How to get the kind of referrals you want
Mark Lee asks networking strategist Andy Lopata to share some of his tips for accountants keen to rely on referrals for new business.
Whenever I ask Accountants the best source of new work they invariably reference client referrals. This has long been the case. More modern concepts such as online advertising, blogging and social media rarely come even a close second.
When I then ask accountants what do they do to encourage referrals of the type they want, to do the work they enjoy most and that pays well, they rarely have an answer. The referrals they do get are more typically the result of what I refer to as ‘accidental word of mouth’ conversations.
For those who are keen to secure more referrals I asked Andy Lopata, a networking strategist, to share his advice:
ML: Andy, accountants often tell me that they get most of their new clients from referrals. In your experience do these just 'happen' or do they need to be encouraged?
AL: In my experience most accountants are not generating anywhere near the potential amount of business through referral that they possibly could. Most approaches to eliciting referrals are reactive and half-hearted at best and where any attempt is made to be proactive they will tend to rely on old-fashioned techniques that simply don't produce results.
ML: I hear you. But it's also the case that many established accountants rely on the fact that the majority of their clients will stay with them for many years. Once the practice is of a certain size the accountant no longer feels the need to seek out new clients all the time.
AL: If someone's firm is in the position where they really don't need any more new business coming in, then good luck to them! But it's easy to become complacent, not so easy to recover when you discover that your business has ebbed away while you've had your feet up.
Before patting yourself on the back, ask yourself if all of your clients are of the 'quality' you'd aspire to? Would your practice not be better if you could sack the least productive or most time-consuming 20% of your clients every year and replace them with more of your ideal?
If you have staff, contractors or more junior partners, are they generating as much business as you, or at least contributing their share? Or do they focus on the technical work because you're bringing in the business? If the latter, what does the future look like for the firm?
The beauty of a referrals strategy is that you can increase and decrease the flow of new introductions as needed, while ensuring good quality introductions by being clear about who you want to meet.
ML: What about newer practices? Many accountants and bookkeepers start-up in practice each year and would love a steady stream of referrals.
AL: A steady stream of referrals takes time to build; you have to develop strong, trusted relationships with your champions first. Start with people with whom you already have those relationships, don't be frightened to ask your friends or family for help. Explore collaborations with other people in a similar position to you in complementary businesses, such as financial advisors or solicitors.
And let people give you 'qualified' referrals, where they are clear that they're not vouching for your work at this stage but recommend a conversation. As you and your clients give feedback, they will soon drop the qualification.
ML: And what about networking strategy once they have started to build their practice?
AL: Develop relationships with a range of potential champions from all backgrounds (clients, solicitors, financial advisors, former colleagues, friends, family, networking contacts). Stay in touch, see how you can help them and then focus on a small number of champions who are well placed to refer you and who are comfortable doing so.
In my book 'Recommended: How to Sell Through Networking and Referrals', I share a system that focuses on developing just five champions at a time. I believe that a focused approach like this will produce more results than a casting a wider net as you get to understand your champions, know when they are ready to refer and ask in a way likely to make it easy for them to refer. You'll also find yourself recognising other opportunities to ask naturally for referrals more readily.
ML: What have you seen work well for accountants in smaller practices?
AL: Many accountants join local networking groups. Those who go with the specific aim of selling their services rarely find satisfaction in doing so. But I've seen a number who recognise that people and businesses don't change their accountants often, so their goal in attending a regular group is to position themselves so that people think of them when the time comes to use or recommend them.
So being present, supportive and consistent in how you participate in such groups and taking a long-term approach to the results is the best way forward.
ML: And what are some of the most common mistakes you see?
AL: Writing letters to all of your client base asking if they'd be willing to refer you sitting back, writing for the introductions to come flooding in is a rookie error!
Another is agreeing a mutual referrals agreement with a fellow professional services provider and then expecting the other party to maintain it without you doing anything to nurture the relationship or measure success. It's incredible how many accountants, solicitors, financial advisors and banks (I call them 'The Holy Quadruplicate'!) claim that their best referrals come from other professional services firms but then complain that all they do is give, never receiving. I don't know where all of those referrals are going.
ML: How about some final tips?
AL: Understand that networking and referrals strategies should be central to your business planning, not an afterthought. If you leave things to chance or wait for them to happen you will be leaving business to go to your competitors.
Such strategies are based on relationships, which take time to develop and need to be nurtured. Don't expect results overnight and don't wait until you are in need to get started.
ML: Many thanks Andy. Plenty of food for thought and I'm sure AccountingWEB members will want to share their views and experiences
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Andy Lopata is the author of Recommended - how to sell through networking and referrals and can be contacted by email: [email protected]
Mark Lee FCA is consultant practice editor of AccountingWEB and a speaker at conferences and in-house events, helping accountants who want to build more successful practices. He also facilitates The Inner Circle group for accountants and is chairman of the Tax Advice Network of independent tax specialists who provide support to smaller practices.
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