THE FINE ART OF CULTIVATING REFERRALS:
(This is Part One of a Two Part Series)

The easiest way to grow our business is through referrals.  And we can take advantage of a couple of those natural laws here.  First, most people are happy to give us referrals.  I’ve seen studies and surveys of our clients that indicate that as many as 80% of them would be glad to give a referral.  The same surveys indicate that only about 25% of them have ever been asked.  Second, people tend to refer “up.”  People like to feel important.  So when they give us a referral it is usually to the CEO of their company, or the Regional Director, someone of a higher standing than them.  Additionally, a referral automatically gains you endorsement with the new prospect.  Your current client passes on his or her trust in you to the new prospect.  You have a 40% or better chance of closing the sale, compared to maybe a 10% or lower chance from a cold call.  In other words, you should open almost half or more of your referrals, compared to 10% of your cold call prospects.  It doesn’t take a rocket scientist to figure out where you should be investing your prospecting time.

When I go out and talk to Financial Advisors, Financial Consultants, Registered Reps, and sales people across the country I find most of you have 80 to 90 or 100 or more “A-List” clients.  Even the young folks, relatively new in the business, soon find that they have 10 or 20 or more of these “good” clients.  So when I do the math I get all tingly inside.  All I have to do is get 1 (ONE—JUST ONE) referral from each of my best clients to add $40-$50,000,000 of new assets to my book each year.  The new guys won’t do that much, but for them it could amount to a 75% or 80% increase in their asset base.  

However……as great as that sounds…….and as “achievable” as that is, when I go out and talk to Managers and Sales Managers across the country from firm to firm, they all have one question: How can I help my people get referrals?  So where is the “disconnect?”

The heart of a referral is made up of one characteristic…..trust.  If a client trusts you they will probably refer you to their associates.  We have to establish a certain level of trust with the client, and then we have to ask for the order.  In today’s issue we will talk about establishing trust with the client.  In the April issue I will show you a “conversational approach” to asking for referrals.  It works because of its simplicity and it is smooth, it’s conversational.  In fact, it will work so smoothly that you will have 3 or 4 names and phone numbers and be gone before your client even knows what you were there for.

But the key is still this:  YOU HAVE TO ASK FOR THE ORDER!  Nothing happens until you ASK FOR THE REFERRAL.  If you are bringing in $10M a year in new assets from people “just calling in,” that business won’t go away.  The $10M will still be there, but you can add another $30M in new assets by cultivating your referral business.

So how do we know when the “trust level” has reached a point where a client will give us good referrals?  The first “rule of thumb” is this:  If the client is on your “A-List,” then you have already achieved a fair amount of trust.  Okay, so you have a couple clients that haven’t totally recovered from the last bear market.  Scratch them off the list and look again, you still have 35 or 75 good clients left.  Work with them.

What tendencies concerning trust can we expect from a client’s behavioral style?  Remember, a good indicator of their trust level, in general, is the I characteristic.  The higher the I, the more naturally trusting they are.  If we rank in order the 4 behaviors by their tendency to trust we would see this:  I—S—D—C……..Now, this does not mean that the C and the D don’t trust you.  With them it is more a matter of trusting “what you do” rather than just trusting you because they want to.          

So if your client has a high-I, he or she may just naturally trust you.  And if he or she has a low-I, maybe not.  So how do we build trust with the other behavioral styles?  

With the D:  It is all about performance.  Get results for them and they will trust you to continue.  You only have to prove that you can get them results one time.  After that they will expect you to deliver.  

With the S:  It is all about the relationship.  After the relationship is in place, they will trust that “we” are doing the right thing.  Give them some process and procedure to follow, make sure it limits risk and doesn’t expose them to lots of new things and lots of decision-making, and they will “trust” that “we” are on the right track.

With the C:  It is all about the quality of the information you provide.  And they will check your work.  This is the “trust but verify” behavioral style.  It may take a long time to build a level of trust, but once they begin to respect the quality of the information you provide, they will trust that you will provide them the information they need.

Make yourself a list of your best clients, the ones that trust you the most.  Take a look at the assets they have with you.  Remember, the goal is just to get one referral from each of them in the next 12 months.  If you can do this, you can expect to add about 50% of the assets that your best clients have with you to your book.  The really exciting part of this is that each year you do this, the next year becomes easier to do.

E-mail me with any questions…….This single topic could be the key to your success in 2005.

Our next issue will talk about part 2 of this referral process, the “conversational approach” to asking for referrals.    

HAVE YOURSELF A GREAT DAY!

Ron Keese