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Practice Excellence: Tackle referrals systematically

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11th Apr 2016
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Referrals are far too important to risk relying on your good nature or to chance. Making your clients feel special is important, but to make the most out of referrals, you have to approach this client acquisition strategy systematically, writes Richard Hattersley.

Many of the entrants to last year’s Practice Excellence awards cited referrals as key to their growth. For example, Stark & Main reported how it generated 78% of new business from referrals last year.

In contrast, “The old approach of ‘just do a great job and wait for referrals to happen’ is never going to reward accountants,” practice strategist Steve Pipe told AccountingWEB.

The most successful firms don’t just rely on one strategy, he added, “They “recognise that they need at least five different referral systems.”

Social media

Social media provides a platform make yourself a familiar face within the profession for prospective clients and referrals. A distinctive social media presence media ensures anybody to whom you are recommended will be able to view your LinkedIn profile or scroll through your Twitter feed to build a relationship with you.

Practice growth consultant Heather Townsend commented, “If [an accountant] doesn’t have a LinkedIn profile or use Twitter effectively, I would probably assume that they don’t understand me, and find somebody else.”

Townsend notes how social media can assist you stay on top of your referrals and client engagement during those busy December and January months. “You can schedule tweets in advance, or social media offers you a chance to engage with clients when your workload prevents speaking in person,” says Townsend.

However, reliance on social media as a way of gathering referrals should be taken with a grain of salt. Many Practice Excellence entrants credited social media and blogging as a source of client enquiries, but few were able to document how many they converted.

Practice Excellence judges including Mark Lee and Ric Payne urge accountants to assess their social media activities by applying the old adage “Measure what matters”.

“What are these firms actually saying in their blogs and on Twitter?” asked Ric Payne. “Followers mean nothing. Most of their followers are probably half naked girls from Russia. How many leads actually came from them?”

Client relationship management (CRM)

While social media is an effective way of forging relationships, Practice Excellence practices use technology more systematically. CRM systems were commonly used by shortlisted firms last year to measure conversions, target profiled clients and capture enquiries. But for some firms, using a CRM system to get referrals is just as much about ensuring these systems become a part of the firm’s culture.

According to Gene Marks, many senior partners are reluctant to use a CRM system. “They’re not going to take the time to record notes after every meeting and phone call for everyone else to see,” he quipped in an article for AccountingWEB.com last year. “They don’t need to be reminded to follow-up client proposals or open engagement letters. You cannot ask them to use this system to identify and then sell more services.”

But when it comes to the serious side of practice expansion, “If you’re increasing your number of clients, you’re going to need software to manage them,” commented 2020 Group consultant Gordon Gilchrist, views CRM as “the future of the accountancy”.

CRM isn’t just about recruiting and bringing new clients on board. You also have huge amounts of client information from preparing their accounts, and in 2020’s view this data can help you better serve and market to existing clients.   

PracticeWEB’s Alex Tucker advises taking a similar approach when creating services and proposals for your dream client, where CRM systems and the data they hold can be used to log client trends and uncover new markets and service opportunities.

Join a network chapter

As we have established, good word-of-mouth alone is not enough to guarantee referral success. Rather than approaching referrals in isolation, joining a network chapter of BNI (or local equivalent) devoted to sharing referrals can share the load, according to Heather Townsend.

One of her clients joined a network and earned an additional £50,000 through new business leads in their first year. In this instance their predecessor had not built up a great reputation so the new accountant member was greeted with referrals the other businesses had saved up.

For the sake of surrendering half a day to gather referrals for the other businesses in the chapter, this referral method is a valuable resource for those willing to join such a group. As Townsend explained, spending half a day finding referrals doesn’t have to be such a hardship: “It can be done through talking with your clients - for example, any suppliers you looking for at the moment - and you can roll that in with your general keeping in touch with your clients.”

However, you have to be committed. In Steve Pipe’s view, “These [networks] only work well for accountants who are willing to wholeheartedly play the game of ‘givers gain’ by actively looking for ways to make outbound referrals before expecting to receive incoming referrals.”

Asking clients

Pipe favours “systematically” asking clients for referrals. He encourages firms to put their approach to referrals under a microscope. “Switched on firms have developed their own referral scripts. And over time, they have finessed their scripts to optimise their success rate.”

As well as carefully choosing your words, Pipe says you have to get the timing right when asking clients for referrals. “The best time to ask is when you have just something good for your client,” said Pipe.

Townsend recently advised AccountingWEB members how to create a referral culture. “Who in your client base can you introduce to each other that you know will benefit from meeting each other?” she asked.

But while this approach works for many firms, Mike Michalowicz, author of the Pumpkin plan, thinks asking clients to recommend friends and colleagues leads to a “marginal-to-poor referral”.

“It’s a bit offensive – I just took your money, but your cheque isn’t good enough,” he said on our sister site AccountingWEB.com. Instead, Michalowicz advises practitioners to ask clients about the suppliers they depend on. “The vendors they depend on are a gateway to cloning customers,” he said.

Bank Referrals

For Pipe, banks represent the most successful referral channel, as documented in research he undertook in 2013 with Mark Lee and Rob Brown. This study found that while a majority of accountants complained about the usefulness of bankers, the minority who cultivated a relationship with their bank offered proof that this method works.

Pipe set out three traits that set successful firms apart from others:

  •  successful firm provided median of 6-10 referrals a year to their banking contacts, compared to 1-5 for the unsuccessful firms.
  • A successful firm asks for more referrals. Pipe said 78% ask at least twice a year and 54% ask at least four times a year, compared to only 39% and 16% respectively of unsuccessful accountants.
  • A successful firm uses different referral systems. For example, 54% uses at least three different referral systems. 

“If more firms followed their lead, systematically giving and asking for more referrals, they too would enjoy much better results,” said Pipe.

Do you take a systematic approach to referrals? How many different referral systems do you use? Comment below with your ideas about the best way to generate referrals consistently. 

Replies (12)

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ghm
By TaxTeddy
12th Apr 2016 08:34

An alternative View

I must admit that while the general tone of this article is very accurate - the underlying theme is that accountants don't take practice development or business leads as seriously as they should - I still hesitate.

In particular, while I am sure that the networking arrangements of BNI or similar are above reproach, personally I feel uncomfortable about treating clients as a commodity to be passed around. Silly, I know, but I can't get past that.

I think it comes from the fact that I have always had a very personal relationship with the clients, many of whom have been working with me for over 20 years. Perhaps I am set in my ways but clients as a resource (and their fees) just doesn't sit well with me. Perhaps I'm old school.

But there is an upside to my approach - I have really nice clients. This is something I have deliberately engineered over the last six or seven years - not by chasing the dollar but by working more with the clients I liked. Happily that was most of them. By weeding out the useless clients and the ones who didn't pay I have found that over time my small practice has become more profitable and a lot more enjoyable, which surely is the point.

I completely understand that my approach wouldn't be for everybody but you don't have to unleash your inner salesman in order to have a successful business.

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By johnjenkins
12th Apr 2016 09:21

If you need gimmicks to get business

then you certainly shouldn't be advising clients. In fact you should seriously consider your role as an Accountant.

I could increase my turnover as much as I want by using different marketing devices, but that isn't going to make me a better Accountant. My business will grow, yes, but I will not be able to service all my clients. I pick up clients who are referred because they say they don't see the Accountant that they formed a trusted relationship with anymore. So I think the important thing that this article misses is that there must be an optimum point at which your business will start to suffer. 

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Steve pipe
By Steve Pipe
12th Apr 2016 11:22

The referrals report quoted


If anybody wants a copy of the bank referrals research report referred to above, please contact me on [email protected] (or leave your email address here if you prefer)

The cover price is £295, but I will gladly send you a PDF version at no charge.

STEVE

 

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By Ralph Robson
12th Apr 2016 11:34

We don't ask clients for referrals

We never ask clients for referrals but do receive many of our new clients in this way. The asking for referrals would put negativity into the client relationship, whereas if an existing client makes a referral because of good service etc. then that puts a positive element into the relationship.

We have used networking and continue to do so and found that it is quite successful. I appreciate that the practice might be slightly bigger and potentially worth more by pushing for client referrals but if the client thinks he is visiting a salesman (like they often do when visiting their bank manager) rather than a trusted advisor would they recommend you anyway?

I would rather enjoy the meetings with clients and perhaps having slightly fewer clients is a sacrifice for that. But by haivng that better relationship with them means that as a trusted advisor I am asked to evaluate projects etc. and can obtain additional fees that way. 

Taxteddy is right in that having the right clients and enjoying it is better than driving for more clients of mixed quality to increase turnover, as often the administration and debt collection costs can eat away at the profit. 

 

 

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Heather Townsend - accountant's coach
By Heather Townsend
12th Apr 2016 12:01

Asking for referrals

I don't think 'asking for referrals' in the traditional way actually works. As the article says, this often brings in poor quality referrals. 

I agree wholeheartedly with TaxTeddy and Ralph Robson. You shouldn't view your clients as a commodity to generate referrals from. This feels very wrong to me. If you do a good job and consistently deliver service to your clients they will give you referrals. 

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Steve pipe
By Steve Pipe
12th Apr 2016 13:16

I also agree

I agree wholeheartedly that (A) you should NEVER treat clients as a commodity, and (B) that you should ALWAYS strive to give them the very best service.

But once you have done something really good for a client, reciprocity (which psychologists tell us is deeply rooted in human nature) kicks in and they actually want to do something for you in return.

So if at that point you gently and professionally remind them that you would love a referral, you are almost doing them a favour by  allowing them to reciprocate.

As a result, they won’t feel exploited or commoditised. They will simply be happy to be true to their nature by being able to do something in return.

That is what all great relationships are built on: “I help you because you help me.”

And it is another example of givers gain. The more you give (ie great service) the happier they will be to give you something back (ie referrals).

But of course, if you ask for referrals without giving great service... you will get an altogether different reaction! 

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Sarah Douglas - HouseTree Business Ltd
By sarah douglas
12th Apr 2016 18:09

Old fashioned

If I am referred to a client.  I would hope the referrer was not prompted all that makes me think is was he paid and what is in it for him. If a client asks me do I know  anyone good I am more then happy to recommend with out being prompted and I am pretty sure that is the way it happens for me. I like to see good business doing well but they do not need to ask me.   I think asking or prompting is a bit tacky. 

  The likes of BNI for referrals is a joke as it is a racket.  Effectively it is pyramid selling.   BNI is the weirdest networking event I have attended , talk about been bullied.   Seriously joining a Chapter talk about weird it is like joining a cult and if you don,t do as they ask they take a flakey.    One of my clients had a brain tumour and the chapter head rang them and gave them a lecture for not attending.   I better stop because I could go on a rant about how bad BNI are morally.  They would recommend anyone regardless if they are good are not and seriously morally void.    However  I do know business who have achieved work form BNI  I would just rather stick pins in my eyes then attend one of their meetings ever again.    

 

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By Sheepy306
12th Apr 2016 20:00

Just wondering.......
What exactly is a "successful firm"? How are we measuring this?
It may be that I'm an "awesome" firm and therefore wouldn't want to be just a "successful" firm.
I only refer clients to people that I 100% personally trust, needless to say that I don't refer clients to any banks.

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By User deleted
12th Apr 2016 20:34

.

Referrals are absolutely how I have built my business.  But it is not in a salesman kind of way - ie the way that unqualified commentators come round and tell us that we are just a bunch of suits who need to understand how to sell, how to commoditise clients and generally how to act like the double glazing salesman they were before they got to old too walk the housing estates banging on the doors of anyone with wooden windows. 

My referrals simply stem from clients and contacts telling people that they know someone who does a good job.  It isn't something I ask for and I don't need to.  I don't feel the need to commoditise clients and myself.  To enough people I'm what they want in an adviser

So stop telling us all how to run our businesses but, more importantly, how to be a qualifed professional (for those of us who are!)  We have been through more professional training and quandries than any of you SEO hacks and double glazing salesmen have had "retweets" on Twitter.

Quality speaks for itself.  Quietly.  It whispers.

You remember that when you're shouting your wares from the rooftop. 

 

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By johnjenkins
13th Apr 2016 08:42

Ann

I couldn't have put it better. Now this makes me wonder what Practice Excellent really stands for.

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Red Leader
By Red Leader
13th Apr 2016 11:55

well ...

Whilst not disagreeing with other practitioners' points above, there is a practical point to be made (I'm all for practical points).

Existing clients often ask me if I'm taking on new clients. In other words, I may be getting less referrals simply because clients do not realise that I would welcome them.

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By johnjenkins
13th Apr 2016 12:11

@Red Leader

The reason why they ask that question is that they know the time and effort that you put in with them. So they are genuinely asking if you have got similar time and effort for prospective clients.

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