Redtail Referrals Series Introduction: Are You Laying The Groundwork To Boost Your Referrals?

The most effective long-term cultural shift for most organizations comes when the focus is put on making the total customer experience something worth talking about on a case-by-case basis. Every now and then you get a nice little bonus of some great PR or word-of-mouth buzz, but it all starts with one customer thinking to themselves, 'Wow, that was kinda cool.' ~John Jantsch, The Referral Engine: Teaching Your Business to Market Itself


In September of 2013, Bill Winterberg, Founder of FPPad, interviewed Stephen Wershing of The Client Driven Practice to discuss several "ways you can strengthen your referral marketing efforts with technology." It's a great video interview, certainly worth your time (14:36), and available here.

To summarize Wershing's key points from this interview that are most applicable to what will follow in this series:

      • Stop Asking for Referrals — Aside from being a key point from the interview, this is also the title of his 2012 book. Wershing finds this practice counterproductive, possibly introducing stresses into your client relationships if not outright diminishing them. He argues that you are, in effect, asking your clients to do your prospect qualifying for you, i.e., to do your job for you. Note: he doesn't attempt to dissuade advisors from asking for introductions to specific acquaintances of a client, but that, of course, is an altogether different request than, "Who among the people you know should I talk to?" To Wershing, asking for referrals is the "marketing equivalent of cold calling".

        You can, of course, disagree with his premise and are, in fact, likely to continue asking for referrals if your returns on "the ask" outweigh the stresses you are potentially introducing (and the discomfort that many advisors express with directly asking for referrals). Regardless, the focus of this series of posts will not be on asking for referrals, but instead on creating an environment for your clients where their trust is such in you that they are comfortable referring you when opportunities arise (and are indeed happy to do so), without you having to ask.

        If your aim is to boost referrals, the importance of establishing this trusting environment should be readily apparent from one of the findings of a November 2011 Prudential survey of "800 decision-makers of American households regarding trust and referrals". A key result of this survey was that "respondents ranked recommending a financial advisor as having higher social risk than recommending many other professional service providers, including accountants, primary care physicians and dentists". In other words, recommending a financial advisor to one's peers is perceived by many to pose a risk to their relationships with those they refer, should the referred have a negative experience with the advisor. Your challenge then is to create an environment for your clients where these doubts, these perceived social risks, are removed.
      • Systematize Your Referral System — In order to create a trusting client environment, you will need systems in place to be your most effective. Wershing believes CRM is the technological heart of this, specifically mentioning CRM's ability to track data that will allow you to segment your client messaging effectively.

Along with the two ideas above, you should also consider which of the two clients below adds more value you to your firm:

    1.    A client for whom you manage $1,000,000 in assets that has never referred any prospects to you.
    2.    A client for whom you manage $1,000,000 in assets that consistently sends qualified prospects your way.

While the former could increase their value to you in the future, should they begin sending qualified referrals, at present you’d clearly have to say that the latter is of more value. And this, in a nutshell, is why generating referrals should be at the forefront of your marketing strategy. Your past successes (prospects converted into clients) may yield you far more business (new prospects) than you could ever imagine by looking at their balance sheets alone. We often overlook this aspect of a client’s value to our firms, but if they are consistently sending us qualified prospects their value goes far beyond their assets under management.  

With the above in mind, in the coming months I want to explore those things you can immediately begin doing to spark those "Wow, that was kinda cool" moments in the minds of your clients and, where applicable, explore how technology will enable you to systematize these efforts.

It will require laying some groundwork on your office's part, but if that work produces enough "wow moments" to yield a steady stream of qualified referrals, you can probably agree that it's time well spent.

Part 1 is now available here.

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