I specifically say “make a referral to you” and not “give you a referral” because, when it happens naturally, a referral is not something a client gives you; a referral is something he gives a friend.
You probably make referrals every day. I know I am making them all the time, although I would usually call them suggestions or recommendations. Here are a few that I have made recently or make fairly regularly:
- Since I work with financial advisors, I will often get questions about tools and resources. I am happy to recommend the client relationship management system I use, Redtail.
- A client of my retail practice needed some short-term financing, and I was happy to recommend and coordinate a loan through a regional bank.
- I love the software applications Evernote and Nozbe. As a busy consultant and executive who struggles with ADD, I have found that these programs improve my life.
- I am a fan of Mark Sisson and The Primal Blueprint. If I get into a conversation with someone about diet or health, I will frequently direct them to Mark’s book or website.
- I recommend my auto mechanic pretty regularly. There have been many times when he has directed me back to the dealership because he believed that my problem was covered under warranty. Other times he has talked me out of repairs on a beat-up Jeep or van I used to own to carry things around for home improvement projects because they were too expensive relative to the value of the vehicle. I believe he won’t charge me to do something unless it’s necessary.
- My wife and I love food and wine and frequently talk about local restaurants and vineyards in the Finger Lakes area of New York where we live.
Once you reflect on it, you will likely realize that you make referrals pretty regularly. Your clients do, too. They likely refer people to you more than you realize. In her study “Anatomy of the Referral,” Julie Littlechild found that 91% of clients were comfortable providing a referral to their financial advisor, and 29% had made a referral. I am intrigued by the 29%. Most of the advisors I know would be thrilled to receive referrals from almost one-third of their client base. What portion of your client base do you think referred someone to you in the last year?
The study found that the top two reasons for offering a referral is because a friend asked for a referral or a friend expressed a financial challenge. In his book The New Art and Science of Referral Marketing, Scott DeGraffenreid determined through social network analysis that people make referrals to improve their standing among their peers. Your client is telling his friend about you not because he wants to benefit you, but because he wants to benefit the friend and to benefit himself.
Who have you recommended to friends over the past month? Why did you do it? Why do I tell people about my auto mechanic, or those software applications, or Mark Sisson? My mechanic does not pay me to tell people about him; he provides me no incentive to recommend him—no discounts or coupons or certificates for a steak dinner if I send three people his way. And I assure you Mark Sisson does not even know I exist, much less that I am a fan. I encourage friends to patronize those businesses because I care about them, my friends. I do it because I want them to have a better experience taking care of their car, because I want them to avoid getting ripped off, and because I want them to be healthier. And I want them to think better of me for having turned them on to something that was useful to them. That is why we naturally make referrals.
So, if people want to realize the benefits of providing a referral (obtain social currency, expand influence, etc.) and can accomplish that by directing a friend to you because they believe you will help them solve a problem, they will refer people to you. Attracting referrals, then, becomes largely a matter of training clients to remember to mention you at the right time. It’s all about helping people remember you when they can benefit from mentioning you. It’s not about giving you names when you ask, it’s about remembering to refer you when the opportunity arises, so you have to prepare clients for the opportunity to refer. “Who can you think of that could use my services?” is about asking your client to help you. “I know someone who can help you solve that problem” is about a client helping a friend.
Thinking about it another way, when you ask for a referral you’re essentially asking your clients to sell for you. And that’s not the role they signed up for. Consider it in your own experience. Is there a professional you work with, or have used his or her services, that you would happily refer anytime someone expressed a need—a car mechanic, a plumber, a lawyer? Most of us have at least one or two people we deal with on a regular basis that we would be thrilled to refer. Let me ask you this, who will you call about that person today? Well of course you’re not going to wake up and ask yourself, “Who can I call to tell about this great mechanic I know?” That’s not how it works. How many clients will you commit to attracting for those people this year? None, of course—that’s not why you recommend them. You do it because it benefits you, not the person you are referring someone to.
