Targeted Referrals

According to Sean Bailey, the senior editor for Horsesmouth, the #1 referral strategy for financial advisors is to ask clients for referrals closely following a positive interaction with that client...preferred by 64% of advisors.  The second most popular approach, used by 52% of advisors, is to ask existing clients who fit the advisors' ideal profile if  they could  refer similar prospects.

The Prospecting Professor recommends a strategy called Targeted Referrals...an approach that is not inconsistent with either of the approaches outlined above.

When many advisors phrase their referral solicitation question, it begins something like this, "Who do you  know that...?" The problem with this phrasing is that it allows the client to wiggle out of an immediate response. In many instances the client can respond by saying,  "You know, that's a good question. Can I get back to you on that?" The advisor must respond by saying "Of course," yet too often the client never gets back to the advisor, and the follow-up never occurs.

Here's how a Targeted Referral is different. The advisor lays out a specific name, or names, of persons who are peers to the client...and asks the client if they know this potential referral, and if they would/could provide an introduction. For example, let's say that the client. is the owner of an asphalt paving company. The advisor has done some due diligence on the asphalt-paving industry and is aware that the industry is guided by a statewide association. By doing some preliminary research, the advisor can be much more precise in their referral solicitation request. As opposed to the "Who do you know...?" question, the exchange can be much closer to the following:

• Advisor: Mr/Ms Client...we have worked together for a number of years, and I have very much enjoyed our relationship together. I most appreciate working with business-owners like yourself because I strongly identify with the entrepreneurial challenges that you face.
• Client: Well...thanks. I've enjoyed working with yourself as well.
• Advisor: I was wondering about something...since you have been in the asphalt-paving business for a number of years, you must have a pretty good network with other owners of asphalt-paving companies.
• Client: Well...I know a few...in fact, ten years ago I was on the board of directors for the state association.
• Advisor: What a coincidence! I wanted to ask you about some of  the board members. I notice that the current president of  the association (Use the specific name here) lives quite close to where I do. I wanted to ask you if you would be willing to provide an T to the two of us?
• Client: I don't see why not.

Three things have happened here:

1. The advisor has demonstrated an interest in the client's industry, which the client should rightfully interpret as a compliment.
2. By using a specific name, the advisor decreases the likelihood of an "I'll get back to you..." response.
3. The advisor has requested an Introduction, as opposed to a Referral. From an advisor's standpoint, they are one-and-the-same. From the client's perspective, an Introduction is less threatening than a Referral.

Effective Targeted Referrals require that the advisor spend some time researching the industry/profession of their clients. Five years ago, this could be a cumbersome effort. Today, with the benefit of Google, it is a 15-minute task.

Comments

[Rick Cecil]

I've been thinking about a similar technique for networking. I have yet to try it because it seems like the initial compliment would come across as phony if I follow it up with a request to introduce me to other folks...what are your thoughts? Is there anyway to ensure that the compliments don't come across seeming like just a ploy to get a favor?

[Prospecting Professor]

Rick:

You bring up a great point. Insincere or disingenuous compliments are completely transparent...and will be seen as a ploy and should be avoided. However, compliments that are completely sincere will be very well-received. I am suggesting that it is entirely appropriate to suggest to your best clients, "I like working with you, because I like you...and I would like to find more people like you to work with." If this statement is made in good faith, who wouldn't take kindly to it?

[Rob]

erghre