When it comes to generating new business, most professional services firms rely on referrals. In fact, according to our study of 530 professional services firms, generating referrals ranked highest in terms of current marketing priorities.
But sadly,most of that marketing effort may be destined to fail.
Our recent Referral Marketing Study exposed an interesting truth. Much of what referral marketing gurus preach—from attending networking events to asking for referrals—is ineffective, or simply wrong.
There are ways to ensure you keep the referrals coming in. Here are some of our favorite research-backed tips.
1. Stop asking for referrals.
Asking clients and fellow professionals is a very common piece of advice from those referral gurus. Unfortunately, it doesn’t always work in the professional services context.
When we asked more than 1,100 referral sources (professional who make referrals) what drove them to make a referrer, we found that a meager 2% would make a referral when asked.
Why so low? The answer is actually quite simple and rather intuitive.
You’re asking for a favor and giving nothing in return. There is no pay-off, especially when you consider that making a referral can be risky for the referrer. They are sticking their neck out and putting their reputation on the line.
There is another reason to stop asking for referrals from clients. When you ask, you can easily switch from a trusted service provider dedicated to their interest to a “salesperson.” That can be a vibe that is hard to shake.
So, if you can’t ask, how can you generate a steady stream of business-building referrals? We actually found that more than 80% of firms actually get referrals from people they have not worked with or even met.
2. Share your expertise by speaking at industry events.
We found that speaking engagements are a top source of referrals.
The reason is speaking at conferences and other industry events raises your visibility as an expert. You may even find that some attendees approach you directly. Like a kind of “self referral.”
More importantly, others in the audience will learn of your expertise, and when asked by a client or colleague, will be able to make the referral based on what they learned from you.
3. Write educational articles and blog posts.
Another great way to get non-clients to make referrals is to educate. Just remember that your audience for your educational content is prospective clients not fellow professionals. For maximum effect publish or post in publications read by your target audience and their influencers.
4. Give more referrals.
People often make a referral to a firm that sent a referral their way. So, to get more referrals, give more referrals. This remarkably consistent relationship is shown in Figure 1.
Figure 1. Reciprocity’s affect on referral generation
The impact of reciprocity is evident when looking at the top 20% of referral makers compared to the bottom 20%. Professionals who make more referrals receive more referrals.
Reciprocity works well, but only if you are in a position to give a lot of referrals to someone who can make the appropriate referrals to you. Make sure both conditions are true before your invest your time, resources or reputation.
5. Deepen social relationships with selected referral sources.
Referrals can come from social relationships and friendships, but only if the referrer is familiar with your expertise. The notion of meeting new people and developing friendships to get referrals is destined to fail if it is not based on understanding your expertise.
That is why we suggest you concentrate on those individuals who both know your expertise (such as a client or fellow professional that you have worked with) and are in a position to make referrals to you.
6. Conduct an industry-leading research study.
Professionals who are seen as industry trend setters are in the best position to get referrals. And among the best ways to demonstrate your thought leadership is to conduct a research study that addresses an important industry issue.
If the research is well publicized it can become a significant magnet for new referrals.
7. Promote the successes of clients.
One of the ways to communicate your expertise is to showcase the clients you serve and the results that you produce. Just be mindful of the limits to what can or should be disclosed.
To avoid such limitations, invite your client to speak at an industry event where the work you have done together is described by the client. Such engagements are actually beneficial for both you and your client. They gain exposure, your gain credibility and referrals. It’s a win-win.
Also consider promoting the successes of your high-profile client in an article or a video case study. Maybe nominate them for a prestigious award. If the story is compelling, potential clients will ask your client about you. These questions often turn into referrals.
8. Avoid untargeted networking.
Most professional services providers will go to any number of networking events. These can be costly because of the time commitment involved. But in our referral marketing research, we found that going to such events is likely to produce insufficient results.
Only about 5.5% of referrals come from someone you’ve meet at such an untargeted networking event. You are much better of attending an event attended by your target audience, especially if you speak at the event—remember Tip #2.
9. Be crystal clear about how you can best help potential clients.
Getting the referral is only the start. Once you get a referral you need to keep it. And to keep it, you need the referred prospect to start a conversation. Unfortunately, more than half of referrals never make it to this next critical step.
According to another Hinge study, potential clients rule out providers they have been referred to without talking with them. When we asked why, the number one reason given was a lack of understanding how the referred firm could help them (see Figure 2). That is why you must be very clear about what you do, who you do it for, and why clients would choose you in all your communication channels.
Think that’s obvious? Think again. Just look at professional services websites—the most likely first stop when someone gets a referral. Often the language on these sites is vague and general. In an attempt to appeal to everyone, such sites end up being appealing to no one.
Figure 2. Why buyers rule out a referral
10. Educate rather then sell.
Quality educational content is a magnet for referrals. The lack of it is a key reason people rule out firms they have been referred to. Clients want information and an air of collaboration. They don’t want a sales pitch.
Quality educational content— articles, webinars, books, or white papers—can actually help bring in business three ways: it helps you generate new referrals, it prevents prospects from ruling you out, and it can help tip the scale in your favor.
Business & Finance Articles on Business 2 Community