I've identified five critical elements to building a referral-based business. I'll use the metaphor of a castle for a business that is strong and less susceptible to negative influences such as a sagging economy or volatile stock market.
Your beliefs and assumptions are the foundation of your referral business. I call this a referral mindset. Having a referral mindset means that you embrace the notion that the best way to build your business is through referrals. When you create a referral mindset, referrals are not just something nice that happens every now and then; they are your primary method for acquiring new clients. Creating referrals is a major part of your overall marketing plan. When you truly adopt a referral mindset, everything you do in your business will contribute to getting more high-quality referrals.
There are many beliefs and assumptions that go into an effective referral mindset. Here are three:
1. I meet my clients the way they want to meet me
2. Approaching clients for referrals is a safe thing to do, not a risky thing to do
3. Providing great service will generate some referrals, but if I want more, I need to be proactive.
After this solid foundation comes the four cornerstones of your referral-based business. If you master any one of these cornerstones, you'll be well on your way to increasing your business through referrals. If you master all four, you will have a steady and predictable flow of high-quality new business coming your way.
The first cornerstone: Enhance your referability
How do our clients say "thank you" to us? By coming back for more and by referring others to us. This is the first cornerstone, because without it, the other cornerstones would hardly be possible. You must serve your clients consistently well. Enough companies are providing such great service these days that the service you provide will be measured by what your clients know you are capable of providing.
It's my belief that you should be getting referrals just by virtue of being in business. There are enough people who actually enjoy giving referrals and will do so without being asked. But, your service must wow them enough to get them talking. If you are not currently getting many referrals, then you need to take a hard look at the service you provide and the relationships you establish with your clients.
First, have an initial process that not only helps you make the sale, but makes you referable at the same time. Keep reviewing your process to make sure you are bringing as much value as you know how to do. Second, develop and use a client-service model that drives your behavior. Your clients can tell the difference if you have a plan that helps you determine when and for what reason you contact them. Most advisors wing it with their service, and never truly work their book for more business and more referrals.
The second cornerstone: Network strategically
Not all your referrals need come from satisfied clients. Many can come from the relationships you nurture with people who may never become clients: CPA's, attorneys, human resource directors, clergy, real estate agents and more.
Networking is an overused term, and most people aren't very good at it. One reason why networking does not produce the results people want, is because they are not very strategic in their approach. They don't have a well-thought-out vision for their networking efforts. Therefore, their results diminished. Your job is to identify the types of people who make good centers of influence for your business, and then systematically meet and grow relationships with these people.
The most critical element to getting referrals from these centers of influence is your referability. To get these people to give you referrals, they have to have a very clear picture of what you do, how you do it, how your clients benefit, and what makes you unique. Never assume you are referable in someone else's eyes. Ask them, "What do you need to know about me and the work I do to feel comfortable referring people to me?"
The third cornerstone: Prospect for introductions
To achieve sustained success in your business, you must be a good marketer and a good prospector. A well-executed marketing plan will bring clients to your door (or phone). But that's not always enough. Sometimes, the clients that come to you are not the right clients. Sometimes, the volume isn't enough to build to the level of sales you desire. I believe you should always be proactive in making referrals happen.
Prospecting for introductions means promoting the referral process by planting seeds with your clients, asking for referrals, and receiving the referrals you get in such a way that it encourages even more referrals from your clients. Most reps know what to do when they trip over a referral, but most are not particularly good at making them happen on a predictable basis.
I teach a client-centered approach to asking for referrals. Rather than being advisor-centered, where you tell your clients you get paid by referrals or you build your business by referrals, you make the request all about the value you provide to your clients and the value you might bring to people they care about.
The fourth cornerstone: Target niche markets
Creating a reputation for yourself with a shotgun approach to marketing is very difficult. Narrowing your marketing focus to one or two well-defined niches makes it much easier to create a reputation and will substantially increase your referral business. When you target a niche, your real and perceived values are increased substantially. Plus, your requests for referrals are more effective. When you target a niche, you bring value to the first appointment that your competitors (who don't target) can't bring.
Within a niche, your reputation will spread much faster than it could between diverse groups, because these people have formal and informal ways of communicating with each other. Serve them well and they will talk.
A good niche can be small business owners/executives in a specific industry, such as the restaurant industry. Another good niche can be employees within a large company. In either case, you become "the advisor of choice."
Get ready to get picky
An effective referral system can actually create more new business than you need. A good problem to have. For most advisors, the sales process is a "needy" situation. Because they don't have enough business coming their way, every new prospect takes on too much importance. This neediness adds to the tension in the selling process and hurts results. When you have an abundance of new business coming your way, not only will you be less needy in the sale, you can actually be selective so that you only take on new clients who are a perfect fit for your business.
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