The secret power of referrals
Referrals are a hidden gem. You’re trying to grow your business using different methods, but missing this huge hidden pipeline of highly qualified prospects.
You’re a client adviser in the wealth management industry; or you might be a lawyer, accountant, sales consultant, entrepreneur or large enterprise account manager. The common denominator is that you all work with clients who are very valuable to you and your firm. These relationships are personal and strong; these clients trust, like and enjoy working with you. They are also loyal, respect and value the business you work in and pay well for the products and services you provide. Yet, despite all this, it never occurs to you to ask them for an introduction to another potential client who would also value your service or product. On the occasion when you do think of it, you find it difficult to ask for and receive the referral.
Firms attempt to recruit new clients by paying for talented salespeople who have an established client base, buy a competing company for their client base or invest in a marketing strategy. Some companies will pay existing clients in some form to be able to use their name as a testimonial. Others will sponsor events, arrange dinners and entertainment to attract potential clients and give them the chance to touch and feel their products, services, people and DNA.
Such strategies all have a financial cost, but also take up a great deal of time in planning and organizing; they also do not guarantee success, despite the heavy financial investment and time required. Asking for client referrals, on the other hand, is close to being free, takes virtually no time and, if successful, costs you nearly nothing.
Referrals reduce the anxiety of finding new business and reduce the pricing pressure on fees from a prospect
Reducing anxiety as to the source of your next clients provides a major incentive to implement a much more effective referrals programme within your company. But there is also another powerful hidden reason why referrals make so much sense. The very act of your being introduced to a friend, business colleague or intermediary means that the client undertaking the introduction likes and trusts you and thinks you can be of genuine value to the person they are putting you in touch with. This means there will be far less pricing pressure or bargaining down of fees within the new relationship, compared to other less personal ways of finding clients. Thanks to the fact that your client has already decided that your pricing is right, she will be able to explain why she recommends your services and the benefits you provide. As such, the discussion with the new prospect is more likely to focus on potential benefits than on your fees.
Referrals are easier and quicker to close than other methods of procuring new business
The other benefit of asking for a referral is that it carries a much greater likelihood of your being able to rapidly convert a prospect into a client. If prospects have had your services personally recommended to them, they enter communications with you much further along the line of saying ‘yes’ than if they had met you via a different route. The benefits of this should not be underestimated. Time saved in finding new clients and bringing them on board could equal a day or more. This can compound as weeks saved for a higher return on investment. Remember, the by-product of all this is that the growth rate for your business will be much faster, with a higher quality of client because you have already effectively qualified (defined and narrowed down) the sort of referral that you are looking for.
Referrals make valuable use of a powerful networking effect
Correctly enabled and carried out, personal client referrals become a naturally recurring phenomenon because of the networking effect. Once you have got a referral from a client, you can easily ask this client for another referral at some point. Second, this newly referred client understands that you build your business successfully through referrals because that is their exact experience of it. Therefore, it will be completely natural for you – at the right moment – to also ask them for a referral. They already understand how another contact of theirs has been looked after by you and your firm. Trust is already there in abundance and they have also experienced your superior products and services, interactions, decision-making and mode of operating.
Referrals increase the loyalty of the existing client who is giving the referral
Giving you a referral will also increase your existing client’s loyalty because the decision to give you a referral will have involved some ego and emotion. Your existing client has invested further in you by making a referral and this is likely to increase their own loyalty to you as they will want to prove to themselves that they made the right decision. If tough conditions appear for your existing client, it is less likely that they will cease to be a client.
Referrals increase your enjoyment of your job
We all want to enjoy the work of the business we are in, but this idea can be forgotten to some extent and it is really important not to let that happen. The clients you have and how you get on with them clearly have an effect on the enjoyment, motivation, energy and passion you have for your products and services. As referrals more often than not lead to you working with more like-minded people, you are therefore increasing the enjoyment of your job.
Graham Eisner has devoted 30 years to understanding the power of client referrals for businesses, first as a private client salesperson at Goldman Sachs and more recently as a referrals sales coach and trainer working with brands such as Barclays, Julius Baer and Deutsche Bank as well as smaller businesses.
Just Ask! 7 simple steps to unlock the power of clients, generate referrals and double your business is published by Practical Inspiration Publishing
