Referral marketing can be a highly effective strategy for financial advisors to attract new clients, retain their existing ones, and grow their business. By leveraging the power of word-of-mouth recommendations, financial advisors can tap into their existing client base and network to expand their reach and literally build an army of evangelistic referring machines.
Why financial advisors? Simply put, I personally have a passion for helping financial advisors and lots of successful experience doing it given my 30+ year career specializing in this space. I walked in their shoes as a CFP myself, I enjoyed leading and training thousands of advisors, and over the last 7 years, we have built an automated referral software company that makes it easier to generate and convert referrals. It has been an enlightening journey as we have learned the key behaviors for success, why they don’t happen often enough, and what to do about it to produce consistent results.
Here’s a simple guide based on the top questions and challenges I have heard and observed along the way.
How Do I Start Referral Marketing?
Getting some initial inertia to start something new or make a change is always the hardest part of anything worthwhile. Here’s a formula that works:
Get leverage on yourself – answer your “why” – why should I focus on this for long enough to build new habits to produce results? This could be your answers for referral marketing:
- I will work less and make more – advisors who focus on referrals as the primary way to build their business earn 4-5X more!
- It is best for consumers – 91% would refer if asked- they want to make a difference by referring others and it is the #1 way they want to learn about a business.
- Other forms of marketing are not working as well – stranger outreach of all types is experiencing lower conversion rates, at higher cost given the noise, commoditization of content, and filters.
- Create a list of pain and pleasure points (Tony Robbins) to help you “feel it! For example, on the pain side, you could say: “If I don’t do this – I will always be chasing leads and looking for my next client”.
Inventory all of your potential relationships – these would be your clients, your business and personal networks, your strategic partners and any unconverted past warm leads including referrals. Then:
- Create .csv or excel files for each labeled relationship and populate with first name, last name, email address, and cell phone number. The #1 way consumers today want to refer is using email and #2 is text. You will need these files to set up any effective technology-based referral system.
- Prioritize the top 500 relationships by strength of relationship, potential to refer, and ability to make introductions to your target market (ideal clients).
Seek out resources to put in place a referral system in your practice – this could mean you dust off a system you already have that you know works, it could also mean you find a credible resource to develop a new one or it could even mean that you explore technology based solutions that you can take off the shelf that does most of the work for you. The keys will be:
- Make sure your system includes driving the key behaviors of referral success including asking for referrals in ways people prefer, incentivizing referrals, facilitating an effective introduction, gets the referral interested in you prior to contact, and make sure it creates an easy path to conversion.
- If you don’t have the time and skills to build one – buy one that makes it easy to set up and use – or you won’t do it! You will get much higher ROI on your spend and time that way in most cases.
How Does A Financial Advisor Make Sure They Are Referable So Their “System” Works?
Any financial advisor referral program is dependent on just how referable the practice and advisor(s) are. Here is your checklist to know if you are referable or not:
- Do you provide exceptional service with a differentiated deliverable? The foundation of any successful referral marketing strategy is to provide outstanding service to your existing clients. Deliver on your promises, be proactive in meeting their needs, and go above and beyond to exceed their expectations. When clients are happy with your service, they are more likely to refer you to their friends, family, and colleagues.
- Do you build strong relationships? Take the time to build strong relationships with your clients. Get to know them on a personal level, understand their financial goals, and show genuine interest in their well-being. By establishing a deep connection, you increase the likelihood that clients will feel comfortable referring you to others.
- Do you consistently nurture, contact, and keep your business in front of your clients and network? Face it, we all feel guilty at times that we don’t stay in touch with all of our key relationships. Make sure you have a system to contact them at least monthly. Each contact should be personal, and authentic, honor the relationship, add value, and create a CTA (call to action). Vary your communication methods such as email, text/SMS, DM’s, social, face-to-face, etc.
- Do you demonstrate the “values” of referability? Do you do what you say, finish what you start, show up on time, and say please and thank you.
- Do you receive unsolicited referrals? If your phone is ringing with referrals contacting you – that is a good sign that you may be referable! Of course, by asking for referrals also- you will magnify your referral generation substantially.
- Have you taken our Referral Intelligence Quiz to find out how referable you are? If not – just click here. It takes only 2 minutes, it’s free and you will get a score that becomes your baseline. You can then work to improve your score by implementing the ideas discussed in this blog.
How Do Successful Financial Advisors Ask Clients For Referrals?
Whether you use a technology-based that does the asking for you, a manual system where you do the asking, or a combination of both (our recommendation), it still boils down to asking. Financial advisors who consistently focus on and ask for referrals earn 4-5X more than those who do not. Here are some principles to help guide you with this:
- Seek out best practice financial advisor scripts, approaches, and outlines. Once you have one that you are comfortable with, practice it over and over again until it sounds like you!
- Ask anytime you deliver value. You have heard me talk about this before in prior blogs. The value should be established and confirmed by asking clients – how have I helped you today? What has been most useful to you? There are lots of ways to add value including asking good questions, listening, providing sound advice, and connecting them to valuable resources.
- Incentivize referrals. Consider offering incentives to encourage referrals. This can be in the form of discounts, free consultations, or even cash rewards. Make sure your clients understand the benefits they’ll receive for referring new clients to you, and communicate those incentives clearly. Incentives increase the likelihood of referrals by 50%!
- Provide referral tools. Make it easy for clients to refer you by providing them with referral tools. This can include referral cards, personalized referral links, or shareable content that clients can pass along to their networks. By equipping your clients with the necessary resources, you increase the chances of them making referrals.
- Leverage online platforms. In addition to traditional word-of-mouth referrals, leverage online platforms to expand your referral reach. Encourage clients to leave positive reviews and testimonials on your website, social media pages, and relevant industry review sites. Positive online feedback can significantly enhance your credibility and attract new clients.
- Express gratitude. When a client refers you to someone, express your gratitude. Send a personalized thank-you note, make a phone call, or take them out for a coffee or lunch to show your appreciation. By acknowledging and valuing their efforts, you strengthen the relationship and encourage future referrals.
- Monitor and track referrals. Keep track of the referrals you receive and monitor their outcomes. This will allow you to assess the effectiveness of your referral marketing efforts and make necessary adjustments. Tracking referrals can also help you identify which clients are your best referral sources, enabling you to focus your attention on cultivating those relationships.
- For a deeper dive – check out our Top 10 Guide to Talking Referrals with Your Clients white paper.
In the end, developing an effective financial advisor referral program is all about getting informed, finding the right resources to help, and then stacking the odds that this will get done given the distractions and challenges that can take focus off of this. If your system requires too many people to make too much behavioral change, it likely won’t work. So I would encourage financial advisors to find a referral system and resources that do some of the “behaviors for them” wherever possible.
ReferMe IQ™ is passionate about helping organizations build high-growth referral-based businesses with their ”state of the art” automated referral platform. Peter S. Velardi is an accomplished senior executive and entrepreneur who has impacted thousands of individuals and organizations to build a fast-growing referral-based business.
If you’d like to learn more about any of the topics discussed, please click here.
Post author: Peter S. Velardi
