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.

The ABCs of Automatic Referrals: Network Mapping and the Six Degrees of Separation

Everyone has heard of the concept of Six Degrees of Separation—the idea that through our networks of acquaintances, none of us is more than 6 steps removed from everyone else on the planet.  I  saw a great TV documentary a couple of years ago called "The Human Chain" that set out to prove (or disprove) that theory. 

The producers asked two very well-to-do people in New York City to try to locate a man neither of them knew, using only social contacts.  The only thing they were given was his name and photograph and the information that he lived in Brooklyn—which every New Yorker knows can be very far removed from the Upper East and Upper West sides of Manhattan, where the subjects lived—and that he was a boxer at a particular gym. They were not allowed to Google him or use any other means of research to find him. The only way they were allowed to seek him out was through their existing social networks—by asking people they knew who they thought might be able to lead them in the right direction.

As it turned out, both subjects managed to get introduced to this young man within two days.  One turned out to be four degrees removed from their target—the other, five. 

Then, the producers asked the young man to do the same thing in reverse: find a way to use his existing network to get introduced to a Broadway dancer who was starring in "A Chorus Line."  He never thought he would be able to do it—but as it turned out, he was also able to accomplish the task within 4 social hops. 

It was a fascinating show. One of the biggest take-homes for me is that you simply can't make assumptions about who people know.  Advisors frequently make the mistake of assuming that only wealthy clients can introduce them to other wealthy people.  That is a fallacy.  In fact, Horsesmouth has found that advisors' best referrals often come from their "C" clients.  We all know a LOT of people.  If I challenged you right now to find a connection through your existing network to a prominent or high-profile person in your community, I will almost guarantee that you could think of a pathway to get you there within just a few leaps.

But the only way you will ever uncover these connections is by "mapping the network" of your clients and other referral sources.  A network map lets you visualize who your client knows, so you can plan your next move.  If you know who your clients know, you can both uncover great new referral possibilities AND find connections through your clients to people you already know you want to meet. 

You know the old saying that you can't map a route if you don't know your destination?  Likewise, you can't get a steady stream of high-quality referrals if you don't understand who you want to meet, why you want to meet them, and who you know who might be able to introduce you to those types of prospects.

This is the heart of the Automatic Referrals process: gathering information about who your clients know, identifying potential prospects within those networks, and then asking for introductions to those people. Do your homework. Take your time. Find out who your clients know.  Then you can identify the acquaintances you want to meet—and ask your clients to introduce you.

The ABCs of Automatic Referrals: K is for K.I.S.S. (Keep It Simple and Specific)

How many times have you asked for referrals and heard the reply, "I’m sorry, I can’t think of anyone off the top of my head?" I bet it’s a lot.

Advisors tend to assume that the reason for dismal results like these is that their referral sources are reluctant to provide names. While this may occasionally be true, the "I don’t know anyone" response is much more often the result of asking referral sources to work too hard.

Our brains are essentially databases that we scan when we need to retrieve information. When you ask a client for a referral, she has to scan her entire "database" of acquaintances (which numbers in the hundreds, at least) and then narrow down the possibilities to come up with one or two names, all in a matter of minutes. Chances are she’s going to draw a blank. 

That's why, when you ask for a referral, you have to give clients some simple and specific details to help them define and target their "search."

Let’s say one of your fellow members of the Chamber of Commerce, Mr. Jones, owns a busy café on your town’s main drag and is an active member of the state restaurant association. And restaurant equipment suppliers just happen to be one of your target markets. If you ask Mr. Jones the generic question, "Can you think of anyone else who could benefit from my services?" it probably won't even occur to him to look in the "suppliers" section of his mental database. But how about if you get very specific? What if you were to say, "I have a number of clients who own equipment supply firms, and I've done a lot of work helping them with setting up 401(k)s for their companies and preparing to sell their businesses (free registration required) when they're ready to retire. Do you think you could introduce me to some of the suppliers you deal with, so I can find out if they might need that type of help?"

Mr. Jones now knows precisely which mental file cabinet to open. And that file drawer just may contain some stellar referrals for you.

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.

Meeting "Ivy League Moms" by referral

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

Yup.

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

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

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

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

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

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

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

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

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

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

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

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

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!

How a $300 million advisor used referrals to build a niche business

Horsesmouth editor Nicole Coulter published a great case study today about Dominic Musso, a now-retired wirehouse advisor who built a $300 million practice in a targeted niche, all through referral. 

In a nutshell, here's the approach that Musso used:

Tell the niche members about your plan to serve other members of the niche and ask for their opinion on reaching out to that group. "Ask for help formulating a round-table agenda that would be attractive to other members of the niche," [business coach David] Leo says. "You want to go into a round-table meeting knowing some of the concerns of the group."

Musso, who attracted more than 800 oil industry clients over a 15-year period, concurs: "Take one person or couple in the niche. Take them out to dinner and learn everything about them. Identify issues beyond investments that could pose problems for them," he says. "When you focus on knowing your client, and identifying their issues-if you do that with one couple, that couple can eventually take you to 12 other people. The more you satisfy them by making them happy and demonstrating your interest in their welfare, and teaching them what they need to know about their life, the numbers get bigger and bigger."

The article goes into much more explicit detail about the "how" behind this prospecting-by-introduction approach and considers how it could work for a less experienced advisor struggling to break into a new niche. 

You can read the entire case study (free registration required) here:

Case Study: How to Crack Hard-to-Enter Niche Markets

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. 

What really makes you referable?

I spotted a good article by sales expert Jeffrey Gitomer in a recent issue of the Portland Business Journal in which he lays out the five and a half elements (if you read Gitomer at more length, you'll discover he's a big fan of fractions) that he believes breed referrals :

1. Be likeable. Goes without saying.

2. Be reliable. By this, he means that you and everything you represent (your firm, your products, your services) must be the best, and that your clients must feel completely secure that you are there for them.

3. Be considered an expert in your field. "To be referable," Gitomer writes, "you must have an expertise that breeds confidence."

4. Inspire trust. Before they'll refer you, people must feel secure that you will do everything in the referred party's best interests.

5. Have a track record. You must have already done the same thing for the client, Gitomer explains, who is comfortable you can repeat the performance.

5.5  Be a valuable resource.  Go beyond doing only what you say you're going to do. Help others gain some additional form of value that may or may not be attached to your product or service.

These are excellent guidelines that you can use to evaluate your practice and your client relationships. #3 is an item where advisors often fall down, typically because they have not identified, even for themselves, a specific target market and the unique expertise and value they bring to that market. To project expertise, you need to know whom you help and how, and be able to articulate that to your clients and to other professionals who might send referrals your way. 

For more on this issue, check out these Horsesmouth articles (free registration required):

The 'Everyday Advisor' vs. the 'Branded Advisor'
When you follow the three key elements of a disciplined branding system, you'll absolutely clobber the competition. The reason: A focused, concentrated effort shows people who you are, what you stand for, and why it matters. Compare that to the "everyday advisor" and see the difference for yourself.

Inside a Successful Niche
Some advisors suffer from a misunderstanding about what constitutes a "niche" or "target market." Others understand how to exploit a niche opportunity and turn it into a thriving line of new business. Here's one success story to emulate.

5 Steps to Targeting a High-End Niche
Advisors who fail to establish themselves in one marketing sphere end up screening prospects for affluence but not much else. That never works.

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How do I use my newsletter to get more referrals?

Bruce, an advisor with Wachovia, recently sent in this question:

I write a quarterly newsletter that I send to clients and prospects. I have been writing it for 15 years and get frequent compliments.  I use it to ask for referrals in the following manner.  At the end of a review meeting, I ask people what they think of the newsletter. The response is always positive. I then ask, "Can you think of anyone who (I describe my target market) you think would benefit from receiving it?  One or more names almost always results. The catch is, I frequently get "I'll ask them if they would like to get it." Obviously, nothing ever results.  Advice please.

I suggested to Bruce that he tweak his script along these lines:

"We are preparing our next newsletter mailing, and I wonder if there are any other [appropriate target market] you think we should include."

Another way to say it would be:

"I wonder if there are any other [appropriate target market] who you think might find our [subject matter] commentary interesting."   

He might even consider letting the client in on what the focus of his next issue will be:

"We’re going to be including a special column on "8 Ways to Ensure Your Business Keeps Thriving After You Retire" in our upcoming newsletter.  Which other car dealership owners in your association do you think [or "do you know any other car dealership owners who"] might be interested in that topic?"

Obviously, you can mold this approach to fit your own newsletter, style, and target markets. The point is to add a sense of timeliness to your request and imply a need for the client to supply the name and address now.

You’re also positioning the request in terms of sending one document to the referral, not adding them to a mailing list.  For most people, this is an easier "yes"—and we always want to go for the easiest yes first (free registration required). 

Finally, if you identify a specific topic that might interest the prospect rather than a general "do they want to get my newsletter?" request, the client may not feel it’s necessary to ask permission for you to send it, especially if you add in the "we’re about to send this out" factor.   Obviously, you should only say you’re preparing a mailing if in fact you are.  If you’re not, you can tweak to say something like "When we send out our next mailing." 

Another approach to consider is asking for advice. In this case, you could say to something like:

"I am interested in getting my newsletter into the hands of more [appropriate target market language].  Do you have any suggestions or advice on how I might best get the word out about the newsletter with those folks?"

or

"Are there any specific [target market prospects] who you think would find my newsletter as useful as you do?"

If you have a newsletter—or if you don't yet but are intrigued by the idea—don't miss 10 Things Your Newsletter Must Do (free registration required).

Iif you've dealt with a similar challenge and have suggestions for Bruce, post them by clicking the "comments" link below.

Asking Top Clients for Referrals—How Not to Appear Desperate

Welcome to Day 5 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 Lynette B., who's with a wirehouse in Dublin, OH.  Congrats, Lynette!

Lynette's question will be answered by Dan Finley, President of Advisor Solutions, Inc. a business development consulting and coaching service for financial advisors.  Dan was a successful financial advisor for thirteen years before founding Advisor Solutions, Inc. 

Question: "I have done such a good job of packaging myself as an advisor to the elite that I have trouble now asking the chosen I work with for referrals without sounding like I am not who I purport to be. How does one elicit their help and ask them to help add onto my practice without looking as if I am needy or not as successful as I portray?"

Dan Finley's answer: Asking your elite clients for referrals when done properly can create a very powerful, positive image.  But setting the stage for a very successful referral campaign with your elite clientele needs a well thought out plan complete with the type of content that elite clients can relate to.

First, you have already successfully completed the very first step, which is to convey the message that you are an advisor to the elite. You are not willing to work with just anyone. Your niche is to help the elite with their complex financial challenges.

Second, you need to take the message to the next level by explaining to them that you are not growing your business in the traditional sense; meaning by adding just anyone—even people who may be considered elite clientele—because you only have so much time in the day to devote to your current client base, who are people that you like.

Third, you need to convey the message that you always have time to help your clients' friends, family and colleagues. In fact, you prefer to work with people who have a relationship with your clients.

Fourth, you need to structure the message that giving you referrals is not about helping you get another client, but rather about helping your clients help someone else.

Fifth, you need to dig deep inside and have a genuine belief system that your mission is to help your clients help others. This may or may not produce financial results for you in the short run, but it will definitely produce incredible monetary and non-monetary results in the long run.

In the right dialogue, this conveys a very powerful message that you are not needy at all, but rather very successful and again are only willing to help those whom your clients want to help.

Let me illustrate a very brief dialogue:

Client: How's business?

Advisor: Great! In fact, I've been so busy that I have decided not to take any additional clients unless they are friends, family or colleagues of my clients, people that my clients want to help.

Client: What do you mean by, “want to help”?

Advisor: Well, how have I helped you the most since we have started working together?

Client: You have helped me reduce my taxes, consolidate my investments, and make sure my estate planning is in order.

Advisor: Who do you believe needs your help the most by getting that level of service?

This is a brief dialogue that powerfully expresses the messages that you have a successful business, you are busy, you have brought value to your client and you want to help those whom your client wants to help. There is nothing needy or desperate about it.

Since you have already positioned yourself as the advisor to the elite, your clients will refer you to someone whom they want to help that will naturally fit your elite clientele. Remember, most affluent investors feel most comfortable speaking with a financial advisor to whom they have been referred.

Got questions or thoughts about today's challenge or Dan'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.

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New networking organization for women

Periodically, I like to highlight new or interesting networking opportunities for readers who may be looking for something off the beaten track.

If you're a female advisor (or know one) who enjoys getting new ventures off the ground more than joining established ones, Team Women International might be worth a look.  This year-old networking group for women has a number of established chapters in the Western states (especially California) and is looking for members to start new chapters all over North America. 

If you know anything about Team Women or would like to recommend other networking groups, share your intelligence via the "comments" link below.

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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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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. 

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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.

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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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