You can trust referrals. Seems simple, but, do you believe it?
I have spent all of my career on #referrals. Either chasing them as a brand new sales rep in the copier industry trying desperately to compete in the Washington D.C. sales territory, or, later as a trainer, consultant and coach.
If there is one thing I have learned after 20+ years of serving the financial services industry it is this: none of you trust referrals and I understand why.
Don’t get me wrong, you do #lovereferrals and you do #wantreferrals…but, you don’t trust them. There are several reasons why this is the truth and I want to invite you on a short journey to help you understand why and then to help you begin the process of radically transforming your experience with referrals in your career.
Lets review why referrals are the best way to grow your business: they have a significantly higher close rate on setting the meeting and converting to clients. Nothing else is even remotely close.
Here we go.
I want to start us off with a look at why we ‘trust’ traditional means of acquiring prospective clients in the financial services industry: metrics.
Cold calling, the traditional business building strategy (no matter what they promised you at the recruiting interview), is a numbers game. You need to call ‘x’ amount of prospects to bet ‘y’ number of meetings to get ‘z’ number of clients. Why do so many firms default back to this method of client acquisition? Numbers. That’s right, the math is what drives them back to it…because they know if you have enough activity that you will be successful enough to survive the first few years.
Please note, there is nothing wrong or immoral about cold calling. The advisor is just playing the percentages. If they make enough cold calls (sending direct messages on LinkedIn is a cold call btw) they are going to find enough people that are #inthemarket for a new financial advisor. This is an absolute fact.
Direct prospecting isn’t bad…it just isn’t the most effective way to grow profitably and fast.
Note: every single advisor and/or manager in the financial services industry says that referrals are the absolute best way to gain clients and yet they never, ever, say you can build your business from scratch from them. This is because they don’t know how to do the metrics for referrals.
The metrics are also why you trust advertising. You are given a price for a certain amount of measurable exposure (reach) to a specific (or general) audience and are given statistics about how many appointments you can expect from ‘x’ amount of ad spend. Advertising works because you are ‘buying’ your time back when you buy ads. As opposed to spending your time direct prospecting (dialing or sending DM’s on social) you are buying your time back by paying for exposure and attention from desired prospects.
Hopefully that all made sense and we are in agreement about why you ‘trust’ traditional client acquisition techniques. Now I want to talk about the two factors that make what you currently trust work and why they are exactly the same success factors for prospecting via referrals as well.
What drives success in direct prospecting and advertising are the specificity of your target audience and the amount of activity. If your are blindly cold calling and/or advertising to too general an audience/list…you will have a significantly greater challenge getting sustainable business growth because you are working some bad math. The better your work on WHO you want to acquire as a client will make sure your activity is pointed at the best audience. Once you have your target identified you now have the ability to undertake the required amount of activity to generate appointments.
Let’s pivot to referrals.
The reason you don’t trust referrals is because you are treating them differently from other ways of acquiring clients. This is a huge problem. The math is almost exactly the same except for one big distinction: referrals are a far and away winner when it comes to the percentage of prospects that convert to clients….they win in a landslide and you know it.
How to start trusting referrals: treat them like any other way of prospecting and use math.
Know your target market. Who exactly do you both want to have as clients and why they should choose you. Quite frankly, this is where all salespeople fail. They are #productcentric and can only answer a question about WHY with a product and that is not compelling to today’s clients.
Back to direct prospecting: If you suck at explaining what differentiates you from your competition you are going to have a hard time driving sales results no matter how you manage to get in front of prospects. #Sales is a skill and you have to learn it and then be able to develop it (this, btw, is the greatest weakness of financial advisors…no formal sales training is the norm and they never, ever, spend for formal, professional sales training).
So, you have your target market and have narrowed it down to an ideal client profile what is next? Build a list. You can’t cold call or advertise to someone that doesn’t exist and that has a name/phone/email. The same is true with referrals. You don’t trust referrals because you don’t understand that you still have to do the work.
If you want to experience the power of referrals at the end of the sales process when you have a high percentage of meetings scheduled and clients acquired…you have to do the same work as any other form of prospecting and that is building a list of people that you want to meet.
How do you build your list? You either pay others (buy a list or higher an advertising agency), or, you do the work yourself. For FA’s, I recommend that you build it yourself and it is work, but, not hard.
My clients are always amazed at how easy trusting referrals is when you clearly define the process.
Once you have a list of actual human beings you can start strategizing and researching about how to get introduced to them (just like in cold calling or advertising). The really great news about referrals is there are tons of ways to get referred to your ideal prospects if you have a clear and defined referral system.
Here is one last reason you don’t trust referrals: you are afraid.
That’s right, you are afraid of referrals. You know that, unlike with cold calling and advertising, you can’t blame anyone else for your failure. The real reason that most financial advisors don’t trust referrals is they don’t trust themselves. When you ask for referrals from clients and you don’t get them it hurts because you feel like they are rejecting you personally.
This is definitely the case in a small percentage of client/advisor relationships because some people aren’t trustworthy, BUT, in most cases the reason clients don’t refer has very little to do with you at a personal level. In fact, it is generally because they have fear/risk associated with referring you, or, because they think it would be too difficult.
You are in sales and rejection is a part of the game. When you have a good system the rejection is never personal…it is all timing and/or risk perception from your referral source and that is far more easy to overcome and emotionally handle.
I hope this has been helpful, but, I am afraid that trying to distill decades of coaching and consulting experience into an article might have been a futile effort. Here is what I want you to know if you have read this far:
- You can absolutely trust referrals. They work at every stage of your career and unlike other forms of client acquisition they scale in both profit and effectiveness across your entire experience as a financial advisor if you understand how to build a referral system.
- The more you learn about the profession/craft of sales the better you are at getting and, most importantly, giving referrals. Being someone that is known as a giver of referrals guarantees getting them.
- Math, research and preparation are essential elements to any form of client acquisition and referrals are no different. The reason you don’t trust referrals is because you are taking them for granted.
I am always available for help on the topic of growing a financial services business that delivers on the full promise of the career: highly profitable and highly satisfying careers that enrich you and your clients. There is no better way for any advisor or any size firm of advisors to grow and prosper than referrals.