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The vast majority of advisors I speak with agree that referrals from centers of influence are a significant opportunity. It’s an opportunity, however, of the ‘untapped’ variety.
- 36% said it was through a friend or family member
- 20% said it was through a professional, such as an accountant or lawyer
Two things jump out.
- First, if most advisors say almost all of their business comes through referrals, why is it that just over a third of clients say that’s how they met? (Hold that thought; I’ll dig in on that another day.)
- Next, with professional referrals as the second biggest driver of new business, it’s a significant opportunity.
Despite the opportunity, most advisors tell me that they just don’t feel it’s being maximized. And that isn’t terribly surprising. In fairness, it’s a long-term strategy and it takes work. But if we get it right, it holds out the potential to drive significant growth.
What’s Getting in the Way?
I’ve studied this strategy through the eyes of advisors, clients and professionals and, in my opinion, there’s one dominant reason that advisors aren’t getting more referrals from professionals.
Here it is. A good center of influence strategy is a client engagement strategy first and a referral strategy second. Too often we get that reversed.
If you can build a network of professionals that are exactly right for the clients you serve, you’ll drive deeper engagement. If you can help clients find support, as and when they need it, you’ll drive deeper engagement. And, if you can ensure that you’re referring clients to professionals that will meet their needs and deliver the highest possible level of service, you’ll drive deeper engagement.
Oh, and deeper engagement drives referrals.
Center of Influence Strategy as Client Engagement Strategy
My guess is that if you think about working with centers of influence as a way to provide a richer experience to your clients, you’ll identify the right people to work with, you’ll be selective, you’ll build relationships and you’ll lay the groundwork for reciprocal referrals. And yes, those professionals do need to be open to referring their clients to you, but that’s only part of the equation.
You can start by assessing how you approach centers of influence today.
- If you’re pitching centers of influence on why they should refer to you, it’s not a client engagement strategy.
- If you choose centers of influence only based on the number of clients they can refer, it’s not a client engagement strategy.
- If you don’t know the profile of the ideal clients of your centers of influence, it’s not a client engagement strategy.
If you want to create a center of influence strategy that will drive engagement and referrals, here’s one simple approach.
#1 Start with your existing clients
Reach out to your existing clients to ensure you’ve tracked the professionals with whom they are working. And, get their feedback on the experience to ensure that the professional is, in fact, a good fit. Let the client know that you’re always adding to your network and would like to reach out to see if there’s a fit so you can make referrals to other clients as needed.
#2 Reach out to the Center of Influence
Now that you’ve established that you have a mutual client and that the service level is strong, you can reach out directly. Here’s a sample script.
“<COI Name> my name is <NAME> from <FIRM> . We have a mutual client, and he/she gave me your name and number. Do you have a few minutes to talk?
I’m calling because <CLIENT NAME> speaks very highly of the service you provide. We work with a small group of professional advisors and when there is a specific need, I refer them on to my clients. I was wondering if you had time for a quick meeting so that I can tell you a bit more about my clients and get to know your business in more detail, so that I can refer clients should there be a match with their specific needs.”
Note that your goal isn’t to pitch the center of influence on referrals. You’re legitimately looking to understand if there is a good fit for your clients. When you take that approach, everyone’s defenses go down because it’s all about the client.
Interview the Center of Influence
At this point, you need to dig deeper. Their willingness to let you make referrals clearly isn’t the only criteria to determine if this will be a good fit. When you meet, your goals are to:
- Get a deep understanding of whom they serve (and if that aligns with your client base)
- Gain insight into how they work with clients (to understand if the client experience aligns with your own)
I’d suggest that you also want to determine if the center of influence is open to making reciprocal referrals should an opportunity arise. That means that he or she needs a clear understanding of who is right for your business. If you let them know that any referral is a good referral, you may as well suggest they send no one.
Remember, this isn’t a pitch, it’s an interview. Among the kinds of questions you might ask are the following:
- Can you tell me about the clients with whom you work?
- Who is your ideal client? For what type of client can you do your best work?
- Are there clients with whom you won’t work?
- Can you tell me about the client experience? What can a client expect in working with you?
- How can a client learn more about what you do?
- What is your process for meeting with a prospective client and determining if there is a good fit?
- How does your team work together to support clients?
- What are your specific areas of expertise?
- What sets you apart from other <accountants/lawyers/others>?
- Do you gather feedback from your clients?
- How do you work with other professionals when you have a mutual client?
- If you come across clients who you believe need financial advice, do you refer to financial advisors today? If no, why is that the case? If yes, how do you decide to whom to make the referral? What do you expect?
Look at the Process Through Their Eyes
Based on interviews among a group of accountants that I conducted some time ago, there are a few things that work (or don’t) to encourage referrals.
- Send them the right clients. My accountant once commented that he routinely gets referrals from advisors who hope he will do the same. However, they keep sending him the wrong referrals (based on his area of focus) so it’s not entirely helpful.
- Take your time. This is a relationship and it takes time to nurture. If you don’t take the time to demonstrate your value and get to know their business, you won’t get traction.
- Stay in touch. Find ways to stay in touch and to add value. It’s not that different from building a relationship with a prospect.
About Julie Littlechild
A speaker, writer and researcher Julie founded AbsoluteEngagement.com with a mission to help financial advisors to intentionally design businesses that support the lives they want to live (and the lives that fuel their capacity to succeed). From 2010–2013, she sat on the national board of the Financial Planning Association and was named one of the 25 most influential people in financial planning in 2012. Julie is based in Toronto and works in the US, UK, Europe and Canada. She holds an MBA from the University of Toronto.