The 5 Great Myths About Referrals

by 27 Mar 2015
It has been proven that one of the best ways to build your client base is through referrals.

But is this really a sustainable strategy? If you’re like many agents and advisors, you’re not quite sure how to persuade current clients to regularly offer them up amidst the turmoil. Do you know what may be stopping you from getting the referrals you deserve? Following are a few myths that have spread in the financial industry. Breaking these myths may help you acquire more qualified referrals than you’ve seen in the past.

Myth #1: Asking for referrals is the easiest way to get referrals.

Agents and advisors know that asking for referrals is the most direct way of letting clients know that you want them. However, many are reluctant to ask. This reluctance makes asking for referrals anything but easy – and for good reason. There are positive ways of asking, however, asking for referrals may imply that you are in a negative position and need more business; or that you are trying to grow a large (and not personal) firm. Moreover, when aggressively asking for referrals, it can be all about you, your business, your sales. In fact, asking for referrals may not be a natural extension of the relationship you’ve developed with the client. That’s why we sometimes “forget” to ask even when we’ve been told that asking could help us increase referrals.

Some of this industry’s top producers receive 100 or more referrals each year without direct solicitation. How do they do it? They say it’s the relationship they have with their clients. How would you rate your client relationships? A periodic proactive call, review meeting or handwritten note can change the way a client feels about you and your organization. It may sound simple, but consistent unexpected acts may give clients just what they need to comfortably, and without prompting, tell others about you.

Myth #2: My clients tell me they “don’t know anyone” who needs my services.

Have you ever heard a client say, ‘I don’t know anyone’ when you made mention of referring? Do you think that’s true – that they actually don’t know anyone who may benefit from your services? Chances are they know lots of people, they’re just not motivated to give you names right now.

One of the most successful strategies I’ve seen for giving clients a reason to immediately refer is an event called, “Don’t Miss the Boat.”  This is similar to a client appreciation event however the only people invited are clients that have referred others to your firm. You tell your clients - "Mr. Client, don't miss the boat!  We're doing this big event on October 15th on the Detroit Star, that dinner boat on the Detroit River.  It's going to be a gala event with music and dinner and dancing. You and you're wife can get all dressed up!  But, don't miss the boat, because the only people we're inviting are those that have referred clients to us by the event date."  This event gives clients an immediate reason to think of someone. Yes, it may be a little gimmicky, but we’ve never seen this strategy fail and it has consistently produced referrals of 40 or more per event!

Myth #3: My clients are delighted with our firm but I still don’t get referrals.

By servicing your clients well, beyond their expectations, they will have something to say to others about you. If you service your clients above and beyond with proactive calls and on-the-spot follow-up, not only will you get referrals, you will be able to easily cross sell other products and services. When you service well you are giving your clients something very valuable to talk about!

Myth #4: Referrals will come with account performance.

Performance alone seldom gets you the number of referrals you deserve. The reality is that even when accounts are performing well, clients may still not refer to you. Are you listening to your clients?

In the book, Blink, by Malcolm Gladwell, a study is referenced that was done to find out why some medical surgeons never get sued. When looking at surgeons and their practices, they found that the surgeons that didn’t get sued spent on average 3 MINUTES LONGER with each patient. And, during those 3 minutes, the surgeon reportedly just listened. Interestingly, if something went wrong the patient still sued, but it was the Internist, Radiologist or someone else that would get sued, not the surgeon. The patient actually liked the surgeon. When the surgeon listened he was silently yet clearly telling the client, ‘I think you’re important enough for me to take a few minutes to hear what you have to say.’ Hmmmm. We don’t sue people we like. We also will do business quicker with people we like. And, we refer others to those we like. Can we deduct then that if we are good listeners we will gather more referrals? When we look at top performing practices, it’s probably not a coincidence that more than 50% of every meeting is spent listening!

Myth #5: Referral acquisition is not a real marketing strategy.

Many of your best clients found their way to your firm through referrals. But do you have a system or process for generating the best new clients into your firm? If you don’t, you’re not alone. Having a plan brings focus to obtaining the best leads. Set a goal for how many referrals you’d like to receive this year. Determine what you will do each week to accomplish that goal. Write it down and share it with your staff!

Breaking the referral myths may change your referral fortunes dramatically. And, the best news is that you can do it without making huge expenditures on traditional marketing. There’s nothing mythical about that!