Making the Switch to Target Marketing

Newly independent advisor Tom H. of San Luis Obispo, CA wanted to jumpstart his new business by concentrating on referrals and using target marketing to channel his message. "It has occurred to me that I don't have a defined target market," he wrote. "Yes, I have a book of business, and it includes many retired individuals as well as young business owners and random individuals."

But Tom had doubts about the approach, specifically a fear about alienating prospects with a specialized marketing message that didn't fit them: "At the risk of not maintaining a target market, I don't want to leave out possible clients.  Is this a sound approach?"

He addressed his concern to Bob David, Horsesmouth Director of Advisor programs and leader of the Automatic Referrals Jumpstart Program. Here was Bob's response:

"I understand how it can be a bit overwhelming to try to tackle too many things at once, especially after going independent. Having grown up in a small University town myself, I know there are some unique challenges. Here are a few thoughts:

• Keep in mind that having a target market does not mean abandoning the clients you have that have been loyal to you as you've changed firms. This would be a de-motivator for you for obvious reasons. It just means that when it comes to your pro-active efforts, you will begin focusing on the needs of your "ideal client" or "target market."
• It is very important to identify your "ideal client." It can be tough, but keep drilling down. Remember that success leaves clues, so start with a hard look at those retirees and inheritors. What do they have in common? What did they do before they retired? Are they affiliated with the University? Or the government? What is the demographic profile—are they men or women? What age? What are their affiliations, passions, hobbies, etc..?
• Consider going one step further and doing a "SWOT" analysis: S—What are your relative Strengths in your market? W—What are your relative Weaknesses? O—What are the Opportunities perhaps overlooked by your competition? T—What are the Threats to your practice? (Could be aging clients, lack of a consistent advisory process, service quality, etc...)
• Consider derivatives of the more obvious categories and maybe move beyond your borders. For example, "Family Owned Funeral Home Operators" throughout CA or retired college professors or retired football coaches, etc...

At first, target marketing can seem daunting, but if you do some digging like Bob suggests, in the end it's a rather natural extension.

For more on target marketing and SWOT analysis, see these Horsesmouth (free registration required) articles:

How to Pick a Lucrative Niche

Many advisors think that by keeping their options open to all potential business they won't miss an opportunity. But the opposite is true. A focused, rich niche can be far more effective. Here's how to develop a niche over the course of the year.

6 Rules to Guide Your SWOT Analysis

SWOT stands for strengths, weaknesses, opportunities, and threats. In order for your marketing plan to work, you must honestly assess your practice in these four areas. If not, you risk failing in your efforts to grow your business.

Why Pruning Your Book Can Boost Referral Results

It may seem odd in a blog about referrals, but I'm going to spend a minute telling you why you should considering cutting people OUT of your book, and being choosier about who you accept as a client.

In his post "Grow Your Practice by Asking Clients to Leave" on The Non-Billable Hour blog, Matt Homann discusses a really interesting post on, of all things, a marketing blog for churches.  The gist is that in order to grow in a healthy way, churches not only need to be open to letting parishioners switch to a new church when they're not a good fit, they should actually be proactive about SUGGESTING that they leave.

Take a look and you'll see immediately how this applies to your business.  As Matt says, "Your practice is often far healthier if you stop serving clients you don't want  (and who are often unhappy with your service anyway)."  Not only does "pruning" your book free up more space for GOOD clients and lead to a happier, more fulfilling experience for you, it also leads to higher-quality referrals... because the clients you like are the ones most able to connect you with others just like them.  (This is especially true when you start to get into niche marketing.) 

Start examining your book and your client requirements today, and get on the road to greater efficiency, higher satisfaction for you and your clients, and more quality referrals. These resources can help (free registration required).

Pruning Your Book 101: Get Rid of Dead Wood
Got too many unproductive clients? This primer shows you how to reduce the size of your practice to release energy and increase your satisfaction.

Should You Throw Some Fish Back?
Being selective about the type of client you take on can be difficult, but critical to your continued success. Here's what FAs have to say about screening prospects in this week's advisor e-mailbox.

Give Your Book a Spring Cleaning
If you're a veteran advisor, find out what's lurking at the bottom of your client list. You may discover a gold mine or a junk heap—but at least you won't be in the dark.

How to Set an Account Minimum--And Stick to It
http://www.horsesmouth.com/linkpo/79321_18.htm
Don't wait until you have hundreds of small accounts to establish an asset minimum. Define your ideal client today, provide high-quality service, and achieve success on your own terms.

Want More Referrals? Get a Niche.

There is a long, long list of reasons that you should consider narrowing your focus and choosing one or more niche markets to serve. On just about every measure you can think of, from production and assets to pure satisfaction and enjoyment of the job, Horsesmouth's research has found that niche advisors are more successful than generalists.  But for our purposes, there is one especially compelling reason to "niche up": you're quite likely to get more referrals.

In their survey of more than 2,100 advisors, Horsesmouth asked the question, "Are you getting more referrals since you started working in your niche?"  Check out this chart.

   

It's hard to argue with those results.

Read The Advisor N-Factor, a Horsesmouth special report, and learn more about why niche marketing is so powerful and how you can start marketing to your perfect niche—and rev up your referral results along the way.

The Five-Minute Referral Secret

Here's the shortest great referral idea you'll ever get, courtesy of the Golden Practices blog:

"Find your five favorite clients.  Take them to dinner.  Don’t let them leave until they answer this question:  What can I do to get more clients like you?"

I know an advisor who started using this approach after going through the Automatic Referrals Jumpstart program.  Dennis words it a bit differently, but the idea is the same: "How do I find more of you?" 

He asked one of his favorite clients this question; she was delighted and complimented, and soon thereafter referred him to the man she was dating, who is the executive of a corporation.  Dennis got his accounts.

Now, this gets hard to follow, but next, she referred him to the son of her ex-husband, who is an executive at Microsoft, and his wife. Dennis got that account too.  Then the son's wife introduced him to her parents, who are a very wealthy retired doctor and mathematician.  He got that account too.  When he was telling me this story, he said, "This one million dollar account will be worth $20 million when it's done."

Can you afford NOT to try this great idea?  (Oh, and if you want to take it to the next level, consider a client advisory board (free registration required).

How Can I Get Clients to Refer Up Instead of Down?

L.H., an independent in Montana, emailed last week and asked:

"I get many referrals to lower quality prospects. How can I get 'referred up' rather than'referred down?'"

It's a great question. There are two pieces to the answer.

The best way to get referred to the type of clients you want is to take control of the process: by asking directly for introductions to specific people your clients know, rather than waiting for them to suggest names.  Automatic Referrals teaches a process called "network mapping" that helps you match the types of prospects you want with the people your clients know, and then ask for introductions to those people. 

This is the referral method that the most successful advisors use.  It gives you much more control over your referral flow, and also makes it much easier to make contact with and make a good impression on referred prospects.

However, the reality is that sometimes clients will provide unsolicited referrals, and you want those prospects to be qualified.  The best way to deal with this is to make sure that you are properly educating your clients about your business and the types of clients with whom you work. Don’t assume that clients know your areas of specialty, specialized services you may offer, account minimums, etc.  You can educate them in casual conversations, in marketing materials, in your newsletter, or by discussing it with some standard language during client reviews.   And, to the greatest extent possible, it's good to train clients to check in with you before making a referral.

Here’s one example of how you might phrase this, either in a meeting or in language you include in a client letter or newsletter:

"A number of my valued clients have been kind enough to ask if I am accepting new clients.  I am always grateful for your trust in recommending me to friends and family members.  At present, I am able to take on new clients in two specific areas: business owners who are seeking the opportunity to sell or transfer their business, and corporate executives who are within five years of retiring.  If you have someone in mind who may be looking for this type of financial advice, please call the office. If I am not the most appropriate choice to provide the help they need, I will always try to recommend another advisor who would be suitable."

On a related note, if you are going to turn away underqualified referrals (which is entirely appropriate and necessary from time to time), make it a point to identify one or more other advisors to whom you will feel comfortable referring those referrals—advisors who will appreciate their business, and provide them with quality service.

Referral Clinic: "My best clients are using me up!"

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

Today's question comes from Carol, a wirehouse advisor in Englewood, CO, and will be answered by Katherine Vessenes, JD, CFP®, RFC. Katherine is president of Vestment Advisors and the country's leading authority on building a multimillion-dollar practice.

Carol asks: My ideal client has said I have been spectacularly successful in getting them to consolidate, assess and plan. Our investments have done very well. My problem is they believe if I have fewer clients, I will have more time to attend to them—and they have inquiries nearly every month which require research. I need to tell them I will not BE IN the business if I do not service more clients in the $3M range-just like them. How do I say they are using me up, which is short-term helpful to them, but long term means they will be with a different advisor?

Katherine Vessenes replies: Carol, I have two thoughts about your dilemma.

First, you might not be feeling so burned out if you felt like you were getting compensated for your time. Many years ago I learned an important lesson while practicing law and trying to keep the difficult clients happy: I would just raise my fees until I fell in love with them again. Consider using your RIA to charge fees or raise them for the level of service you are providing.

Second—if that doesn't work, then go to plan B: I would invite them to be part of your informal client advisory board. (Although this technique will work with just this client, it would be better in a small group of similar clients.)

Call them and tell them you would like to invite them to a dinner party and get their feedback on a couple of things because you really value their advice and are seeking some ideas about your business.

Start the meeting off by describing your ideal client. Then get the discussion going by asking the clients what they think the ideal client would like about your current level of service, and what they think you should change. Take copious notes, of course. Then ask them for suggestions on how to get more referrals to this group.  Good ways to phrase this are: if you were me, how would you approach this group? Can you give me some specific suggestions? If you are really bold, you might say: some of my clients have been hesitant to give me referrals even though they really like my services. What am I doing wrong?

Two things should happen after this meeting: you should have a great marketing plan to your ideal client, and your existing clients should be much more motivated to give you referrals.

Good luck and let me know how it works out for you.

Got questions or thoughts about today's challenge or the response? Post a comment!

Don't let self-limiting thoughts wreck your referrals

Gail, a regional advisor from Texas, wrote in to tell us that even after 20 years in the business and despite being a big producer, she still finds that asking for referrals is her greatest business development challenge.  She says she's concerned that "my clients will wonder why I'm asking at this point in my career."

We all worry from time to time (some of us more often than others) that people are thinking negatively or critically about us.  And certainly, it's good to be aware of how others might perceive us, to ensure that we don't do anything truly foolish or destructive.  But most of the time, we're projecting critical thoughts onto others, thoughts that are exaggerated or just plain fiction.  And those thoughts hold us back in unhealthy ways.

This is a common problem with advisors where referrals are concerned, and it's the problem Gail is having. She's got this idea that there's something inappropriate about a successful advisor needing to generate new business, and she's projecting that idea onto her clients.  It's problematic enough that the idea itself is flawed... but attributing it to clients makes it doubly dangerous.

Whenever we make an assumption about what other people are thinking or feeling, we should stop and examine it objectively.  (You'll find this works especially well with spouses!) Often, when we expose our assumptions to air and light, we're able to see their weaknesses and strip them of their power. 

So let's examine Gail's assumption.  Think of some high-end, successful industry icons.  Bill Gates and Microsoft, perhaps. Saks Fifth Avenue.  Mercedes.   When you see an ad for one of their products or services, do you think to yourself, "Wow, I can't believe they're still trying to get new customers?! I mean, they're so successful, and they've been around for so long..."

Of course not. 

Or let's look at it another way.  Do you assume your attorney or your accountant will never need another client again? Or if you needed back surgery and called the office of the most brilliant and sought-after orthopedic surgeon in your state to get a consultation, would you expect the receptionist to tell you to take a hike because the doctor is just too successful to take on any new patients? 

You see where I'm going here.  99.9% of clients are neither surprised nor concerned that their advisor is interested in or willing to accept new clients.  Most clients probably don't give much thought to their advisor's other client relationships or business development situation at all. Why should they? It's not their job, just as it isn't your job to wonder whether your dentist's practice is thriving or not.  But to the extent that they do give it any thought, your desire to take on new clients has no bearing whatsoever on your quality or professionalism. 

In fact, if you ask the right way, you can actually reinforce your exclusivity and make your clients feel like members of a small and elite club.  This is a secondary issue for Gail, who says, "I especially want to emphasize that I'm only looking for million-plus dollar accounts without sounding snobby."  She can play that up in the way she phrases her referral discussions.

If Gail uses network mapping to pre-identify prospects or prospect types in her clients' circles who are likely to be qualified to do business with her, she can ask for introductions to those people in a way that reinforces just how successful she is.  "John, I know you're on the board of the Houston Advertising Federation. I believe Kim Phillips is also on the board?  She's one of a select group of ad execs in the area whom I've been focused on meeting over the past few years. What would you think about the three of us having lunch sometime next month, on me?" 

Can you see how this kind of exchange would actually reinforce both John's and Gail's importance and elite standing?

Don't let self-limiting thinking (free registration required) dampen your success. Anytime you find yourself concerned that something you do or say has made or is going to make a bad impression on others, stop. Recognize that you've made an assumption. Examine it.  Maybe it's valid—but more likely, you'll find that it's both without merit and counterproductive. 

How to Stop Getting Poor Referrals From Attorneys and CPAs

Welcome to Day 18 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 comes from Chris M., an independent advisor from San Diego. Congrats, Chris!

Daryl Logullo, founder of Strategic Impact, will be answering Chris's question. Daryl helps advisors attract more clients using direct response, strategic alliances, and client referral strategies.

Question: "How do you position yourself to ask politely for referrals from
another professional (attorney, CPA) so that you are not in the uncomfortable position of turning away non-ideal prospects (i.e. too small, too conservative) that are referred to you?"

Daryl Logullo's answer: It sure becomes a lot easier when the referral source knows four specific, tangible items about you:

1. Precisely what your skill sets are (managed money, insurance planning, estate tax guidance, etc.). They need to be able to recite your core competencies as specifically as possible.
2. Whom you have previously done work for (showcase this via testimonials, case studies, etc.)
3. What reasonable results they can expect should they refer you.
4. What your communication process will be should they introduce you to a prospect or client.

If you tackle items one and two above, over time it becomes crystal clear in the referral source's mind who an ideal client is for you.

The problem is that most advisors have never done this. And they certainly don't do anything regularly that creates opportunity to discuss who "lives" inside their current business world. Trust becomes the byproduct.

If you take a look at the social psychology that influences trust and garners closure, trust means that the other person's intentions are open, honest, and in your own best interests. Trust leads to social influence, which means that I earn the ability through my own thought or action to easily persuade the other person—often when I'm not even trying.

I don't want to get into a long discussion about how to gain trust quickly. But at the core level, the other professional must have confidence in your skill set and that fact that you won't harm them.
Outgoing ways of accomplishing this kind of trust include providing pro-bono services or service on mutual charitable organizations; conducting joint focus group symposia; and other activities that involve the referral source in your "world."

There is a larger issue here under the surface that I want to address and be specific about. Let me do this in the context of attempting to forge a relationship with a CPA. (I don't want to digress from your original question here, but I need to sidebar to make the point.) It is what I call one of hundreds of hidden truths about a CPA and his/her world that often goes unspoken.

When I do occasional public speaking, I'm often called to elaborate on this truth. I know it to be true from the over 349 hours of private focus group work I have done interviewing CPAs for over ten years now.

Here it is: You and the CPA are often approaching your efforts from the opposite ends of the business-building spectrum.

You see, if a CPA increases his or her client or referral load, that doesn't necessarily mean he/she will make more money. In fact, CPAs often view this growth, or a newfound "referral alliance," simply as more work and more expense.

Why? Often because of a linear business situation. In other words, service one client; charge one client for hourly fees; collect fees on one client.

I don't have space here to go into tremendous detail on this, but many accounting professionals explain it using a common phrase they toss around: "relevant range." 

Essentially this means that the CPA's business has a certain overhead, and that overhead can service only so many clients. An obvious statement.  Often, in the CPA's mind, they'll begin to lose money at a certain point where they add additional clients.

"'How is that possible?" you ask?  It's because added overhead may be required for them to grow. Many CPAs have a linear business model, and they often view growth, as related to operational costs and more clientele, as a negative (even though, as you know, in essence it's really a positive).

So fo course, you position yourself to them by being trustworthy, competent, and intelligent. But go further, and empathize. Make sure they understand that you get the concept of their linear business challenges.

CPAs have told me that an advisor can earn much more respect and trust simply by understanding and relating to the CPA's business challenges than by playing fancy "dating games." That's why I honestly believe that if you embrace what I'm explaining, CPAs will begin to understand the type of work that you do, and for whom.

Oftentimes, that's the key to receiving highly qualified referrals that fit into your ideal client scheme. Then you will never find yourself in the uncomfortable position of having to explain to a professional that their referral is not ideal.

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

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 CPA Won't Refer and Now His Son Is My Competition

Welcome to Day 2 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 George M., who's with a regional firm in St. Louis, Missouri.  Nice job, George!

Daryl Logullo, founder of Strategic Impact, will be answering George's question. Daryl helps advisors attract more clients using direct response, strategic alliances, and client referral strategies.

Question: "I have a CPA that has done my taxes for over 20 years. During that period, I have given him an average of 1 or 2 referrals a year. Many of them have become his clients. He gave me one, some time ago. This tax time when I dropped off my records, I noticed that one of his sons, just graduated from college, has set up a co-located office with him and is affiliated with one of the 'independent' broker-dealer networks. I commented on this and was told, 'We have so many clients that need this service, we decided to get into it ourselves.' 

Over the years my contacts with other CPAs have gone nowhere when they learned I wasn't interested in giving them my tax business.  This seems to be part of the price you pay in my market. So I kind of have all my eggs in one basket.  What do I do now?"

Daryl Logullo's answer: The short answer is, you move forward! Besides trust, referral alliances love one thing: consistent momentum. Sounds like you're feeling paralyzed.

First, the son.

Attempt to forge a relationship. Be genuine and honest. Protocols may include a further introduction made on behalf of the father; an invitation by you to provide advice on a prospect of client proposal you are working on; even inviting him to participate in one of your quarterly client meetings. Bottom line: move forward! With or without the old man.

You can also do the same with other CPAs in the marketplace.

I do want to comment on the twenty years of knowing and trusting the 'father CPA' since that sounds like a regrettable point to you. There is a semblance of a relationship there. At the very least, the CPA knows your skill set. But are you certain that during those 20 years he has experienced all of your work? Does he truly understand all of your competencies?

If so, use that to your advantage; if not, there's hope. But it requires an open, honest conversation about core competencies. It involves you "bringing" the CPA into your monthly world of financial advice and counsel. The examples I gave above can help.

Now: how to go about moving forward. Please understand that in many instances referrals from CPAs tend to deal with seasonality factors (among other things). I write about this in Chapter 13 of my book.

CPAs often run a cyclical and seasonal business. Yet, if you have a good relationship with the CPA (or any professional for that matter), I firmly believe you should be able to sit down, face to face, and confidentially, tactfully say, "I understand that there is a lot of timing involved here—and I've sent you some clients through the months—but tell me:  Are you seeing any situations now that may be a good fit for me?"

Asking that question isn't pushy, domineering, or aggressive. It's acceptable business behavior between valued professionals.

Just realize that in all likelihood the CPA may have a narrow picture of what you want from him. In your example, sounds like you've always dropped off tax info. Maybe that's all he knows your needs to be: Using him for tax prep!

Clearly define what the circumstances are that would be right for the CPA to contact you.

Can you think of such situations?

I can. For example, maybe he should contact you whenever he faces a question concerning a lump sum retirement plan distribution for a client. Or whenever there is a  family inheritance issue for a client. Or whenever a client wants to convert her UGMA account to a 529 plan.  You get the idea. I refer to these "life cycle events,"  or L.C.E.s. Detail what L.C.E.'s warrant a phone call to you. Be specific!

Often, written tools such as a Client Profile or an Ideal Client Picture help to communicate this. Those are great tools that every advisor should be using.  Remember: referral alliances love consistent momentum. Start creating some and watch what happens. Good luck!

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

The ABCs of Automatic Referrals: E is for Educate

When you went to buy your last pair of shoes, did you know what you were looking for?

I'll bet you had a decent idea.  Maybe it was a pair of running shoes, or loafers, or a pair of heels to wear to a wedding.  And you probably didn't go into the shoe store and say, "Excuse me, I need shoes. Can you sell me a pair, please?"

You wouldn't do that, because that would make it pretty difficult for the clerk to help you. Sure, he could make an educated guess about what you were looking for based on what you were wearing—but what if you had just come from the office dressed in your Brooks Brothers suit, planning to buy a new pair of running shoes? 

No, a vague approach to shoe-shopping would definitely a recipe for wasted time and general frustration.  Which is why we don't shop for shoes that way.  We at least have an idea what we're looking for, enough so we can get to the right department to browse.  And most of the time, we communicate a pretty specific idea of what we want: "I’d like a pair of Nike running shoes, please," or "I’m looking for brown loafers with no tassels." 

Now we’re talking. The clerk can quickly lead you to the loafers, rather than wasting your time (and his) showing you his entire line of workboots.

The moral of the story: if you want high-quality referrals, you have to educate your clients.  Because they simply don’t know your business like you do.  Don't assume they will extrapolate from their relationship with you, or that they know everything about you and your areas of expertise.  In fact, most clients are as likely to send you a neighbor with a $5,000 IRA as a co-worker with $5,000,000. 

You don't have to settle for referrals that fit you and your practice as badly as cheap shoes.  Help your existing clients understand who your ideal clients are and how you serve those clients. You'll start to get more qualified referrals that fit.

Subscribe to our FREE referrals newsletter.

A referral a day keeps the cold calls away

According to Brett Coffman of Matrix Wealth Advisors in Charlotte, N.C., physicians may be among the more challenging clients to serve, but they make up for it by also being among the most loyal.  "They tend to appreciate our advice more than any other demographic," he said in a recent Investment News article. "They tend to be our best-referring clients."

If physicians are represented in your client base, try mapping their networks and asking them for introductions.  By the way, some advisors find that physicians respond very well to the "asking for advice" method.  So you might want to give that a try.

Then, let us know what happens. (If you've already had an experience with asking a physician client for referrals, good or bad, click on "comments" below and tell us about it.)

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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.

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Find the referral formula that works--then stick with it

In a recent Duct Tape Marketing post, John Jantsch put his finger directly on a very common marketing challenge for advisors. He writes:

"There is a Buddhist concept called the monkey mind. The monkey mind is the name for that clamoring in your head that hates the silence, hates the mundane, hates to sit still.

I think small business owners suffer from the marketing monkey mind. They can't stand to listen to the same marketing message over and over, they yearn to bounce off the walls in search of the new, new marketing message and they hate, more than anything, repetition.... Stop changing what you say, what you look like, what you do—stick with something long enough, repeat it over and over until it makes you ill (or becomes a mantra)."

Jantsch is talking about small business owners, but his observation fits advisors to a T—although in their case, it's more typically tactics that change, as opposed to branding or marketing messages.  As long-time advisor coach Joe Lukacs once told me:

"Lack of consistency is a real problem in this industry.  Advisors often stop doing what works out of sheer boredom.  If you want to try new strategies, try small tests, slotting in the new methods without taking time away from proven techniques. You may have to work a little harder for a short amount of time, but don't abandon what works.  Recognize what works, bottle it, and stay consistent."

This advice is true for referral marketing as well as marketing and prospecting in general.  As Jantsch suggests in his post, the end goal of any type of marketing is to get prospects to target YOU, rather than the other way around.  Know which markets you serve.  Be clear about what makes you unique in serving them.  Figure out who your best referral sources are for those markets, and then be consistent in asking them for introductions and otherwise engaging their help to get the word out.  You'll start to develop critical mass in your chosen markets, and the referrals will begin flowing more and more freely.

You can conquer monkey mind and make referrals truly automatic in your practice by remembering Jantsch's and Lukacs' sage advice: "Stop changing what you say, what you look like, what you do. Recognize what works, bottle it, and stay consistent."

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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.

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Referrals: More on "failure to launch"

Do you wonder why your referral requests always seem to crash and burn?

Bill Bachrach has a theory:

If nobody's finding you, maybe you're not as attractive as you think you are. Do your clients make excuses when you ask them for referrals? Do you they tell you, "I don't know anybody who's looking right now, but if I come across someone, I'll let you know. Why don't you give me a couple of your cards?"

In "Referral failure: it doesn't mean you're unworthy," I respectfully disagreed with Bill's premise that advisors are afraid to ask for referrals because they know deep down that they're not really referable.  I also take exception to this notion that clients respond to referral requests with "I don't know anyone," because their advisor is not good enough to refer. 

I understand where Bill is coming from; certainly, there are some FAs out there who have some improving to do.  But our research suggests that nearly 90% of advisors routinely get the "don't know anyone" or "can't think of anyone" objection when they ask for referrals. And it's not because all of those clients are unwilling to refer.  It's because advisors usually don't ask in a way that makes it easy for clients to think of appropriate referrals.

Your client's brain is basically a big database. When you ask for referrals, it's essentially the same as doing a Google search. Ever try Googling without being specific? I don't know about you, but I don't have time to sift through 42,356,356 hits because I didn't type in specific-enough search terms.

If your client is just average, she knows more than 200 people. If she's well connected, that number is much higher. So, when you put her on the spot and ask her a question as general as "who do you know who might benefit from my services?" is it any surprise she comes up empty?

On the other hand, consider what might happen if you gave your client some parameters, such as "Do you know any other women who are also going through a divorce right now?" Now you've narrowed the field from hundreds of acquaintances to a much smaller group. That makes it easier for her to think of specific people and their situations.

So, if you typically hear some variation of the "I don't know anyone" referral objection, odds are the problem is not with your referability, but rather with your referral methodology. Once you figure out who your ideal client is, learn to convey that information to your existing clients, and understand how to ask for referrals in a targeted way, you'll stop hearing those unpleasant words and start getting introductions instead.

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Hoosier networking group shares referral wisdom

If you happen to live in Indiananapolis or Terre Haute, Indiana, you might be interested in what looks like a pretty dynamic networking group, Rainmakers.  And even if you aren't a Hoosier or if you belong to another group, you can still get a lot out of their Shaman’s Guide to Being a Rainmaker.   Here's a little sample of their networking wisdom that highlights the importance of knowing your target market and having a strong elevator pitch:

Sharpen Your Focus

What exactly do you do and who exactly is your customer?  Other Rainmakers cannot refer you if they do not have a clear idea of both your clients and your services.

Bad: "I am a technology consultant"
Better: "I specialize in technology support for companies that do not have an IT staff"
Best – "I offer IT support for companies with no IT staff. My ideal client is an accounting firm with between 10 and 40 employees"

In the ideal scenario, Rainmakers will immediately think of the right connection between the right people, in the right businesses.

A cautionary note: having it doesn't mean you have to flaunt it.  It's best not to make every networking event a personal challenge to see how many times you can repeat your elevator pitch in an hour!  Treat your pitch like your business card; offer it sparingly and focus instead on asking questions and learning about the other people at the event, and finding a few good ones to follow up with (there's a great section on that topic in the Shaman's Guide too).

Let the existence of this upstart group also serve to remind you that you don't have to rely on existing networking organizations—you can start your own, tailored to your own interests and needs.  Here are a few case studies about advisors who have done just that (free registration required):

Case Study: Create Your Own Elite Dinner Club 
Dining with prominent members of the community turned into a networking sensation for this veteran advisor. See how a top producer parlayed a one-time $1,000 restaurant expense into a steady flow of million-dollar connections—and friendships.

Case Study: How to Start a Business Networking Group
Here’s how an advisor started his own business networking group, cultivated an association of lucrative contacts—and tripled his book in 18 months.

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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.

Why "C" clients can be great referral sources

Chris Holman, "The Prospecting Professor," writes in a recent post about centers of influence that while most advisors crave relationships with attorneys and CPAs, they often ignore the so-called "superconnectors" around them.

These are the folks who seem to know everyone. Journalists, restaurant owners, and PR professionals often fit the bill—in fact, I wrote a few years ago about one connector I happen to know who is a publicist and a networker with talent that must be seen to be believed (free registration required).  "One of the most connected persons I know is the couple (two people) who own the local coffee shop and bakery," Holman writes. "They seem to know everyone in the neighborhood." 

Uh... YEAH.  I don't know about you, but the guy who owns the local diner in my town knows pretty much everyone too.

There's more to the story, though. We should also remember that sometimes—often, in fact—those "superconnectors" are already our clients. And they may be people whom we consider to be only B- or even C-level clients based on asset levels.  We hear often from advisors whose biggest clients were referred by their smallest ones. 

So when you segment your book and look to replicate your top clients, don't ignore those "superconnector Cs."  They may not have millions in investable assets, but their referral power is worth its weight in gold.

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Stop referral objections before they stop you

How often has this happened to you: you ask for a referral and they say, "No, I'm sorry. I don't give referrals. I just don't believe in them."

That doesn't happen very often, does it?  In fact, clients may "object" to your referral request, but the objection is rarely that direct or that negative.

Do these lines sound more familiar? "I'm sorry, I just can't think of anyone."  "No one comes to mind right now, but let me sleep on it and get back to you."

Those, you've probably heard before.  Because just look at the results of a poll Horsesmouth conducted on this very subject for the article Want Referrals? The Trick Is in How You Ask (free registration required):

 

Nearly 90% of the respondents describe the same experience.  "I can't think of anyone" is an objection that will stop you cold, and it's depressing. Luckily, it's also very preventable.

It's too difficult for clients to dig into their mental databases and extract the perfect referral for you from the hundreds of names they have stored there. So, you're going to do the work for them. 

Ideally, you'll do your homework in advance, and ask for an introduction to a specific person you know they know.  "I've been hoping to meet Gary Johnson, who serves with you on the museum board. Would you be able to introduce me, perhaps over lunch next week?"

Even if you can't get that specific, you can still be very targeted in your request.  Instead of, "Do you know anyone who could use my services?" try, "Do you know any other otolaryngologists who you think may be planning to sell their practices in the next 5-10 years?" 

Give your clients some traction when you ask for referrals (free registration required) and you'll end-run the "I don't know anyone" objection much more often. You'll also be pleased to find you're getting higher-quality referrals.

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