge or Chris's response? Post a comment.

When Is Great Client Service "Great" Enough to Ask for Referrals?

Welcome to Day 3 of our Referral Clinic and Blog-a-thon.  We asked advisors to send us their toughest referral challenges. Now we're featuring the 20 best, along with solutions from top referral experts and veteran financial advisors. 

Today's winning question was submitted by Andrea E., an insurance rep in Utica, New York. Congratulations, Andrea!

Andrea's question will be answered by Katherine Vessenes, JD, CFP®, RFC. Katherine is president of Vestment Advisors and the country's leading authority on building the multimillion-dollar practice.

Question: "Everything I've read regarding harvesting referrals seems to hammer home the same message:  In order to obtain referrals, you must earn the right to ask for them by providing outstanding service.  How do you know when you've provided enough outstanding service?"

Katherine Vessenes' answer: The basis starting point of any referral program has to be building what we call absolute advocates—those raving fans who love you so much they can't help but send you their friends and family.

So rule number one: build a loyal base of advocates by providing great client service and the WOW experience. This has to be a level of service beyond what they can get elsewhere.

Rule number two: The time to ask for referrals is at the point of highest client satisfaction. I learned this hard way practicing law. The most likely point in time for me to get paid was when the client was the happiest with our outcome—when we delivered the estate plan or won the case. Getting paid then was easy—if I waited too long to send out the bill, the chances of getting paid actually decreased day by day.

The same rationale is true of our clients and getting paid through referrals. The time to ask is after you have demonstrated great value and proven yourself. Never ask before you have delivered a plan or something of value to the client.

Rule number three: pick your times carefully.  Here is one example: After delivering a financial plan is a great time to ask for referrals. The script would go like this:

"Jane, now that you have seen our plan and recommendations, how are you feeling about our work so far?" This question is crucial, because no one is going to give you good referrals if they are not happy with your service.  Frankly, we never know for sure if we are meeting clients' expectations unless we ask them.

Then ask this:

"Is there anything we can do to make this experience better for you?"

Once again this is great feedback to learn if your WOW level of service is working.  Assuming you don't get any negative response, you go to the next question:

"Great, I am so glad to hear that. That is what we were hoping for. Now I could use a little advice about my business, if you don't mind. I have enjoyed working with you so much, I have been thinking about focusing my practice on (pick a point of contact with them, like "other pilots like you" or "other members of the West Valley Country Club"). Does this make sense?"

See what they say to you. They might say some other financial advisor is already working with all the local pilots. Chances are they are going to think this is a good idea.

Then you ask: "If you were me, how would you go about it?" What you are asking for here is your marketing strategy.  Most people will give you a lot of good ideas, because they want to help.

Then you ask: "If you were me, who should I approach first?" This is where you get the names and other information.

Then: "How do you think I should approach them?" Most of your clients will be willing to call, send a letter or email. If not you may have to prompt them.

If your clients are not willing to recommend their friends come into the office for an initial meeting with you, let off a little of the pressure and ask if it would be a good idea to invite them to a seminar you were planning for pilots.  Most people would be happy to do that because it is non- threatening. Make sure you invite your client to come to the seminar and be your MC—this adds creditability to the entire program.

Other good times to ask for referrals:

2. After doing your annual client satisfaction survey. Once again, it lets you know if they are wildly happy with your service. If they are, ask them for recommendations on others who could use what you are offering.

3. After a client appreciation event. Call the clients, ask if they enjoyed the event and then go into the same questions listed above.

4. The annual client review. A good way to approach this is to confirm once again that they are happy with your service.  Then say "I want you to know, I will always make time for your friends and family who need the kind of services we provide. Can you think of any one who could benefit from our (describe your system here)—I would like to invite them to our next workshop."

5. Unsolicited praise. Sometimes clients like what you are doing do much, they start telling you how pleased they are with your services. This can be a great time to thank them and ask for recommendations.

Final thoughts: just start asking. The more you ask, the more comfortable you will feel and the more likely you will get new recommendations.  You won't get referrals from everyone, but even if you can get 1 in 3, this could improve your revenue by 30% or even more. Remember the best time to ask is when the client is the happiest with your service.

Got questions or thoughts about today's challenge or Katherine's response? Post a comment.

The ABCs of Automatic Referrals: F is for Follow-Up

When the referrals and introductions start flowing, it feels great—like being on top of the world.  But that superhero feeling won’t last if you don’t know what to do with all of those leads.  It doesn't do any good to get referrals if you aren't organized enough to execute on them.   

We've got some extra work to do when we get a referral. In exchange for that nice fuzzy lead, we have to take care of not one, but two people: the referred prospect and the referral source. Fail to follow up properly with the prospect and the entire exercise has been for naught—plus you run a significant risk of damaging your relationship with the referral source. Fail to acknowledge and thank clients for referrals and you not only put those potentially important relationships at risk—you also lower the chances that you'll get additional referrals from those clients in the future. 

The more referrals you're processing, the more you need an automated follow-up process.  Why? Just look at this list of steps that are necessary just for converting a prospect into a client (from Barry Mendelson's article "Break Down Your Business Into 4 Practice Systems for Faster Growth" [free registration required]):

1. Data Collection
   • Prospect/advisor interview(s)
   • Prospect/advisor follow-up call(s)
   • Prospect profiling
   • Document retrieval/checklist
   • Schedule report or findings meeting
2. Information Processing & Case Analysis
   • Investment guidelines
   • Asset allocation decision
   • Estate & tax considerations
   • Work plan development
   • Phone call reminder
3. Report of Findings
   • Document preparation
   • Meeting agenda
   • Findings and proposal presentation
   • Close
4. Implementation
   • Contract preparation
   • New account forms completed
   • Client notebook delivered
   • Quarterly portfolio reviews scheduled

And that's not even considering the steps you need to take to get to that first meeting with a referral prospect... and the additional and parallel follow-up steps that you need to take with the referral source.   Did your client offer you an introduction, but you still need to put your heads together and find a good day for you to treat him and the referral to a round of golf? Did you send a handwritten thank-you note for the introduction?  Does your client expect you to keep him apprised of how things are progressing with the referral?  Did you send him a thank-you gift when the introduction ultimately turned into a new account? 

So, whether you're a solo practitioner or have a team of six, whether you choose to track follow-up on paper worksheets (like the follow-up checklist in Automatic Referrals) or using customized contact management software (free registration required), make sure to include an efficient follow-up system in your referral strategy.

The ABCs of Automatic Referrals: D is for Damage Threshold

What worries you about asking for referrals?

If you're like many other advisors, you're afraid you'll offend and alienate clients by asking.  In fact, though, that fear is completely unfounded—assuming you ask in the right way.

The problem is that advisors often view their client relationships as much more fragile than they really are. Daryl Logullo calls this line the "damage threshold"—the line you can't cross without harming the client's perception of you.

Is there really such a line?  Sure.  And if you took your client out to dinner, got drunk, and danced the Can-Can on the tabletop, you might cross it.  The line exists... but it's probably a lot farther away than you may think.

Advisors often operate as if the damage threshold for every client relationship were zero. Even when they're dealing with a long-time business associate or a client of 20 years, they actually think that the relationship is so fragile that a simple request for a referral or introduction might blow it to bits. A great analogy is the anorexic who looks in the mirror and sees a fat person instead of someone who is skeletally thin. There’s a skewed perception of reality going on here that is very destructive.

If you're deathly afraid of offending your clients by asking for referrals, there are a few remedies at your disposal.

1. Take an objective look at the evidence, which will show you that your fears are irrational.
2. Become more aware of your own value, so you feel more confident in the resiliency of your client relationships.
3. Learn to think about referrals as a way to help clients, not you.
4. Make sure you know how NOT to ask for referrals, and build confidence in your ability to do it gracefully and effectively.

Don't let imaginary barriers stand between you and success.  Get past the damage threshold.

Subscribe to our free referrals newsletter.

More on comprehending your value

Last week we talked about adopting a client-centered mindset toward asking for referrals.  I said the key to that mindset is recognizing that you offer people valuable knowledge and expertise, and focusing your referral efforts on sharing those gifts with OTHERS, rather than on helping yourself.

This is a difficult paradigm shift for many advisors. In this new paradigm, you're focused on enhancing your client's life and the lives of people they know. But if you're like many advisors, you are so immersed in your own need to generate business that you tend to forget that your clients perceive you as someone who does, in fact, enhance their lives.

To comprehend the client-centered mindset, you've got to be able to think like your clients, and see yourself through their eyes. Your clients see you as someone who brings value to the table. That means you've got to recognize that value too. But this is something advisors often have trouble doing.

So today I'm going to suggest an exercise that may help shift your thinking. I want you to close your eyes and think of a trusted professional in your life—someone who has contributed to your life in some way and counts YOU as a loyal client. This could be an attorney, an accountant, an architect or real estate agent, a doctor—any professional whose services you truly value.

Take a moment and think about this person. Visualize the role they play in your life. If they've done something tangible for you (like built a house or healed your child), picture that. Think about how they've helped you or your family, and how their help has made a difference in your life. Really feel that relationship and their value to you.

Now, imagine that this person has just asked you to introduce them or recommend them to a specific person you know—someone they could help in the same way they’ve helped you.

For example, imagine that your cardiologist (who saved your life with open heart surgery) remembers that you mentioned your mother was having heart trouble, and asks if she might be open to a second opinion. Or your accountant (who saved you $20,000 on your taxes last year) says he recalls you play golf with the owner of a certain small company every Tuesday and asks if he might join the two of you in a round, on him?

Pay attention to how you feel about this request from this special professional in your life. Are you angry or offended? Do you feel they were out of line?  Are you likely to say yes to their request? How do you feel as you think about this scenario?

For most advisors, a light bulb goes off when they go through this mental exercise. Suddenly, they see THEMSELVES as that essential, valued professional their clients see.

Try it. It may transform how you think about referrals—and your relationships with your clients.

Subscribe to our free referrals newsletter.

The ABCs of Automatic Referrals: B is for "Back Door"

Let's talk about initial conversations with referred prospects.

I hope you'll agree that where referrals are concerned, protecting your relationship with your referral source is of paramount importance.  It trumps establishing a new relationship with the referral.  That is, in the best of all possible worlds, you'll do both, but if it comes down to one or the other, you care more about keeping your existing client than about getting a new one.

That prioritization should inform the way you approach your conversation with a referral.  You want to make a good impression and get them interested in working with you, but not at the risk of pushing too hard.

One way to accomplish this is to use the concept of a "back door" when you first start talking with the referral.  You explain that you think you might be able to help them, but emphasize that you are simply feeling out the situation and have no expectations one way or another. 

Here's an example of how this type of follow-up conversation might go (with a tip of the hat to Bob Burg).  Key phrases that emphasize your relationship with the referring client and reduce pressure on the prospect are highlighted in red:

You: Mr. Saunders, this is Pat Caruso. Your name came up in a business conversation yesterday with Skip Peterson. I believe you know Skip from the hospital board?

Referred Prospect: Yes, I've known Skip for a couple of years. What can I do for you?

You: Skip didn’t assume you’d be interested, but he was very enthusiastic about a succession plan I helped him set up recently—I specialize in succession planning for privately-held businesses—and he thought you might be interested in doing something similar for your own business, so I told him I would contact you.  Maybe we can meet for a quick cup of coffee and I'll run it past you.

There are two reasons for this approach. One, it keeps the pressure on the prospect super-low. As Bob points out in his article Referrals: How to Set More Appointments (free registration required), most of us automatically get defensive and resistant if we feel someone is trying to "sell" us—and when we're feeling defensive and resistant, we're not open or listening.

Two, providing a "back door" makes you more attractive to prospects, because your credibility and desirability increase when you sound like you don't need the business. You're animated and friendly, of course, but without pressure or urgency.  Burg calls this lack of attachment to the results "posture."

Obviously, you should find words that fit your personality and style.  Just remember that the goal is to generate interest without applying pressure.  Assure prospects they're not cornered, and they'll be much more likely to listen to what you have to say.

Subscribe to our free referrals newsletter.

Client comfort inspires more referrals

In a recent Duct Tape Marketing post, John Jantsch asked that all important question: could your business be more comfortable?

"Everyone just wants a little comfort in life," John writes.  "I will always be drawn to people and products and companies that just seem to make me feel better. I think really that the whole of the world is looking to do business with companies that aim to transform their lives—even if that transformation is found in the tiniest little thing."

Well, amen, brother.  Who hasn't heard the old saying: God is in the details.  Are you making your prospects and clients feel special and comfortable at every touch point?

In an article on Horsesmouth, advisor consultant Katherine Vessenes talks about how she taught one financial advisory firm to see itself through the eyes of its prospects and clients (free registration required), from the parking lot (where they realized their signage was poor) to the lobby (where the lighting was dingy, the receptionist was AWOL, and the only beverage available was water served in a styrofoam cup). 

If this firm just cleaned up the reception area, changed the paint color and improved the lighting, and ordered some better furniture, Vessenes suggested, they'd be well on their way to at least a par client experience.  For a slightly larger investment—a few hundred dollars for an Oriental rug at Home Depot and some $3 Mikasa crystal glasses—they could begin offering the kind of service that inspires client loyalty and, ultimately, more referrals.

Look around with fresh eyes.  Even if you have no control over certain aspects of the client experience (if, for example, you work in a branch office and can't make changes to the lobby), ask yourself what you can improve about YOUR workspace.  And of course, there's more to comfort than lighting and refreshments, so take a good look at your client service strategy.  These simple exercises can transform your business and amp up your referral flow. 

Here are some resources (free registration required):

Is Your Workspace Giving Clients a Negative Message?
If you've been letting that paperwork pile up, watch out.  A messy, disorganized office sends a negative message to clients and prospects—and saps your energy, to boot.  Here are some tips for giving your workspace a cheap and easy makeover.

A 6-Step Client Service Strategy That Works
A Horsesmouth member called recently and said he needed to create a systematic client service strategy—fast! We said we could help. Here's the action plan.

Subscribe to our free referrals newsletter.

Bob Cobb on unleashing the referrals in your book

Today we're featuring a guest post from Horsesmouth contributor Bob Cobb, President of Ultimate Financial Advisor. 

How many referrals did you give today? I suspect that it might be more than you already realize. Did you tell a friend about a restaurant? Recommend a good movie or book? Hook a friend up with a merchant or service provider that will "take care of them?"

Pay attention to the next couple of days and I suspect that you will find that you are making referrals all the time. So is everyone else.

The weird thing, too, is that they are almost all unsolicited: "Hey, Tom, have you tried the new sandwich shop down the street? It is wonderful; the smoked turkey is out of this world."

Throughout the day, every day, people are making recommendations. Are you getting your fair share?

For most advisors the answer is no. Most advisors never ask for referrals from clients, and many never receive any. A lot of that has to do with three things:

1. The service that you deliver
2. How you are positioned in the mind of your client
3. How you approach the subject

Item #1: the service you deliver

Ask yourself a simple question. Are you referral-worthy? Are you delivering a level of service to your client that is consistently surpassing their expectations?

Two variables come into play here: The client's expectations (how have you managed them and what have you promised?), and what the client is receiving (your level of service).

There is an old adage, "under-promise and over-deliver."  To put it in mathematical terms: 

Client's Experience - Expectations = Client Satisfaction.

The number of unsolicited referrals you receive is a good barometer of how you are doing here.

Item #2: How you're positioned in the mind of your client

Are you the go-to guy or gal for your clients anytime the subject of money comes up? Are your clients aware of all your capabilities? Do they have a clear idea of your mission and your process and what your ideal client looks like? If the answer here is no, then you have an opportunity. Have you made it easy for them to give you referrals?

Item #3: How you approach the subject of referrals

Here are two common ways that people approach referrals that in my mind are ready for the Museum of Extinct Sales Techniques:

• The "I get paid in two ways" conversation
• Pulling out the legal pad, poising the pen at the ready, and asking, "Who else do you know that I should be talking to?"

I assume that these techniques must have worked once.  But let's take a quick visit over to common sense corner and think about how we feel when we are the client.  Have methods like that ever worked on you? The answer is generally a resounding no!

Here are 8 keys to getting the referral train either to leave the station or to pick up some momentum:

1. Focus on a specific niche (free registration required) and become an expert in that niche’s desired outcomes and common obstacles
2. Create (or leverage something already created by your firm) collateral material that discusses those outcomes and obstacles and your solutions
3. Have a clearly defined process for helping clients clearly identify their outcomes and help them navigate the pathway to their personal promised land.
4. Under-promise and over-deliver
5. Plant the seeds for referrals early, often, and in a way that positions you as a more valued resource and partner in the mind of your client
6. Make sure that they know the type of client that you are looking for
7. Remove the risk of making referrals
8. Follow up with all parties involved every step of the way (obviously this doesn’t mean violating confidences, but keep the referring client in the loop)

Thanks to Bob for sharing his referral wisdom.  If there's a referral or business development expert whose ideas you think we should feature here (or if you're interested in being a guest blogger on Automatic Referrals), let us know.

Subscribe to our free referrals newsletter.

For quality referrals, communication is key

In last week's issue of his wonderful e-zine "Winning Without Intimidation," Bob Burg made a point that is absolutely central to a successful referral strategy:

When it comes to effective communication, the onus is always on "us" to be sure the other person understands our point/want/need. I related the story of the wise mentor who told me, "Burg, when the shooter misses the target, it ain't the target's fault." We can't expect others to put that burden of understanding on themselves.

Along the same lines, when you don't get the referrals you want from your clients, it ain't the clients' fault.  FAs tend to think of referral marketing as a reactive method, but that is a deadly mistake. If you do what most advisors routinely do—that is, hand off control of the referral process to your referral sources—you are highly unlikely to get the prospects you really want. 

In most cases, other people don't know what your "ideal client" looks like.  They don't understand your business—nor should you expect them to understand it, even if you've worked hard to educate them about your practice.  You have to drive the referral process by coaching your sources with very specific information about whom you'd like to meet.

You can't rely on others to hand you perfect referrals day in and day out. It simply won't happen.  To be sure, referral sources will probably surprise you from time to time by handing you great referrals, delivered with little or no coaching from you at all.  That's terrific—but you want great referrals ALL the time. So if you seem to keep missing the target, maybe it's time to adjust your shooting technique.

Subscribe to our free referrals newsletter.

Learn to listen for referral clues

One of the most important components of the Automatic Referrals process is detective work. Conversations with clients (and friends, family members and colleagues) are literally filled with information that can lead to referrals.  Clients will tell us many significant things just in passing—and many more if we ask even the simplest questions and then pay attention to the answers.  The advisor who got five referrals by asking "how's your family?" is a perfect example. 

But to make this process work, you've got to know how to listen to your clients—REALLY listen.  (It goes without saying that even if you don't care about referrals, there is nothing more critical than learning to listen well.)

That's why Ron McDaniel's post Your next conversation: 6 Things that will make it different is so useful.  "If football is a game of inches," Ron says, then "meaningful conversations are a game of nuances."  He suggests the following six small changes in how we approach any conversation that lasts longer than a minute:

1) Listen 50% more
2) Ask twice as many questions
3) Hold eye contact 50% more
4) Make slight contact, or hold contact slightly longer (as in, your handshake)
5) Show sincere sympathy or enthusiasm for something they say
6) Ask if there's anything you can help with

Here's an added strategic point.  We all need to ask ourselves, "Do I listen? Or do I wait to talk?"  Personally, I spent most of my life up until a couple of years ago waiting to talk.  Since I started consciously working on listening instead, I've been amazed at the doors that have opened for me in just about every arena.

If you answered "wait to talk," you may want to spend a few minutes with this fabulous article (free registration required) about listening to clients written by a very successful independent advisor, Jeffrey Gitterman of Gitterman & Sacks.

Subscribe to our free referrals newsletter.

Sometimes it pays to solicit advice instead of referrals

A colleague of mine has been giving some thought to Bill Cates and his recommendation to solicit referrals by asking clients or family members for advice.  She'd been skeptical, she reports, until now:

"Recently, I've had an experience with asking a family member (a close aunt) for help and advice with a difficult situation (in-law problems, and I've never had in-law problems before now). I've noticed how gleeful my aunt is to help me sort through this emotional mess. Granted, I'm not asking her for the names of her best friends so I can interview them or ask them for their business... but I'm asking for her help and advice. It's reminded me that, in general, it's very flattering to be asked for your opinion. It makes you feel like an expert. It shows that the person asking respects your knowledge.

That's what the Cates method does. You go to your client with whom you have a good relationship, and you lean on them for advice. How can I reach more people with my services? Do you know anyone who might be interested?  You're asking for their help because you respect their opinion. It's quite different from begging. And, I suspect that FAs who approach asking for referrals in this way are VERY effective."

She's right--this method can be very effective.  We had an advisor tell us this story in response to our referral survey in 2004: "I had been asking a client for referrals, every meeting, for a year. When I asked for advice, rather than referrals, he opened his wallet and gave me the name and address of four people to contact using his name." 

Here's a more detailed example of how this can work.  My friend Bob Burg, who wrote the wonderful books Endless Referrals and Winning Without Intimidation, tells the story of a big corporate prospect he'd been pursuing for years without success.  Then he found out that this corporation was a major client of a friend of his.  He didn't want to create the impression that his friend owed him anything, but he didn't want to let this opportunity pass, either. So he asked for the friend's advice on how to best pursue this corporation.  Here's what he said:

"I know this is a huge client of yours, and I’m not in any way asking you to make a connection for me. But I’d love to know what you think is the best way for me to go about contacting the right person, so I can at least get the opportunity to establish and develop a relationship with them."

But apparently the friend would have none of that. He said he'd have his main contact at the company contact Bob—and he did. Over the years since, Bob says, that client has accounted for several million dollars in sales.

In addition to getting referrals, this can be a very effective method for breaking into a new niche.  It's the prime method an independent named Jim Abel used to build a niche business around serving physicians (free registration required). 

As an advisor, it may feel strange to turn the tables and asking someone ELSE for advice.  But do try it.  It really works. 

Subscribe to our free referrals newsletter.

If you want referrals, chocolate never hurts

  I happened to have lunch yesterday at Chef's Corner (in Williston, Vermont) the same very nice French bakery/cafe where I had dined the day before.

Midway through the meal, one of the chef/owners appeared and presented my dining companion and me with two beautiful, sumptuous chocolate-covered strawberries. "These," he announced, "are to say thank you for eating with us two days in a row."

I'll be telling my friends about this.  Heck, here I am telling the world about it.

What's the chocolate-covered strawberry in your practice?

Subscribe to our free referrals newsletter.

Communicate your unique value to clients

In The Legal Marketing Blog this week (which I follow, because financial professionals can learn a lot from other professional services firms), Tom Kane asks a great question, inspired by John Janstch: are you your own competition?   The thesis here, applied to our business, is that every financial advisory practice is unique in some way—but that clients don't perceive the subtle differences between advisors and their practices, and therefore view your business as basically the same as everyone else's.   So in fact, you're not really competing so much against other advisors as you are against your own inability to communicate your unique value.

This rings true.  Sure, you may offer the same products or money managers as some other advisors, but essentially, you and your team ARE your business, and since you're all unique individuals, your business is by definition unique as well.  The more you can get that uniqueness across to your clients and prospects, the more you will stand out from all the advisors who don't make a similar effort to differentiate themselves.

Tom writes:

The way to beat the competition is to set yourself apart. Make your firm different—in how it provides services, returns telephone calls, having an identifiable niche, or otherwise doing something differently to stand out from other law firms.

Just replace the law lingo with appropriate terms and this advice applies perfectly to our industry too. 

Remember, though, that it isn't enough to do things differently. If you serve specific niches, make sure to talk about it, even with clients in different niches.  If you pride yourself on a top-notch service strategy, you can allude to it in your client reviews ("Because we are committed to outstanding communication with our clients, our policy has been to contact you an average of once every two weeks.  But we want to make sure we're sensitive to your needs.  Is twice-a-month contact too frequent for you?")

Value is in the eye of the beholder. The real key to differentiation is client perception—so help your clients see you in a unique light, and they'll be better able to refer you.  (Need some help? Search Horsesmouth's library of resources on financial advisor differentiation using the keyword "branding" [free registration required].)

Subscribe to our free referrals newsletter.

Get more referrals by being a "connector"

  Chris Holman, the Prospecting Professor, posted a great item last week about The Interesting People Dinner, a brilliant marketing strategy devised by a Minneapolis law firm.  The firm used some very creative and slightly theatrical methods to invite a select group of "interesting people" to a dinner, with the express purpose of helping them connect with each other.  It was all about the guests; in fact, no attorneys from the firm even attended, although all attendees knew who their hosts were.

This type of event is something an advisor could easily adapt, which is of course why Chris posted it.  Financial advisor Cella Quinn of Omaha pioneered a different but equally successful dinner party concept of her own a few years ago.  Her goal: help C-level women executives connect with each other. 

Cella took a mental inventory of the biggest companies and institutions in Omaha. She then composed a list of the highest-profile women who worked in these organizations. "They had to be top decision makers at companies, universities, hospitals, or nonprofit organizations," she says, adding that only 10% were current clients. Then she brought the women together over dinner at her favorite country club (30 of 32 accepted the invitation) and helped them get to know each other.

The evening was such a smash, the women decided to do it again… and again… and again.  They've been meeting every month for five years now (and the members all pay their own way).  For an initial investment of $1,000 and some time, Cella Quinn has brought in 17 new accounts, five of which are worth more than a million dollars.  But she didn't do it for business, Cella says. "I reached out to them as friends." Get the details of how she put together that first dinner in Nicole Coulter's case study, "Create Your Own Elite Dinner Club" (free registration required). 

Something like this doesn't have to be a women-only event.   The only key point is that the guest list must be exclusive, because that is the draw for successful people.  In that regard, Quinn's "10 Club" sounds a lot like the Interesting People dinner party.  Both show the power of facilitating valuable connections among important or influential people.  And both are designed expressly for social purposes—no sales pitches or marketing allowed.   

Which makes sense. When you're the mastermind who's helping others create abundance (free registration required) in their lives, there's no need to talk about yourself, because your actions and initiative speak volumes. The clients will flock to you. Referrals won't be far behind.  And you'll have a blast in the meantime.

Subscribe to our free referrals newsletter.

Referral failure: it doesn't mean you're unworthy

If you're uncomfortable about asking for referrals, does that mean that somewhere, deep down inside, you know you don't really deserve them? 

That's what Bill Bachrach asserts in his article "A Boomer-Smart Business" in the March issue of Advising Boomers magazine. He writes:

If you’re great at what you do, you won’t be uncomfortable asking people to introduce you to others. You’d never hear someone say, “I’m a great pilot, but I wouldn’t want to ask anybody to fly with me.”

With respect to Mr. Bachrach, I have to disagree with this premise that advisors are reluctant to ask for referrals because on some level they know they're not really referable.

The truth is that some of the best performing, most client-service-oriented and most conscientious advisors in the business feel extreme discomfort about asking for referrals.   

It's not because they doubt their ability as advisors—not on any level.   In fact, they have the opposite problem. They consider themselves to be professionals of the highest caliber, and they mistakenly view asking for referrals as unprofessional and "salesy." They're afraid that asking will make a poor impression on their clients.

It's that erroneous belief—the idea that asking for referrals is somehow beneath an advisor or will make clients uncomfortable—that prevents most advisors from being more proactive about referral marketing.  Fortunately, these referral fears are unfounded and relatively easy to eradicate.

Is it possible that you're afraid to ask for referrals because on some level you're not fully confident in your abilities, or suspect you're not giving your clients all the attention they deserve?  Sure, it's possible.   It's also possible, and much more likely, that you're a very good or even exceptional advisor who doesn't realize how much you do for your clients and how much they value you. 

If asking for referrals makes you anxious, you owe it to yourself to take an honest and objective look at your skills, your practice, and your client relationships.  If something does need improvement, you can get to work.  And if you're already pleasing your clients more than you've been giving yourself credit for, you can start trusting those relationships and making the most of them. The truth—whatever it may be—will set you free.

Subscribe to our free referrals newsletter.

How to turn referral event guests into prospects

Ronald, an advisor from Canada, asked a great question a few days ago:

I intend to have a nice client event, like a wine tasting event, for clients and guests. How do I convert the referral guests without turning it into a pushy sales event?

Another advisor actually asked a similar question a while back on a Horsesmouth discussion board called How to Turn a Client Event Into a Referral Event (free registration required). Here's what referral expert Michael Brizz had to say:

The transition begins with the background information you get on who is coming BEFORE the event. You want to be prepared with conversation starters and know something about their situation and ways you might help. During the event, initiate conversation that will allow you to follow-up. It could be a simple as talking about their golf game and you have a terrific article on some aspect of golf you can send them, info on a camp for their kid, or info on retirement. Use your conversation at the event to get a "hook" that will allow you to  follow-up. Find a way to do a favor for them. Do it, and then in your follow-up, ask for the appointment. 

You can take this a step further, too.  One way is to provide a simple informational packet to each attendee, including a financial questionnaire.  This strategy worked very well for advisor Ron Carson at his wine tasting event:

"Before the meal, Carson gave what he describes as 'the world's shortest commercial' for his firm. He'd left an informational packet, including a detailed financial questionnaire, on each chair, and he asked that guests review it and complete the questionnaire later, at their convenience. In return for an evening of fun and fine fare, he asked one thing from attendees: the chance to see whether he might add value to their financial situation."

Out of 19 guests, 18 completed Carson's financial questionnaire. Seven of the households set appointments, and six became clients. You can read more about Ron Carson's strategy in Case Study: Wine Tasting—How to Attract Affluent Clients (free registration required).

Do you have a strategy for making the leap from referral event guest to prospect?  Share it by clicking on "comments" below. 

Subscribe to our free referrals newsletter.

My two sons: a referral success story

T.H., an independent who recently went through our Automatic Referrals Jumpstart Program, emailed the other day with a great story:

As a result of the class I decided to do some network mapping with one of my top clients. I discovered that he had a son that inherited a large amount of money and I also uncovered three other people that are members of my niche market group.

I never would have thought to have done this had I not taken the class. It was also very easy—all I had to do was ask, "How is your family?" to get the process going. I am going to be playing golf with my client and his sons.

T.H. explained to me in a follow-up phone conversation that he knew very little about this man's family, even though he's a top client.   For example, he knew the client had two sons, but didn't know their ages or realize they were grown men who might be qualified prospects.  He also said he was amazed at how much information a simple question like "How is your family?" elicited.  The client just talked and talked.  He's put that question on his agenda to ask every time he sits down with a client. 

Two takeaways. 

1. Go beyond the "need-to-know."  Ask clients questions about their families, their hobbies, their travels. You'll be surprised and delighted how much you can learn.   Remember: people love to talk about themselves (the only thing they love to talk about more is their children and grandchildren!) Realize that these conversations are not just good for client retention; they're critical business-building opportunities too.

2. Use what you learn to identify potential referral opportunities.  If you don't know enough, ask more questions the next time you talk to the client, and keep on showing curiosity until you're ready to ask for an introduction. 

As T.H. told me, "It’s simple things like this that can make your production just go through the roof."

Subscribe to our free referrals newsletter.

Why your referral fears are irrational

Does the thought of asking your best clients for referrals make you feel queasy? Do you avoid asking because you're convinced your clients will run screaming, convinced that you're, in the words of one advisor, "a greedy bastard?"

By far, the greatest fear among advisors is the concern that asking for referrals will erode their existing client relationships—that clients will feel put upon and burdened by the request. But this fear is unwarranted. In fact, multiple studies have been done establishing that some 85% of clients are happy to give referrals—if asked (unfortunately, most never are). And in all the years that my colleagues and I at Horsesmouth have been interviewing advisors, we've never once heard a story of damage to a client relationship from asking for referrals.

So, if you're afraid of asking, chances are you have a distorted view of how fragile your client relationships are. You can overcome this challenge with just a small set of mental adjustments. Step back and take an objective and realistic look at your client relationships. For the most part, you're delivering value, right? In some cases, you may actually have changed a client's life—literally. They can retire earlier, or care for their elderly parents, or send their kid to a better college, because of what YOU have done for them.

Unless you have serious problems in your practice, it's probably fair to say that most of your clients like you and trust you and think you're worthy of their friends, family, and colleagues.

After all—if they didn't, would they even be your clients?

Subscribe to our free referrals newsletter.

Referral anxiety--how to handle a nervous client

In my last post, Should you contact referrals by email?, we talked about a client who's promised to email some acquaintances and tell them about you, but then failed to follow through.  We said the most likely explanation is simple distraction—the client may simply be busy. 

But there is another possibility.  Maybe she's procrastinating because she's anxious.  Maybe she's worried (and not even aware of it) about what you'll say to her friend or colleague.  What if they're not interested? What if you put on the hard sell? 

If you suspect this may be the problem, it's perfectly fine to raise the subject (gently) with the client.  "It is very kind of you to offer to email so-and-so about me, Joan.  I'm sensing, though, that maybe you're having second thoughts or feeling a little uncomfortable about it?   If so, perhaps we can talk about your concerns to make sure you're comfortable with the process." 

At this point the client might simply say, "Oh, no, not at all... I'm sorry, I've just been very busy at work and hadn't gotten around to it yet.  I'll get that email out tomorrow."  Or, she might agree that yes, in fact, she's got some concerns, and you'll have a chance to allay them.

It can be difficult to initiate these types of conversations. We all have a tendency to want to avoid them, afraid that if we talk about it, the client might decide to rescind the offer of an introduction.  But we have to remember that if a client offers an introduction or referral without being 100% comfortable about it, chances are the promise may never come to fruition anyway—plus, now we've got a tense client.

So get whatever's bothering her out into the open air.  Chances are very slim you'll lose the referral, but even if you do—better to lose a referral than a client.

Subscribe to our free referrals newsletter.

Should you contact referrals by email?

In his Referral Minute newsletter this week, Bill Cates discusses a difficult scenario: a client promises to email some people and introduce the advisor, but never does.  Finally he just tells the advisor to go ahead and email the prospects directly himself. 

Bill goes on to offer the following email template to use in this situation:

Subject: Bob Jones recommended I contact you.

Dear Joe,

Your friend, Bob Jones, recommended I contact you.

My partner and I have done some very high-level financial planning for Bob and he thought you should know about the type of work we do.

I was hoping we could find a time to speak briefly over the phone in the next week or so. At that time, we can determine if I might become a valuable resource for you, as I have for Bob.

Perhaps you can bounce back with a day and time frame when we might set up this quick call. Or, feel free to call me at 555-555-5555.

Thank you. I look forward to speaking with you soon.

As Bill says, the point here is not to try to set a face-to-face meeting via email, but rather to "'negotiate' a quick phone appointment," which will hopefully lead to more. 

This is indeed a very helpful template if the only choice is in fact to email the referrals directly. But, as Bill points out, the entire scenario is less than ideal.  Introductions always trump referrals (free registration required).

I like to think of it in terms of football.  Imagine that your client is the quarterback, you're the receiver, and the referral is the ball.  The closer the quarterback is to you when the ball leaves his hands, the more likely it is to land safely in your arms.  The email scenario is like a long pass; there's a lot more room for error and for external forces to push that ball off in a direction you didn't want it to go.  A live introduction over lunch, on the other hand, is equivalent to a handoff from six inches away.   You could still lose the ball in the end, but your odds of success are a heck of a lot higher.

So... maybe we can step back and turn this situation around with a little analysis.  The client promised to email the referrals but never did.  Why?  Most likely, it's just a time problem.  You could offer to draft a quick introductory email for him, explaining that you've done this before and it will be much less time consuming for him that way.  If he likes it, he can just plug in his name and the prospect's name and hit send.  He doesn't have to do any work, and you still get to bask in what we call the "credibility glow" of his introduction.  He may say "no," but hey, it's worth asking.  Your offer may also convey to him that you're serious and really would like to follow up on these referrals, and that alone might goose him into finding the time to get it done himself.

Alternatively, maybe the client is procrastinating because he's actually uncomfortable about providing the referrals in the first place.  We'll talk about that one next time.

Subscribe to our free referrals newsletter.

Prospects prefer referrals from "a person like me"

Whose opinion counts most to your prospective clients?  According to the most recent survey by The Edelman Trust Barometer, the answer is most likely "a person like me."   (Thanks to the Church of the Customer for pointing out this link.)

This fits nicely with research conducted by Prince & Associates a few years ago. They found that at 2/3 of affluent clients said they'd prefer to find a financial advisor by referral, and about half of those would look to friends or colleagues (aka "people like me") for that referral:

Your best prospects WANT to find you by referral.  If you're not regularly asking "people like them" for introductions, it's time to get started.

The surprising truth--how referrals affect client relationships

Do you avoid asking for referrals because you're convinced your clients will think you're pushy? Selfish? A "greedy bastard?" (That's a direct quote from a financial advisor explaining why he doesn't ask.)

Get ready for a shock.  85% of the financial advisors we surveyed told us that referrals actually strengthen their relationships with their clients. 

So here you are, convinced that if you ask your best client for a referral, he'll storm out of your office and immediately transfer every last penny directly to your competitor—when the reality is, the relationship will most likely do even BETTER over time if he starts giving you referrals. 

Why? Maybe clients cement your value even more in their own minds when they recommend you to someone else (after all, why would they refer you if they didn't love you), or maybe providing referrals makes them feel like part of your team.  Whatever the reason, it isn't really as counterintuitive as it seems when you stop and think about it.

Do you have experience with this phenomenon?  Share by clicking on the "comments" link below.

Subscribe to our free referrals newsletter.

Want more referrals? Show your clients some love.

Whatever romantic plans you may have this Valentine's Day, I've got one more thing to add to your agenda.  Take a few minutes to think about how you treat your clients.

And be honest.  Are you showing them enough love? 

You've got to develop your own creative ways of providing top-quality service. Your goal is to create "raving fans," clients and connections so anxious to tell others about you that they have trouble containing themselves.

How do you create raving fans? Well, it obviously depends in part on your relationship with them. Clients and strategic alliance partners, for example, are looking for different things. But regardless of who's on the receiving end, the bottom line is giving in a way that creates delight.

Take Elizabeth Baldwin-Ross, a financial advisor in Syracuse, N.Y. (one of the country's snowiest spots).  She swung by a widowed client's home one day in February with coffee and muffins for breakfast, but found the home snowbound and vacant. So she borrowed a snow shovel from a neighbor and shoveled the walk. "Of course, I returned the shovel with a thank-you note written on the back of my business card," Baldwin-Ross told us. "My client tells that snow-shoveling story to everyone she knows."

And that's no surprise.  When it comes to referrals, love really does make the world go 'round.

Already sharing the love?  Tell us how you delight your clients by clicking on "comments" below.

Want more ideas for turning clients into raving fans?  Check out these articles (free registration required):

9 Client Service Tactics That Generate Business
With more and more investors carping about lackluster service, now's the time to take that extra step that really shows clients you care.  Here are nine creative service tactics that build more than goodwill--they build business.

How to Win Your Clients' Appreciation
Inspired by a Broadway star's passion for his audience, this advisor decided to win her clients' loyalty by treating them like front-row fans.

7 Service Tips That Have Clients Feeling the Love
In a new book, the retail magnate who's dressed Wall Street's best shares his secrets for building loyal, long-lasting client relationships.

Subscribe to our free referrals newsletter.