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21 Feb, 2008

Published: 07:00 Thursday 21 February 2008
By: Brett Davidson, FP Transitions

In any professional services business the most effective way to grow the business is via referral. Successful IFAs measure the number of referrals they receive per week. If your business is not receiving several referrals per week then you have not yet hit the mark with your clients. It is not good enough to say that because clients don't leave your business they are satisfied.

* Referrals are a sign of a healthy business. If you are getting a steady stream of referrals it is likely that many other aspects of your business are working effectively.

* Referred prospects are more likely to see you as an expert, arrive pre-qualified, and buy from you; lowering costs of client acquisition and improving profitability.

* People generally refer people like them, so 'A', and 'B' class clients can refer you more of the people you want to be dealing with to improve your client quality over time.

Referrals can come from two sources: your clients and your broader network of contacts (friends, family, staff, professional connections, business associates etc).

Consistency is vital. Your business must deliver a known service and outcome; same time, every time.

Failure to do so makes it hard for anyone to refer to the business. Although one bad report may not stop you going back, it is far less likely that you will risk negative feedback from a top client again. What is the opportunity cost of that one bad service experience?

Discipline comes from prompting, and reminding clients regularly that your business grows by referral. At FP Advance we don't recommend asking clients to get out their address book to provide you with names. This is too direct and makes everyone feel slightly grubby. However, many advisers are astounded to find out that their clients haven't referred because they didn't realise the business wanted more clients. How does this happen? Simply because clients were never told that the business is looking for referrals.

The referral asking process becomes just that; a process like everything else. From the very first meeting with a new client, to telephone conversations with your support staff, to review meetings, there is the opportunity to gently remind people that you are seeking referrals.

Here are some ideas to help you increase your referral rates:

Knowing what you can do for different client segments and being able to communicate it clearly makes it dead easy for existing clients to refer other people like them.

Let clients know what they have to do to refer someone to the business, explaining how you will approach the referral and what you will say to them. This process must be transparent and consistent every single time so they can trust you.

Try to acknowledge a referral with the person who referred the prospect as soon as possible. This should happen regardless of whether they do business with you or not, as you are encouraging the referral behaviour in the first instance. This could be with a card or small gift.

At every client seminar or client event ask existing clients to 'bring a friend'. This is a great way to meet new prospective clients. If you take clients to corporate hospitality events like the football or the theatre the people they bring are likely to be like them, so invite your best clients to these events.

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