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.
But 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 only 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's no pay-off, especially when you consider that making a referral can be risky for the referrer. They're sticking their neck out and putting their reputation on the line.
And 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", and that vibe can be 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've 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, with the reason being that speaking at conferences and other industry events boosts 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 a referral based on what they've 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, 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's not based on understanding your expertise.
That's 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 best 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've done together is described by the client. Such engagements are actually beneficial for both you and your client - the client gains exposure, while you gain credibility and referrals. It's a win-win.
Also consider promoting the successes of your high-profile clients in an article or a video case study, maybe nominate them for a prestigious award. If the story's 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, and in our referral marketing research, we found that going to such events isn't likely to produce sufficient results to offset such expense.
Only about 5.5% of referrals come from someone you've met at an untargeted networking event. You're 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've been referred to without talking with them. Why? The number one reason given was a lack of understanding around how the referred firm could help them (see Figure 2). This is why you need to 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 connecting with 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've been referred to. Clients want information and an air of collaboration. They don't want your 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.
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