Everyone’s ideal is a business where the phone just rings and the referrals come unsolicited all week long.
Here’s my take on this: when I meet people with thriving businesses who truthfully tell me all their business comes from referrals, they have usually been in business a long time – often over 20 years. Even then, they are a rare breed who have done many things right over many years.
We also usually know of 1or 2 others who seem to live on referrals. Again, these people are the rare exceptions who bear strong resemblance to the top 5% in any field who do a lot of things very well. And sometimes the perception they give is not accurate or true over the long haul.
MISTAKE! The challenge here is we often use these people as a measuring stick and conclude that our business is flawed.
REALITY: on average
20% of your clients will voluntarily refer you
20% of your clients will never refer you
60% of your clients will refer you but need to be asked!
And even then, the 80-20 Law will still apply; you’ll still get most of your business from 20% of your sources. It’s just that you can’t know who that 20% is until you’ve asked everyone!
In the financial services those numbers are even more skewed. The most recent studies I saw were:
11%
17%
72%
The CHALLENGE:
If you are a natural and fit into that 20% of people who are happy to refer, it is especially hard to understand that most of your clients are not like this.
The NORM:
Most of you reading this are in that 20% of happy-to-refer sometimes – it depends what it is – and are in the 60% the rest of the time. You won’t go out of your way to recommend someone but would oblige if you were asked – provided they are good (after all, you don’t keep going patronizing a business if you get a bad haircut, oil change, meal, experience of any kind)
The OTHER Challenge:
If you are too wary about recommending other professionals, you will likely find it hard to attract referrals to yourself. Think hard about this one! There is a correlation between the number of referrals you give and the number you get.
CONCLUSION:
Consign the fantasy referral business notion to the pile of fairy tales you bought for your children when they were four. At least for another 10-20 years.
YES!
Connect on a personal level with your clients! Deliver truly memorable customer service! Always try to go the extra inch! Make it easy for your clients to talk about you! Coach your referral sources and clients how to talk about you! Grow your network! Have a target market!
AND YES!
Most of the time, ask for what you want (referrals)!
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