Attracting referrals is like attracting sex. Stick with me and I’ll explain.
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I saw a newsletter yesterday that stated as fact “The single biggest reason you aren’t getting more referrals is because you’re not asking enough.” Garbage.
The biggest reason advisors don’t get more referrals is they don’t understand how they happen.
Why do people give you referrals? Because they're social animals.
Humans have a natural need to give you referrals. They are social currency. They expand influence. They are a way of networking.
It is perfectly natural to want to do things for the people who are important to you, and providing referrals is one way you can do it.
Being the source of good information, be someone other people look to for advice, makes us feel important.
As John Jantsch says in his book, The Referral Engine, “Being recognized as a source of good information, including referrals, is a great way to connect with others. Think about how eagerly you responded the last time someone asked you for directions, offering up your favorite shortcut and tips for avoiding traffic. We all do it. Making referrals is a deeply satisfying way to connect with others—asking for referrals is just the other side of the same phenomenon. I think the growth of many popular social networks can be traced to the fact that people love to connect and form communities around shared ideas.”
In his book The New Art and Science of Referral Marketing, Scott Degraffenreid utilized social network analysis to examine why people make referrals. His study demonstrated something that makes intuitive sense: people refer to elevate their standing with peers.
Asking a client to provide you a referral actually can hijack the process. It's like Russell Crowe in the movie, A Beautiful Mind, playing the role of John Nash. In the movie, Nash's friends bring him to a bar and find a single girl. They persuade Nash to go up to the girl and ask her out, but he doesn’t know how to ask a girl for a date. So he just goes for the gold and says:
"I don't exactly know what I am required to say in order for you to have intercourse with me, so could we just assume I said all that? I mean, essentially what we are talking about here is fluid exchange. We could just skip straight to the sex."
How do you suppose that turned out? Not well.. The women would not go to bed with Nash just because it is good for him. Besides not having any interest in him, there are real risks involved for her. Nash doesn’t appreciate that for a woman to want to go to bed with him, she needs to have certain feelings about him first.
When a client makes a referral to you, it is because he or she feels certain things about you. Clients must feel strongly enough about what they will get out of it, and that it is worth the risk they expose themselves to by sharing a friend with us.
Making a referral must be an experience clients benefit from. And if you disrespect your client by going directly for the result without the allowing for the full process to unfold, you'll get slapped down like Nash did.
Understand why people would want to make referrals to you, and provide that experience to them.