Make It a Point to Appreciate Your Client’s Referrals! I see a lot of people trying to incentivize referrals. For example, if you refer a friend you get a cash reward. Aside from compliance concerns with that approach, in most cases, I haven’t seen that be particularly effective.
First, clients refer friends who they truly believe will be benefitted by the association. At the same time they are scared that YOU will screw up the relationship and make them look bad. A direct financial incentive often exacerbates that concern with another level of “guilt” in their own ulterior motives.
Second, many of your staff aren’t great at your “elevator pitch” – at selling your service cold. Your clients are likely to be horrible at it; often saying things that repel the prospect rather than attract.
Third, unless you educated them well, your clients have a narrow window into the range of problems that you are effective at solving. They tend to know only what you did for them, not the wider range of what you are capable of accomplishing.
And, as in most things, the 80%/20% rule (or even 95%/5%) applies. You’ll likely get 90 or 95 percent of your best referrals from 5 or 10 percent of your clients. Once someone has sent you a quality referral, it’s much easier to have that person send you a 2nd, 3rd, 4th and 5th than to get most clients to send you even one.
In my coaching and consulting business, the same holds true. Most send me none. I have two or three really strong clients who are responsible for the vast majority of my referrals.
Show appreciation after the fact rather than offer “bribes” upfront.
A relatively small number of your clients, no matter what you do, will send you a referral directly. However, once they send you one, they often are capable of sending you five or ten more. And then I’ll always use gratitude rather than bribes.
When it comes to showing appreciation, I have found that that the personal touch works best. Let’s say Sue Jones refers her friend and the friend ends up being a great client.
My next step would be to find out what Sue really likes. Does she love a specific Italian restaurant? Does she enjoy a spa day at a specific spa? Is she a sports nut, wine collector, or??? Well, you get the idea. Let’s say she enjoys a particular spa – well, I’d line up a $200 gift voucher with maybe a small tangible gift from that spa. Then I’d have it delivered with a personal note attached expressing my appreciation. If appropriate, I might also send the same thing to her friend, my new client.
“Hey, I really appreciate the opportunity to be of benefit to your friend and I really appreciate you thinking about me and my firm as a solution to her needs.”
This is a good example of how to do it right.
Appreciation gifts are also easy to get very wrong.
Let me share with you a personal story as an example of major failure to reward. Years ago, I used to spend significant amounts money on TV advertising in my local media market (Denver metro.)
One day, I turned up at my office and there was a very expensive leather “Denver Broncos” golf bag waiting for me. The local CBS affiliate’s representative had attached a note thanking me for being a great client.
I knew nothing about golf (still don’t), didn’t (and still don’t) care about golf, didn’t (and still don’t) play golf. Add to that I’m not particularly a sports fan, not a “team sports fan,” and definitely not a football fan. So this just missed the mark completely. Not only did it not accomplish its mission of having a very expensive gift to make me feel appreciated, but it totally backfired showing the sales representative didn’t take even a moment to learn a bit about me.
That was 27 years ago and I am still using it as an example to audiences big and small, which proves how bad of a choice it was. The bottom line is that you should get to know your clients and look for ways to show that personal touch.
Constant communication keeps you top of mind, and helps insure that you are in front of them when the time is right.
We touched on this above, but it is worth repeating. If you contact a client once or twice per year they are very unlikely to have you top of mind when a conversation drifts to a topic where you’re the natural resource.
An hour or a day after they receive that email from you, they are going to forget your name again. Frankly, most emails they’ll only see that they received something from you and maybe the subject before skipping on to the next one.
If you contact your clients once a month, they may remember who you are but you won’t spring to mind when you should. If you contact them in some form every single day with emails, texts, phone calls, newsletters, letters, books, invites to meetings and events, etc., they will always know who you are. You are instantly identifiable and, as soon as they have a need for you, they will call you.
For example, if a client of yours has a parent or grandparent pass away and inherits $4,000,000, they should invest all under your watchful eye. If you only contact them once per month, you are likely going to get there too late. By the time they receive your message, they will have already spent it on a new car or thrown it into a Robo-Advisor recommendation.
Make it as simple as you can for them.
For clients you want them to be reminded to contact you with any financial changes or new opportunities. With prospects including referrals, by the time that they actually need your services, they should already be familiar with your podcasts, your events, your meetings, your webinars, your emails, your texts, your phone calls, your free material etc. You should be THE investment guy.
By the way, I have an associate, Walter, who helps small business owners scale and structure their business to sell. He shows them how things must be structured to be attractive for acquisition, helps them scale to $10 Million +, and helps facilitate the sale. At that point he hands them off to a Wealth Manager.
The Wealth Manager must be there before the sale, because as (he relates it), his job is to make sure they don’t buy the Lamborghini, Caribbean Island, and get divorced and end up with then new Trophy Wife #2 (or #3). He knows that a liquidity event comes with the hazard of running through all of the money. It’s also common that the business owner who has visions of sipping Pina Colada’s on the beach typically gets bored in 6 to 12 months and then looks to start a new business.
The referrals from my friend Walter who built them to be sold are VERY Valuable.
As a Reminder – Be Appreciative.
Just take a moment and work through your average “Life-Time” value of a client. To keep the math simple, if you ended up with an average account of $1,000,000: At 1% a year ($10,000) over 10 to 20 years you end up with $100,000 to $200,000 life-time value. That number doesn’t include referrals to other family members, associates, and friends. It also, doesn’t consider any initial planning fees ($5,000?) and commissions on life-policies, long-term care, and more.
Well, if the referral is worth $10,000 to $25,000+ THIS YEAR and $200,000+ life-time, then you certainly can afford some nice gifts as a thank-you as well as a welcome gift to the new client.
Once you know how valuable your average new client is, then you know how valuable the people referring you are. If someone comes to you with a referral, be as appreciative as you can. Show how much it means to you, but also show knowledge about them. Acknowledging a referral is one thing, but showing appreciation is completely different.
Another aside: Anyone who expects a quickly fired off email as a “Thank You” to express great appreciation should be fired for stupidity. Be personal. Show you took the time. Even better include your book and perhaps some other gifts that may hang around their office for awhile. Don’t expect email to feel personal or important. Send a note card. Send a physical gift.