When is the right time to ask for a referral?
What is the right way to ask for a referral?
How can I improve my technique in asking for referrals?
These are questions I get asked on a regular basis and it's a topic that I'm passionate about!
I've worked with countless clients who regularly ask for referrals with limited success and they want to improve their technique. Even those who have mastered the traditional approaches to asking for referrals tell me that their success rate has declined in recent years.
What used to work just isn’t working well anymore.
However, my business is based on strong referrals, and I have developed a technique that works extremely well. This is a 2 part post with this post providing diagnostics for understanding the current health of your referral base. Our next post will teach you how to significantly increase your referrals … without asking!
To understand your current referral base you need to clarify the context. I always start with these 3 questions:
- How long have you been in business?
- How many referrals are you getting now?
- Are they always appropriately qualified?
The answers to these questions will actually give you a ton of information about your business, your strategies, and your marketing. Let's take a look:
1. How long have you been in business?
For a professional services business, if you have been providing the same services under the same umbrella for at least 10 years, and you have been consistently and actively growing your business throughout that period of time, you should be getting a steady stream of highly qualified referrals that are unsolicited by you. (If you're not, then the 2 questions that follow, below, will provide more insight.)
If you have been in business under 10 years, you should be getting some referrals but they may not yet be as steady or as qualified as you'd like. Many of your referrals are probably still solicited by you ... which is appropriate for where you are in your business cycle. You haven't yet reached a level of momentum where unsolicited referrals would quickly grow your business. Don't worry about it. Assuming that you're doing everything else right, unsolicited referrals will come. Depending on your pace of change and growth, it can take up to 10 years to start getting traction, especially in highly commoditized industries.
2. How many active clients do you currently have, and how many unsolicited referrals are you getting now?
A general rule of thumb is to expect about 5-10% of your client base. So, if you have an active client base of about 100 households, it's reasonable to assume that you would receive, on average, 5-10 unsolicited referrals each year.
If you are not receiving at least 5% of your client base in unsolicited referrals, there are a couple of areas to look at in your business:
Unsolicited referrals are the result of a remarkable and consistent experience that is worthy of attention and promotion. Are you adequately impressing your clients through your work? They may be reasonably satisfied, but if they aren't talking about you, it's likely that you haven't given them a good enough reason to promote you. What opportunities do you have to give your clients a memorable experience?
Some clients may believe that you're too busy to accept new clients. Many Professional Services Providers mistakenly give the impression that they are already too busy. Do your clients know that you are willing and able to receive referrals, and do they trust that you will serve their referrals without compromising their experience of your service?
3. Are your referrals always appropriately qualified?
If you are receiving a steady stream of unsolicited referrals, I first encourage you to celebrate! You've already achieved a milestone that many of your competitors are striving for. Your current clients are happy and want to support you ... but they don't always know what kinds of referrals you want. Unqualified referrals are usually the result of unclear or inaccurate messaging and positioning. Often this is because you've continued to grow and improve your capabilities and your clients aren't aware of the developments in your offer. How can you adjust your current messaging to let your existing clients know how your capabilities and ideal client profile have changed since they started working with you?
These are the first 3 diagnostic questions to explore how to increase your referrals. Stay tuned for our next post in which we will share 3 essential tips on how to significantly increase your referrals without asking!
Until next time, embrace your success, differently.