Over the years JMA’s research has shown the most successful and profitable professional services firms benefit hugely from referrals (both from individuals external to their firm, and from internal referrals or cross-selling that occurs in-firm).
In our latest study 70% of respondents rated their referral relationships or networks as “highly effective” and the number one way their firm sourced new business.
However, there’s a big difference between hoping to get some referrals and strategically planning and cultivating a successful referral program as part of a business development culture within your professional services firm.
It’s helpful to remember of some of the referral fundamentals to stay on track.
Who do prospective clients turn to for referrals to professional services?
In the business to business world, referrals are typically obtained by prospective clients asking:
- colleagues in their own firm (i.e. cross-referrals)
- past colleagues, now in-house at other companies or firms
- respected industry sources
- indirect competitors considered to be at the leading edge
- other legal/accounting/engineering experts.
And on the consumer-facing side, prospective clients mostly ask these trusted sources to recommend a professional:
- family and friends
- community sources (sporting groups, hairdressers, church parishioners)
- other professional advisers (financial planners, accountants, doctors)
- other service providers (mortgage brokers, real estate agents).
Understanding the 3 drivers of referrals
What causes a colleague, family member, industry contact, professional or competitor to make a referral to a professional services firm?
In general, referrals to professionals are driven by three factors (sometimes individually, but usually with elements of each co-mingling or overlapping in the mind of the referrer):
- Direct experience of your firm’s superior service, and stand-out results or outcomes achieved by your professionals.
- Professionals’ expertise in an industry or specialist field, when your professionals have strong positions as credible and visible experts.
- Firm reputation, standing, and profile – especially if it is strong in a narrow sphere or a distinct specialty.
How does your firm and professionals’ appeal measure up against each of the three drivers? Are you strong in all three, or is one (or more) of those areas not as positive as it could be in the minds of referral sources?
Perhaps your professionals’ service one-on-one to clients is amazing, but is not backed up by a professional and modern online presence, so you are not amplifying your reputation beyond the immediate client interaction. How many referred prospects do you lose when they look at your website?
Or maybe your firm has been making great use of social media and a new website to amp up positive perceptions, but your processes and service style once a client is on board is resulting in client dissatisfaction. News of that negative experience may be shared with the original referral source.
Perhaps your firm is viewed within the wider profession as a ‘Jack of all trades, master of none’, making it difficult for potential referrers to define exactly what sort of work you do and how you could help. Referring a personal contact to your firm for complex or high-value work may be considered too risky, even if they regard you highly personally.
The number one way of propelling valuable referrals to your firm is to be worth referring to in the first place – appealing strongly across all three drivers is the winning trifecta.
What about when referrals stop?
It’s important to bear in mind that from most sources, referrals are intermittent – they ebb and flow with the cycle of business, busy-ness, and contact. But sometimes referrals slow down or, worse, stop completely and you are left wondering why.
Here are some of the most common reasons that referrals slow down, and what you can do in response:
- You haven’t acknowledged a referral. Don’t expect another referral if you haven’t shown your appreciation for the last.
- You haven’t kept the referrer in touch with what’s going on. To feel completely comfortable, make sure they know how things are going.
- You haven’t given a referral the right treatment. Referrers put their reputations on the line – treat every referred client as a VIP.
- You haven’t reciprocated with a referral when you can. The most tangible sign of appreciation is to cross-refer a client, if you can.
- Your referrer just doesn’t have anything to refer right now. Any referral source, active or not, needs to be part of your “keep in touch” program, so they feel valued and appreciated. All the time. Not just when the referrals are flowing.
- Your referrer has started referring elsewhere. Maybe someone else has earned share of mind, so you need to focus back on three drivers of referrals.
Think about these possibilities, explore these issues, and take corrective action to leverage all the possible referrals you can from valued sources.
If you want to learn more about what other firms do when it comes to best practice referrals and cross-selling check out our Referrals and cross-selling in practice research report.
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