It’s very interesting this notion of referral strategies. As I travel the country presenting to mortgage brokers I find one common theme…
We all rely 100% on referrals to sustain our business but many businesses have a very small percentage of their clients actually referring to them.
“But I get 100% of my business from referrals Deena” is the response I usually get. I totally know and understand that. But can I ask you to do a little exercise on your business for me please?
Write down the number of clients you have. Yes, go on do it – you’ll be surprised with the outcome.
Now above that number write down how many of those clients ACTUALLY refer business to you every single year. Now divide the top number by the bottom number and this will give you your referral percentage… Interesting isn’t it? That is if you’re not throwing up by now.
When I do this exercise most people get about a 1 – 5% referral percentage. Some, and only a handful at that, have a higher rate than this which is usually about the 10% mark. That’s usually because they are doing something special, like staying in touch with their clients through quarterly newsletters, sending out gifts, birthday cards etc…
So why is it so low do you think? We all hand out business cards for them to give to their friends and family but the phone never rings. We spend so much time with our client getting them their loan, then never to be referred to again!
Why? They don’t know:
- how to
- why to
- that they can / should
They’re not reminded to refer to us – we forget to ask, we’re embarrassed to ask.
There’s nothing in it for them? Or we haven’t outlined what’s in it for them?
They don’t understand that your lively hood depends on their referrals.
You did such a great job, putting them into that great loan with the bank, they tell all their friends about it and where do their friends go? Straight to the bank where you placed your client. See they are referring…but they are referring the loan product or lending institution, not you! So what can we do about this?
But doesn’t “EVERYONE KNOW SOMEONE IN A 12 MONTH PERIOD WHO NEEDS A LOAN”? Then why are, only 5% of our client base referring?
We need to:
Reward them for referring – no this doesn’t mean giving them your hard earned cash. You can give them loyalty points, enter them in to a competition or buy them a small gift to thank them for their referral. Why not take all of your top referrers out to dinner once a quarter or perhaps every 6 months. Have great ways to ask them for referrals without handing out business cards. Do a movie night (get it sponsored – even better) and get them to bring their friends (more referrals).
There are simply dozens of ways you can thank you clients for their business and their referred business but most of us aren’t so good at doing that.
The good news is – You can double 5%! And then double that again and again.
You’ve just got to start.
If you are interested in finding out more about increasing your referral percentage and client loyalty then call about the Finance Matters marketing program available on 02 9526 9999. Remember to also ask them for the next Finance Matters marketing program workshop date near you.
Thanks for reading this months tip, I hope you can use it.