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A Referral Strategy to Get Excited About

Stewart Reid shares an easy method to help your business grow organically – and continually.

December 2020

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Stewart Reid

Director, Intermediary Distribution, Western Canada

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Stewart Reid shares an easy method to help your business grow organically – and continually.

Listening to your client works

In the current environment, when face-to-face meetings and networking events are lacking, it makes sense to focus your efforts on improving your referral strategies to grow your business organically. While many investment Advisors may struggle with the referral conversation, I’ve seen firsthand, on the ground, that there’s a seamless approach to help make the task easier, not at all awkward – and much more efficient.

It starts by listening (and knowing) your client, and understanding whether or not they are the “referring type”. What I mean by this is that when I’ve asked several successful Advisors which clients have referred them to others, most can’t name more than a handful. Why is that? Because effectively, it’s these easily identifiable, few personalities that have contributed to the core of your business growth, and will be the ones to help you build in the future.

So, how do you develop a simple, repeatable process to identify these referring types, and stop the conversations that aren’t working?

Be strategic, tactical – and specific

The answer lies in tracking the outcome of your ask. Think about the futility of asking a person on a date if they’ve already refused. Using this same logic, it doesn’t make sense to repeatedly ask a client for a referral if they didn’t provide one the first time, because you’re just chipping away at a potentially high-value relationship. It’s statistically incorrect to assume that everyone in your book will introduce you to someone they know just because you put in the time to inquire – no matter how smart or elegant the proposal.

It doesn’t make sense to repeatedly ask a client for a referral if they didn’t provide one the first time.

Instead, consider building “referring type” into your annual household review. For example, building this column into your spreadsheet could allow an Advisor with 200 households to focus on the 10 clients who’ve provided referrals in the past, and eliminate asking the 190 who haven’t (and likely will never) provide an introduction.

For seasoned Advisors, this overall review process typically takes place in the summer, when there’s time to rank and segment their clients and prospects according to specific gaps and/or opportunities, such as an estate planning conversation, or a referral request. Advisors manage at least 5-10 variables (from investments to insurance plans) across several accounts, so there is a habitual chance for error if you’re not diligently keeping track. A yearly in-depth assessment ensures that no small detail is missed, and reveals where follow-up is necessary, helping to keep “the pipeline” full while giving your clients peace of mind that their needs are being met.

Integrating referral outcomes (“Yes”/ “No”) into this targeted, value-add approach would save an incredible amount of time and stress, while benefitting all relationships in the long run. Not only that, but you could track how many referrals each has given, and their number of LinkedIn connections, which often provides key insights into their networking abilities and whether or not they are the type to make valuable introductions.

To start you down the right path, I’ve included below an example of a household review template to use in your practice:

For reference only.

Click here to view the table

The Next Step: Making it Easy for Clients to Refer

Once you’ve successfully identified the referral client types and built this process into your business, consider dedicating special attention when it comes to building a social rapport with them – be it a virtual coffee during the current pandemic, or an in-person lunch and sporting events once restrictions are lifted. The goal is to make it easy for them to refer you over and over again, and it’s well known that people are more comfortable – and therefore more likely to make introductions – in a social situation than a business setting.

Here’s are a few handy scripts to add to your toolbox:

  1. A Sample Request for a “Referring Client Type” >
  2. How to Ask for an Introduction on LinkedIn >

At the end of the day, whether it’s 5 or 10 clients that you’ve isolated as referring types, that’s really all you need to have a strong, organically-growing business. Consider this: if you sign on 6-12 prospects as a result, that’s 1-2 additional meetings each month – and most successful Advisors don’t have the capacity for much more. This simple discipline will not only help you zero in on the true sources of your business-building, but it will also ensure you maintain a lasting relationship with all your clients – by asking only the right ones for referrals.

For more ideas to enhance – and grow – your practice, contact your BMO Global Asset Management Regional Sales Representative.

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