Be clear about how you’ll handle referrals outside your target market


It is a comment I hear periodically when I speak with advisors’ clients. “Sometimes we hesitate referring someone because we are not sure they would qualify to be your client.” Let’s call it referral reluctance. How do you overcome this hesitation?

First I should say that it is good when clients are thoughtful about referrals. You want people to avoid referring prospects you know you don’t want. That’s not what we are talking about here. This is the situation when someone believes their friend needs what you do but they are not sure you will take them. If the need is there, wouldn’t you rather make that decision yourself?

There are two big takeaways from this kind of referral reluctance: be clear about who you are looking for and be clear about what you will do for people you choose not to take as clients.

Part of the reluctance to send someone who may not qualify is not being sure the referral is the kind of person you want to meet. In the study Julie Littlechild and I did that became the SEI white paper the Elements of Referability we identified a correlation between describing your target client frequently and getting more referrals. So, if you want more referrals make sure you are letting everyone know on a regular basis we hope to attract.

You can make that target client description more powerful by including what those prospects are looking for. As we say, a niche is a need. Describing what your clients are looking for will bring you more referrals than describing what you are looking for, like investable assets.

Distinguish between target market and acceptance criteria. Including a minimum account size in your description of the people you want to meet can limit referrals. People tend not to discuss with their friends how much they have to invest. Your clients don’t want their friends feelings to be hurt by getting rejected by you so if they fear the minimum will not be met they may just avoid making the referral. It’s better to create the description of your ideal client based on a problem they need solved or an experience they seek. Once you can establish whether there is a good match between the need and your service, you can decide whether to bring them on.


Which brings us to the second point – have a strategy for helping people you don’t want to accept as clients and communicate that publicly as well.

Maintain a list of other advisors you might refer these prospects to. Or at least know about resources you can connect them with. As long as your clients know that whoever they send your way will get some kind of help they can feel good about connecting you with their friends, even if they do not become your clients.

You are only capturing a minority of the referrals your clients are already making. Let’s do everything we can to avoid creating referral reluctance on top of that. Be clear and remind people periodically who you most want to meet. And don’t let qualification criteria get in the way of clients sending you referrals.

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