Blogs - The Prosperous Advisor
Sounding Off: What's the Best Way to Generate Referrals?
Friday, February 1, 2013
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What's the best way to generate referrals: asking for them or earning them?

Thomas Fross of Platinum Advisor Strategies said, “If you want to make a client uncomfortable, you should ask them for a referral,” Thursday at the Platinum Top Producers Boot Camp. 

Ron Carson, the Prosperous Advisor, disagreed and offered this rebuttal.

Super Bowl Sunday always reminds me of one of my favorite quotes from football legend Vince Lombardi:

“Some people try to find things in this game that don’t exist but football is only two things – blocking and tackling.”

Contrary to what many believe in our industry, and to a recent article that suggests otherwise, asking for referrals works. In fact, this is exactly what we practice at Carson Wealth Management Group and Peak Advisor Alliance. I built Carson Wealth Management Group with this principle, and much of our success is simply because we do a lot of blocking and tackling - and we execute the little things well. Not seeking and asking for referrals is completely contradictory to anything I’ve ever experienced in building my own million-dollar business.

Getting warm introductions - referrals from clients - is analogous to executing a great recipe. You must do several things well for the recipe to produce the best outcome. Mr. Fross is correct in that the main ingredient, and the first step of the referral recipe, is to deliver a great client experience. Without this, your ability to generate new business through referrals is limited. But thinking referrals will just magically appear when you provide great value is like thinking you can make chocolate chip cookies without chocolate chips. It’s like seeing the flour, the substance, as enough. Advisors who subscribe to this belief are often not rewarded for delivering exceptional value to their clients. They are in position, but they miss the block or tackle.

Much of my thinking is grounded in research done by Dr. Robert Cialdini. We encourage our Peak Advisor Alliance members to read his books on professional persuasion and ethical influence. His research suggests that a successful relationship involves reacting to certain client cues with a request for something in return, like a referral. Other research, like that from Julie Littlechild, the former CEO of Client Audit, helps us understand the necessary ingredients in the referral recipe. Clients are motivated to share referrals with you for two primary reasons:

  1. Reciprocity
  1. They want to help someone else

Now to the recipe:

Start with offering exceptional value to your clients. The ability to replicate your best clients is directly related to the client experience you are delivering. To have a sustainable business you must offer value, and this value becomes a requirement in order to grow your business by referrals.

Educate your clients on several items:

  1. They need to understand and appreciate your value. This is why you share your mission statement and value proposition with both prospects and clients. They need to understand why they like you so much.
  2. You want to grow. It is imperative that clients know you will be selective with your growth, and that you will maintain capacity for them. This is why successful advisors use the phrase, “For the benefits of our existing clients we only accept a limited number of new clients each year.”
  3. The type of new clients you want. Your clients must understand the type of people you want them to introduce to you.

Manage Expectations

From day one your clients need to know you expect referrals from them, and this expectation is beneficial to both you and your client. Explain to them that many advisors spend the majority of their time chasing new prospects and not servicing existing clients, and that your approach is different. Clarify that you spend most of your time servicing clients and, therefore, need your clients to introduce people like them to you.

Make sure your clients know that you like them: It is not enough that you like your clients…they need to know you like them.

Ask at the right time: Ask when there is reciprocity on the table. Condition yourself to ask whenever a client gives you a compliment. This is a common area of execution error. Too many experts train advisors to ask at the end of every meeting or in other manners that often come across as staged and without authenticity.

Ask in the right way: There are a couple of “right ways.” One excellent method is to understand why clients refer people to you. They do so because they want to help someone else. So, ask by saying, “Who do you know that you want to help? Who do you know that is not getting this client experience? Introduce them to us so we can help them in the same way we are helping you.”

Ask with great comfort, confidence, and conviction: This is a special ingredient to the mix. You must have an authentic belief in your own story and then transfer that confidence to others.

Provide a comfortable, nonthreatening environment for your clients to make the introductions. Smaller, more intimate prospecting events are a favorite method for me. Lunch dates, golf foursomes, and any activity you all enjoy will also work well.

The above recipe is easiest implemented with your advisory council members. You have spent the most time with them and part of that time has been sharing the above recipe.

Just as blocking and tackling wins football games, asking for referrals works. It is simply about executing the recipe and all of its ingredients. So, please keep, or start asking for referrals. But before you do, make sure you have all of the ingredients and understand how to communicate them to your clients. Clarity on your story is needed. And, practice, practice, practice is also required. Role playing with a colleague or your coach is a great way to be sure you start to receive the referrals many of you deserve. Because Lombardi also said, “Practice does not make perfect. Only perfect practice makes perfect.”

What do you think?

Ron Carson is Founder and CEO of Carson Wealth Management Group, a comprehensive wealth planning firm, and Founder of Peak Advisor Alliance, the largest advisor coaching program in the country. He also co-authored the practice management book Tested in the Trenches: A 9-Step Plan for Building and Sustaining a Million-Dollar Financial Services Practice and its revised second edition Tested in the Trenches: A 9-Step Plan for Success as a New-Era Advisor.

(2) Comments
I lost interest when the article started down the road of "It is imperative that clients know you will be selective with your growth".

Americans are hurting financially, and although we need to consider our time as a valued commodity, holding yourself out for just wealthier clients is part of the problem in this country.

The financial services industry has been dessimated over the past 5 years, and now more than ever there is a need for industry growth. Laying the foundation for selecting clients based on any specific details is not helping the issue.

I was listening to a wholesaler teach about client profitablity, and deciding when to FIRE your less profitable clients. It makes me sick to think about the greed that drives the corporate side of the industry. If there is going to be a difference made in this country, it will not start with firing clients.

Referrals are good. ALL of them. Let us try to make a difference for this country.

Posted by Jon C | Saturday, February 02 2013 at 11:59PM ET
Your best source of new business is referrals from happy customers and clients. Try to know their problems and sort them out. They will automatically promote you in social circles.
Posted by KIMMY B | Wednesday, December 11 2013 at 9:49PM ET
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