Maximizing Client Referrals–A Lost Opportunity for Most
Referrals are the largest, most reliable and most cost-effective source of new clients for professional service providers. Studies show that referrals account for a phenomenal 88 percent of new-client business. Furthermore, the fastest-growing firms are more likely than average firms to grow through referrals. The results speak for themselves; top performers are growing twice as quickly from client referrals as are average firms.
Moreover, it requires virtually no incremental costs to pursue referrals effectively. Incidental expenses, such as lunches or small gifts to thank clients for their referrals, easily pay for themselves as business grows. Best of all, most clients are happy to help. A survey of more than 6,000 professional service firms revealed that 90 percent are comfortable referring friends, family and colleagues.
I believe that the foundation of a solid marketing and business development strategy needs to begin with a game plan for referrals—especially from exist clients. Whether you choose to directly ask clients for referrals or not, your plan should be a conscious choice that involves tactics, assigning accountability, setting goals and measuring progress. If you ignore client referrals as part of your plan, you are starting with half a plan.
Yet in spite of the clear opportunity, many firms fail to tap the growth potential in referrals because they don’t have a defined process for doing so. Even firms that get a fair amount of referrals leave opportunities for greater growth on the table by not having a systematic method for generating referrals.
Firms that I’ve worked with do not see the opportunity at the outset. Firms that put a strategic process in place and that are open to change, have seen a doubling of the number of referrals from clients in the first year alone. Do the math—a few extra hours, a few extra dollars, concentrating on your main source of revenue and typically the easiest to work with—your clients.
Take a proactive, not reactive approach to client referrals and you will be amazed at the results.