What Goes Into a Referral Marketing System?

Jul 13, 2017

Picture a great client review meeting.  You discuss the client’s goals and financial plan.  You check their beneficiaries and their estate plan. Everything is going great, the client is happy and engaged until….  you start looking at your shoes, mumbling something about, “Do you know anyone that could use my services?”  Their smile goes away and they begin to look at their shoes, mumbling something like, “Not right now, but can I get back to you?” That great meeting just went south.  A few months later, you try something else.  You add “referrals accepted” or “your highest compliment would be a referral from you” to the bottom of your emails.  That doesn’t work, either. 

Two weeks ago, I introduced our newest research in partnership with Julie Littlechild (Absolute Engagement) and Steve Wershing (The Client Driven Practice), called The Elements of Referability. (Looking for the highlights? Access the webinar recording.)  To further build on your referral knowledge and future success, I asked Steve to write a post outlining one of the most important aspects of getting more and better referrals – having a plan.  

referralOur paper, The Elements of Referability, created jointly with SEI and Absolute Engagement, identifies some of the characteristics and habits of advisors who tend to attract the most referrals. And what was the single answer on our survey that most highly correlated with being in the top group of referral-getters? That they have a relatively structured referral marketing system. But what is a referral marketing system and how can you put one to work in your business?

A marketing system is a series of processes that communicates the right message to a target audience and has auditable processes to measure and follow up on the leads that it generates. So, a referral marketing system is what you can do in your business to project messages through the people who refer you (clients, centers of influence) and then tracks the people you get introduced to and moves them through a series of steps to ultimately meet with you about becoming their advisor.

This may sound different than approaches to getting referrals you may have heard before. Most advice about referrals is purely tactical. This is what to ask your clients. This is what to put at the end of your emails. This is when to bring up introductions to friends. The difference between those tactics and a system is similar to the difference between an article on “The 10 best mutual funds to buy now” and an investment strategy. And, like a good investment strategy, a referral marketing system may not give you the biggest return this year – but it will generate the most value over the long term.

Let’s look at two often neglected parts of a referral marketing system: getting the right message out and measuring the results.

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Getting the right message out

If a friend were to ask your client about the difference between working with you and working with another financial advisor, what would they say? What do you wish they would say? If your clients are not saying what you want, if they are not saying something compelling (which I maintain is the primary reason advisors don’t get more referrals than they do), you can teach them what to say. Obviously, you cannot sit them down and ask them to memorize your sales pitch. But they are willing to help. And one thing I have learned from many of the client advisory boards I have done is that they are receptive to a better way to describe you and the value you represent.

One useful exercise is to reserve a few minutes during a meeting to ask for some feedback. Ask them, “If a friend were to ask you about me or our work together, what would you say?” And then ask, of all the services you provide and how you do them, “What’s most valuable to you and why?” You will accomplish two things. By getting clients to articulate what they value most, you will bring it up to the surface. Once it is in their mind, they will be thinking about it. They may even think of some people to tell about you. They are rehearsing what they will say when there is an opportunity to mention you.

You will also be learning not only what’s most valuable to them, but the language they used to describe it. And you will get some idea of what you can help them say better.

Have a strong, focused positioning statement. Repeat it often. Ask your clients for feedback on it. Each opportunity to bring it up in conversation provides another chance to teach it to people.

The next challenge is to take that referral the client makes and turn it into an introduction. Another question on our survey with a high correlation to getting lots of referrals is letting clients know how to connect you with people when the opportunity arises.

Even simple strategies can be effective. Let clients know that you will welcome an email of introductions sent to a friend and you, and that you would be happy to pick up the conversation from there. Let clients know they can introduce you to people on LinkedIn. Offer things of value that clients can, in turn, offer to people they want to refer. Encourage clients to forward your articles and blog posts and give them a way to subscribe. Have some kind of resource or e-book (or real book if you are ambitious) that clients can recommend you send to people. If a client wants to refer you to someone, work with them to craft an introduction.

Measuring the results

The second part of the system is to capture the data and measure the results. It may seem like you are not getting many referrals, but are you capturing all the contacts and casual inquiries? After talking with lots of firms, we know that many advisors do not consider a contact a referral unless they get a name from a client, schedule a meeting or have a lengthy phone conversation. Many shorter contacts are not even recorded. What you may find is that you have less of a referral problem and more of a conversion problem. There is a big difference between “never got in touch” and “did not become a client.” Is your initial experience (which may simply be stopping by your website) one that raises interest and motivates further conversation? The most successful firms track every contact. Every call for information. They have mechanisms on their websites to capture information on visitors. They know how many people had some kind of contact with the firm and how far they got into the process before they decided not to pursue it and dropped out.

A marketing system sends out messages and tracks the results. What messages are you sending out? If they are not getting the results you desire, how are you changing them?

Research tells us that clients are referring their advisors seven times more frequently than most advisors realize. The marketing strategy that will likely give you the best return on investment is not to get more clients to refer, but to help them do it more effectively. A well-designed referral marketing process will help you help them attract more of their friends and associates.

Stephen Wershing, CFP, is president of The Client Driven Practice, LLC, which coaches financial advisors on how to create referral marketing plans that work. A former broker dealer executive and COO of a national independent firm, he is the author of Stop Asking for Referrals!

The opinions and views expressed herein are those of Stephen Wershing. SEI bears no responsibility for their accuracy.  Stephen Wershing and The Client Driven Practice, LLC are not affiliated with SEI or its subsidiaries

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John Anderson

John Anderson

John Anderson is the creator and lead author of Practically Speaking blog and Managing Director of Practice Management Solutions for the SEI Advisor Network.

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