There is a fatal flaw in most advisors referral strategy, and it is undermining their business and their relationships.
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Most referral programs eventually get around to this: if you want more referrals you need to ask for more referrals. However, recent studies
contradict this. Worse, most ways of asking for referrals actually undermine your relationship with the client. What have you been encouraged to do? "Referrals are part of how I get paid." You mean I'm not paying you enough? Could I pay you a little more, and not have to start handing over my personal relationships? "Referrals help both of us, because with them I can spend less time marketing and more time on client service." So, if I can't come up with enough names, the service you provide me will suffer? Worst of all, these approaches to referrals focuses on you, and not your client. Ideally, everything you do with the client, except perhaps sending them an invoice, should focus on benefits to them.
Most referral programs reflect a hunter mentality. We must go out and stalk and capture the referral. How do you suppose the prey feels in this relationship?
The new research indicates that you can attract referrals, and you don't have to demand them. You have probably seen examples of this in your own experience. Do you know anyone who gets referrals and never asks? Some advisory practices
actually have a policy of not asking. Under the hunter mentality, this would be impossible.
I prefer to think of referrals more like a farmer rather than a hunter. Under the farmer model, you prepare the soil, plant the seeds, and nurture the field. A crop will grow.
I keep hearing in referral training programs how important it is not to release the process to clients. If you want dependable, consistent referrals, you need to be in control. The farmer does not approach it this way. Could you imagine a farmer being obsessed with the progress of every seed? He knows that if he plants enough seats in fertile soil and carefully tends to the field he will get a good crop. Not every seed will germinate. Not every plant will thrive. But he will get ample yield.
for something. You have heard this idea before: target marketing, specialization, niche, unique value proposition. Make sure you are clear with yourself, your clients, and the public, what kinds of problems you solve, what kinds of clients you work with, what different kind of service you provide, or what kind of approach you take.
Have the right conversations
with clients. Talk about more than their portfolios, and address their plans. During difficult markets, keep them focused on their goals and the impact of the environment on their plans. Make sure you understand what the client expects from the relationship, and then meet and exceed it.
Systematically improve your practice based on client feedback
. Engage with your clients to find out what they would like changed, and what they would like added, and then work diligently to include that in your business.
Prepare a fertile field, tend to your crops, and you will have a bountiful harvest.