3 Referral Myths and How They Limit Your Growth
(This article is reposted with permission of the author. It was originally published here.)
The path to substantially increased referrals starts by acknowledging one important fact.
Your clients are referring you to more people than you can handle – you simply don’t meet most of them.
We know this because the data tells us the same thing, year after year. Within a few percentage points each year:
- 79% of clients say they are comfortable referring
- 52% of clients say they are likely to refer in the next year
- 33% of clients say they actually referred in the last year
And here’s the kicker. You likely met referrals from fewer than 5% of your clients.
So how do you bridge the gap? I have a couple of suggestions for you this week.
1. Check out the Becoming Referable Podcast
Stephen Wershing is the President of the Client Driven Practice. He and I talk a lot about referrals. We don’t only talk about the tactics advisors can use to encourage clients to refer more effectively, but about what makes an advisor referable in the first place. And we decided to stop talking only to one another, invite others into the conversation and share some new ideas with the industry. This week we’re launching the Becoming Referable podcast and I couldn’t be more excited.
Our first guest is someone who has been studying effective referral strategies for most of his career. Bill Cates is the President of Referral Coach International. He generously shared his time, his insights and his ideas to help you become more intentional about moving from referrals toward meaningful introductions.
2. Understand the Big Referral Myths
Referrals are a funny business. Despite high levels of client satisfaction, we’re universally frustrated by how difficult it is to translate that goodwill into referrals. I believe there are three, deeply held, beliefs about referrals that get in the way of our success. And until you tackle those myths, it will be hard to generate the referrals you actually deserve.
For more detail on these myths (and the research that supports my claims) you can click here and download the full report.
Myth #1: “My clients just aren’t making referrals.”
In fact, your clients are referring you more often than you know. It turns out that the number of referrals you receive isn’t the problem, but rather the number that you meet. Investor data highlights the gap between ‘comfort’ referring and real action. And it’s a big gap.
Instead of focusing your time on encouraging more clients to refer, identify the clients who say they have referred, but for whom that didn’t lead to an introduction. Find out how they are referring currently and help them do two things: describe your value more effectively and make an introduction.
Myth #2: “Clients who refer want to help me grow my business.”
There’s nothing like the signal of trust that’s triggered by a referral. It’s easy to interpret that act of trust as one that’s designed to help you grow your business. The reality is, however, that most clients are motivated to help the people they care about – more than to help you, no matter how good the relationship.
You may need to change your approach to ensure that you are capitalizing on the motivations of your clients. Instead of focusing on helping you grow the business, focus on the needs and concerns of their friends and family.
Myth 3: “ To get more referrals I need to ask for referrals more often.”
While most advisors “confess” that they simply don’t ask for referrals often enough, the reality is that it probably won’t help. Instead, clients need to recognize that you’re the solution to a problem a friend is describing. And that means communicating your value in a way that reflects what friends actually talk about (hint: they usually don’t complain about a lack of investment knowledge and rigor). Focus on the real-life problems you solve and help clients tell that story.
One of the simplest ways to take action, based on these myths, is to create shareable content that focuses on the real problems of your clients and their friends. If clients share how difficult it is to talk about money as a couple, share resources on how to communicate effectively. If clients tell you they aren’t sure if their children will make effective financial decisions, share links to websites that focus on financial literacy. You can be sure that if these are problems for your clients, they are problems for their friends and they will share that information. It’s what friends do.
The reality is that you are likely sitting on a massive, untapped, referral opportunity. You simply need to bridge the gap between the referrals you’re receiving and those you actually meet. That starts by assessing if you’re a victim to the three myths that hold sway over a majority of advisors. From there, you can begin to think differently about how to take action. We’ll be sharing tactics on all things referrals on the podcast to help you do just that.