Know Your Ideal Client Profile to Screen Referrals

Nobody's apt to look a gift horse in the mouth, but the truth is that just because you receive a referral doesn't mean you should take it on impulse. Other than failing to meet your account minimum, there are other factors that should trigger a pass. Take the advice of Dallas based advisor Woody Young and avoid "taking what you get instead of getting what you want."

It follows that in order to get what you want, you need to know whatyou want. Take the time to sit down and determine what type of client you most enjoy working with and have found success with in the past.

Consider these questions for starters:

• Risk. Do you prefer working with conservative clients or risk-takers?

• Arm's length. Do you prefer to maintain a professional detachment with your clients? Or do you like having an informal, friendly relationship?

• Communication. Do you prefer a formal or informal style? E-mail or formal written proposals?

• Gender. Do you have a preference in working with women or men?

• Age. Are you more comfortable with older or younger clients?

• Focused/broad. Do you specialize in a niche or are you a general practitioner?

• Fast/slow decision-making. Do you like working with people who make investment decisions quickly? Or people who take their time?

• Educate/collaborate. Do you like to teach? Or do you prefer savvy investors who discuss decisions with you?

When you've defined what kind of client you're most compatible with, you can easily see what kind of referral you should pursue, which you should contemplate, and which you're better off passing on. This way, you'll start getting the kind of clients you want, not just those you can get.

While the above questions are a good start, there's more to establishing an Ideal Client Profile, and if you're curious about learning more about the topic, you can find additional information in these Horsesmouth articles (free registration required):
  
Attract Business With an Ideal Client Profile
http://www.horsesmouth.com/linkpo/83744.htm
Knowing exactly who you serve best leads to more effective marketing and referrals--and more business. Review these examples before writing your own ideal client profile.
 
7 Steps to Cloning Your Best Clients
http://www.horsesmouth.com/linkpo/79385.htm
Your dream clients might be just a phone call away. Here's how to replicate your best clients.
 
Identify Your Best Clients
http://www.horsesmouth.com/linkpo/68983.htm
Business coach Steve Sanduski shows you how to segment your book so you can identify your best clients--and find more just like them.

To Get Real Results, Take Your Conversations Further Than You Are

Letting clients know you’re seeking referrals is certainly a good idea. They might take the message to heart and remember it when talking to friends and drop your name. The “might” in the previous sentence is the problem. When you leave it solely up to your clients to take charge and proactively seek out people they know and tell them about you, you’re setting yourself up for disappointing results.

The client may nod enthusiastically and agree to mention you to those they know, but from the moment they leave your office or stop talking with you, their personal concerns and the demands on their time begin to take over their attention (as they are only human), and your quest for more referrals takes a back seat in their priority list.

To avoid this and encourage action from your clients, take the conversation further—illustrate specific scenarios where they can bring you up and get them to commit to specific action steps. Dan Richards of Strategic Imperatives provided some effective talking points for doing this in a recent Horsesmouth article:

• "If you are talking to someone who is unhappy where they are, perhaps you could suggest that the three of us get together for coffee."

• "Recently I've identified the three traits shared by the clients I work with the best and find I can help the most. I wonder if I can spend two minutes going over these with you, should someone you're talking to be a fit for this profile."

• "I'm always happy to sit down with anyone you introduce and give them an hour of my time to talk about their situation and perhaps suggest an alternative approach for them to consider."

• "I will be conducting a couple of luncheon workshops for clients this fall, at which I'll be discussing how this economy continues to affect client portfolios and what strategies we're using. Many people find that a comfortable way to get a feel for my approach. If you know someone who might be interested, give me a call or drop me an e-mail and I'd be pleased to send him or her an invitation. If you're interested in attending, perhaps you can invite your friend to join you."

• "Please ask if it would be OK to send them a copy of my most recent newsletter; just drop me an e-mail or give me a call with their name and address."

• "You've told me you found the articles I've been sending you valuable. If they're interested, send me a note with your friend's name and e-mail address, and I'd be happy to add them to the distribution list for those articles."

See Dan’s entire article (free registration required) for more on what to say and do to get referrals in today’s environment. Also, see these other Horsesmouth articles for even more action points and strategies:

Getting Your Clients to Follow Through on Referrals and Introductions
Use these three handy scripts to help coach clients into giving more referrals--and following up on the referrals they promise.

3 Powerful Persuasion Secrets That Get More Referrals
If you're looking for more ways to get referrals, here are some worthwhile gems from a new book.

7 Ways to Get Specific Referrals
To get more referrals, you need to get specific. Here are seven ways to increase referrals, along with specific questions you need to ask your existing clients.

Don't Overlook this Guaranteed Way to Increase the Success of Your Referral Strategy

How many referrals did you receive last month? Who was your last referral? Who referred them to you? Did a specific conversation or act on your part trigger the
referral? What was it?

Aren't you keeping track?

You are probably familiar with the maxim, "What gets measured gets done." When people keep score, they tend to try harder. The idea is that keeping track of your efforts and results puts a level of accountability into place that fosters action and discourages procrastination and sub-par effort—it's not so easy to brush off bringing up referrals with a client when you know you're hurting your records. It also gives you a clear perspective for judging what's working and what's not, and what's worth spending more time and effort on.

Keeping track works.

But all too often we fail to track our efforts, and months later, after the demands and distractions of day-to-day life has sapped away the momentum of reform, we are forced to acknowledge with shame that we did not live up to the goals we set for ourselves. Don't let your referral strategy efforts end this way.

Creating a simple spreadsheet in Excel or on paper is all that is needed, but you can also elect to use CRM software or websites created for tracking purposes. There are many options available to you. Whichever method you choose, the most important thing is to make updating and revisiting your records a priority in your schedule.

Here are some things worth tracking to get you started:

• Number of requests for referrals
• Responses to requests for referrals
• Closing rate on referrals by clients
• Assets brought on through referrals
• Time spent working on referral strategy

This list is not comprehensive, of course, and you should use the metrics which work best for you. Whatever you choose to keep records of, give it a try. You will better maintain motivation and improve your results if you track your efforts and results.

The No-Pressure Referral Request

People get pitched products and services all the time in modern society, and this can cause them to have their guard up against and ultimately be repelled by anything that even resembles a "sales situation," even when it comes to your good clients and referrals. Asking something like, "Do you know anyone who could benefit from my services?" can be off-putting to some, and they may not want to mention friends and family because they're afraid you're going to "sell" them.

To avoid your referral requests sounding like a sales situation, consider using what recent Advisor Radio (free registration required) guest Judith Cane calls a no-pressure request.  Judith, an advisor in Ottawa, Ontario who specializes in working with women, starts by asking her clients if they ever talk about finances with other members of the clubs or organizations they belong to (you'll want to know ahead of time what clubs/organizations they are members of so you can pose the question specifically).

If they say yes, she asks, "Could you pass my name on if they're interested?"

If they say no, she tells her client that they can invite any of her fellow-members to a wine and cheese tasting that she hosts regularly, where they can learn more about investing, the cause of all the trouble in the stock market, and other topics of financial concern.

At the event itself, Judith concentrates solely on providing her guests with quality information of benefit to them and she invites them to sign-up for her e-mail newsletter if they like. She does not pressure anyone and does not aggressively follow up.

While this kind of no-pressure referral process may not bring the immediate business of a more aggressive approach, in the long-term, it works. Judith mentioned that she has been contacted by people who attended one of her events over a year ago who, while they weren't interested then, are now nearing retirement and could use some good advice.

Consider introducing elements of this kind of no-pressure approach into your own referrals system to avoid the sales stigma. And head over to the Advisor Radio (free registration required) to hear Judith describe her strategy in even more depth.

Is the Use of One of These Hackneyed Referral Requests Hurting You?

Speech is a free-flowing, spontaneous medium. When you talk with clients, often you don't even think about what you're saying or how you're saying it—you just go with what pops up in your head, and what pops up is generally the phrases and talking points you've used in past conversations.

When it comes to referral requests, "what you've always said" might be hurting you more than helping you, especially in the current atmosphere. Here are three popular phrasings of requests from the "Leading Your Own Referral Revival " AdvisorFest webinar (free registration required) hosted by Bob David, including why you should think twice about using them:

• "I'm taking on a select number of clients this year." This is meant to project exclusivity, but it can come across as too advisor-centric. Also, it's a similar approach to that used by Bernie Madoff, telling investors that he's closed but that he'll make an exception just for them, fooling them into believing that he must work wonders to be so overwhelmed with clients. Do you really want to be taking cues from Madoff's playbook right now?

Try being more inclusive and sympathetic. Ask clients if they know anyone who is unhappy with their investments, and if so, if the three of them would like to get together for lunch.

• "I get paid two ways, one is referrals." There are many variations of this. If you're not careful, clients may resent you for being less than honest and upfront. Also, with many portfolios having taken large hits, investors are questioning the fees they pay their advisors, so bringing up the issue of payment may not be the greatest idea.

  Instead, put the focus on giving. Offer to send your newsletter or articles to anyone your client knows, provided it's OK with them.

• "Who do you know that can benefit from my services—or is just like you—or who should I be talking to..."  Too vague and broad. Most likely to get a deer-in-the headlights response.

  In our research and experience, the more specific you get when asking clients about people you could help, the better. Mention specific examples of the kinds of clients you work with (like entrepreneurs, pre-retirees, etc.) and the specific issues you have expertise in (business succession, IRA rollovers, etc.).

Why Educating is the Key to Bringing on Clients and Keeping the Ones You Have

There is a paradox in today’s investment world, especially when it comes to the wealthy. In order to overcome loses from last year and recover their nest eggs, many investors want to get aggressive and capitalize on the market recovery. However, these same investors are still afraid of being burned again by a market plunge and many of them have lost confidence in investment professionals to guide them through.

Educating is a great way to overcome the fear and distrust many are feeling, since understanding grants peace of mind. An effective way to keep your clients informed is by sending articles to them, encouraging them to pass them along to friends and family, which also makes it a good stepping stone to referrals.

Here are some important points to keep in mind should you decide to start an article sharing strategy:

• Find articles that reflect who you are and your investment philosophy. Remember that the goal here is to educate the client or their associates, giving them knowledge about why and how you do what you do so that they feel comfortable with you managing their assets.

• Write a note on the corner of the article. This could be something as simple as, “Saw this and thought you’d be interested,” to explaining to them how the article fits in with their own portfolio strategy. This adds a personal touch, making it more meaningful.

• Keep tally. For an article sending strategy to work, you need to keep at it, and the only way to ensure that is to track how often you’re sending them out. Plan out how many you want to send each month and stick to it.

• Alternate mediums. Email makes it easy for clients to forward articles along to their friends, but don’t rely just on sending articles electronically. Mix it up by sending the articles via fax or physical mail. 

• Encourage clients to share! This one’s important. Always include a line written somewhere on the article or in the email about sending the article on to anyone who could find it useful. This is what will get you referrals.

• Get writing. Authorship is a powerful credibility establisher and trust builder. If you can, write articles for local papers or trade magazines and then send reprints to your clients.

• Avoid mentioning products. Whatever you do, avoid having the articles you send read like a product advertisement. This makes clients and prospects see you as a salesman, and that’s the opposite of what you’re going for.

See these articles for more on using education and article sharing to improve client service and ramp up prospecting (free registration required):

The Rule of 7: How to Build Mindshare and Win More Clients
How often do you follow up with a prospect? Do you make one call and hope that it's enough? Two? Three? Four follow-ups? Is there a magic number of follow-ups that will increase your chances of sales success when prospecting? Yes. The magic number appears to be seven.

How to Land New Clients in a Bear Market
Here's how one advisor is using a four-pronged approach to communicate with clients in a way that naturally grows his business during a market crisis. If you view the current turmoil as a buying opportunity, you must also see it as a once-in-a-lifetime opportunity to add new clients. Embrace it or waste it. The decision is yours.

Keeping the Faith With Clients
Now more than ever, the trust you engender will make or break your career. Here's how to consolidate clients' trust and keep it by being a leader in turbulent times.

Finish Referral Conversations in a Position of Control

How many times has something like the following happened to you: You're talking to a client or another professional when they mention someone they know who they feel could utilize your services, so you hand them your business card and ask them to pass it on to the acquaintance. Then comes…nothing. Time goes by with no call. If the person you gave the card to did pass it on, which is certainly not assured—it's more probable that they forgot and/or misplaced the card—the acquaintance might not get the prompt to action they might need to pick up the phone and ring you up.

Over at the Referral Authority, Matt Anderson identifies this kind of passive "pass on my card" situation as one of the biggest problems people have when it comes to referrals. "Always be in a position where you're asking: 'When should I get back to you to see if this person is interested?'" says Anderson. When you end a referral conversation on that note, with a confirmed future action set in place, you stay in control of the process and ensure that the ball will keep rolling.

The next time a referral opportunity comes up in a conversation, don't end the talk passively. Set the stage for future action, committing to a time when you can follow-up with the person who's agreed to pass the card along.

Be Upfront About Expectations in New Referral Relationships

Past posts here have discussed the seeds of referral opportunity in the current market environment—the chance that your clients know someone who is unhappy with their current advisor, whether due to lack of contact or poor performance, is very high. You should certainly be asking your clients if they know such an unsatisfied friend or associate.

But you should be careful if one of your clients refers such an acquaintance to you. Because the referral is coming off of an unsavory relationship with another advisor and you were recommended, they are likely to have unnaturally high expectations. It's not a bad thing that they think highly of you, but exaggerated expectations can lead to frustration when they're not delivered upon, and let's face it, no one is making miracles happen in this market.

In order to address these kinds of inflated expectations, you should be upfront early on in the relationship, before the referral agrees to become a client. You might tell them that your clients have not been immune from the market meltdown and that you won't be able to fix all the problems with their accounts over night, but also that you are dedicated to protecting and growing your clients' assets and would appreciate the opportunity to do the same with them. Whatever you choose to say, honesty and pragmatism are key.

By bringing up expectations and addressing reality like this, you encourage future client satisfaction. To ignore inflated expectations is to make dissatisfaction, and possibly defection, more likely.

Making Thank You Notes Personal When Hand-Script Isn't an Option

Replying to the post, "The Art of the Referral Thank You," an advisor named Justin wanted to know if there was a way he could send notes to his clients thanking them for referrals that had the same impact as a handwritten note, only not handwritten. "I have horrible handwriting and have resorted to typing all correspondence," he wrote. "Do you have any other suggestions?"

Firstly, the flaws in handwriting are part of the charm in handwritten thank you notes. It really sets them apart from word processed fare and gives them a personalized feel. You shouldn't worry too much if your handwriting is less than perfect—handwritten thank you notes will still be very effective. Think of a homemade gift from someone. It may be a little rough around the edges, but the time and care the giver put into it has a profound impact. It's the same idea with a handwritten thank you note.

However, one thing I must stress to Jason and anyone else worried about the legibility of their penmanship is that you should be wary of faking the handwriting. Some people try to make their correspondence look hand done by using a certain font that imitates hand-script-I'd advise against doing this. Not only will clients see through this, but they are likely to perceive it as tacky. It's far better to just word process them without the deception if your handwriting is truly illegible.

Another option is to pay a company like Send Out Cards to send thank you cards to your clients. The way this works is that they send you a form with a space to write each of the letters of the alphabet. Once you do this and send it back, they can create an infinite number of messages in your handwriting style. This way you only have to make the handwriting look good once, and you can save yourself an aching wrist, too. Send Out Cards even has a selection of gifts like chocolates, books, and candles you can send out with the card should you choose to. The downside to this approach is that you won't be able to use cursive, and perceptive clients may catch on to the fact that it's mass-produced. Still, it's a good way to add a personal touch if you don't have the time or the ability to do thank you notes by hand.

Ramp up Referral Quality with a Joint-Client Survey

A strategic alliance with another professional such as a CPA or attorney is a valuable asset to any referral strategy. Yet Julie Littlechild of Advisor Impact has an idea to make these relationships even more effective: a joint survey, both independently run and confidential, of both client bases.

"In this scenario," writes Littlechild of such a survey with a CPA, "you would conduct an independent survey of your clients, and the CPA would conduct an independent client survey of his or her clients. Each survey would reflect your own needs and objectives, but you would look for cross-selling opportunities for the CPA (e.g., valuation or corporate audit services), and the CPA would look for cross-selling opportunities for you (e.g., wealth management or estate planning)."

Armed with this information, both you and the other professional will be able to give referrals where there is true need for the others services.

Here is Littlechild's sample letter to a COI (center of influence) introducing the joint-survey idea:

Dear COI,

I'm writing to let you know about a client survey program I thought you would find of interest. We are looking at conducting a client audit, which is a tool that allows you to gauge client satisfaction and to identify specific cross-selling and referral opportunities.

I thought you would be interested to know that in addition to getting feedback on the service we are delivering, we are asking clients to rate their overall satisfaction with their accountants and expect to be in a position to send you several referrals as a result.

The firm that conducts the client audit also works with accountants, so I am attaching the brochure. If you are interested, I would be happy to make an introduction and would be very interested in talking about how we can structure both of our surveys to gather feedback that would allow us to provide more focused, needs-based referrals to one another.

I'll follow up in the next week to discuss the idea further, but please don't hesitate to call if you have any immediate questions.

Sincerely,
[Your name]

For more ways you can use surveys to improve your referral strategy, see Littlechild's full Horsesmouth article, here (free registration required).