Everybody relies on referrals, and nobody has a plan – Client Engagement Think Tank Part 3

In the
 first two posts of my series on the client engagement think tank, we discussed the disconnect between our target market and our client onboarding processes. In this article I will discuss the central paradox of most financial advisors marketing plans – the the lack of a plan to attract referrals.

In the group discussion, the advisors in the group confirmed that referrals were central to their new client development efforts. They also indicated that none of them had a well-defined and consistently executed plan. Everyone had made some efforts to generate referrals. Some had worked at firms early in their careers that forced them to ask during every client appointment, and they tended to be ones least inclined to continue asking.

This was not a revelation – we know through our work and through most articles about the topic but few practitioners have a well-developed referral marketing strategy. We also know this is not unique to our industry. John Jantsch, author of The Referral Engine, indicated that, in an informal survey of small-business owners, 63 1/2% of businesses receive more than 50% of their new business from referrals, and 80% have no formal strategy for generating them.

We learned that, while few practitioners consistently ask for referrals, all seem to attract a few of them. Clients who referred tended to do so whether they had been asked or not. It was apparent that asking was not a requirement for giving referrals. The number of referrals each practice attracted per year differed, but none appeared to be close to their potential. It was clear that the advisors in the group needed to have some coherent plan for attracting referrals.

If the practices involved in the discussion could attract a few referrals every year without a plan, we are convinced that executing a carefully thought out strategy would help them realize far more of their potential. My next post will offer some ideas on what you might include in a referral marketing strategy.


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