Why Referrals Will Make or Break Your Business

The following is adapted from The Referral Magnet by Kelly Edwards.

When I start working with an advisor, one of the first things I ask them is where their new clients come from. More often than not, they’ll tell me that most of their clients come from referrals or people they know in their personal lives, but they say it almost apologetically.

“I mostly just work with referrals. I know that’s bad and I should be doing more marketing, but…”

Don’t get me wrong, these advisors are grateful that they’ve grown over the years through referrals; it’s just that they think they should be doing some kind of marketing or advertising as well and that referrals shouldn’t be their primary source of new business. They think of referrals like the icing on the cake, but the truth is, referrals are the cake itself, and that’s why marketing for advisors focuses on having your cake and eating it, too.

I can’t say this enough: the financial services industry is a marketing anomaly. What works for other types of businesses isn’t likely going to work for you, and that’s why you have to take all the latest and greatest marketing trends with a grain of salt. Marketing is all about tapping into consumer behavior, and the consumer behavior of someone looking for an advisor is truly unique.

As consumers, we make our buying decisions different ways depending on what’s at stake. Think about the different approaches you’d take in these scenarios:

• Deciding where to take your spouse for dinner
• Finding a real estate agent to sell your house
• Choosing an oncologist to treat your cancer

Your approach with each of those buying decisions would be very different because of what’s on the line, and that’s why the marketing approaches of the restaurant, real estate agent, and oncologist have to be different as well.

With that in mind, think about what’s at stake when someone is looking for a financial advisor. They’re essentially looking for someone to keep them financially secure for the rest of their lives, someone who will look after their best interests and protect the people they care about most, and someone who knows how to help them maximize and protect every penny they’ve worked so hard to earn and save over the years.

It’s a huge decision that is truly unlike any other, and that’s why the first thing most people do when they’re looking for a financial advisor is ask other people they know, like, and trust who they use.

Now are you starting to see why referrals are the cake, not the icing?

If you focus on growing your business through referrals instead of marketing to strangers, you’ll be going with the grain of consumer behavior instead of against it.

Does that mean other types of marketing don’t work at all? Of course not. The truth is, everything works to some extent in marketing, so it’s about figuring out what works the best for the least amount of time, money, and effort. For advisors, that’s referrals.

This is good news for several reasons. First and foremost, growing your business through referrals is enjoyable for most advisors. You’re undoubtedly a relational person or you wouldn’t be in this industry, and you truly care about the people you work with and know in your community. When you focus on growing your business by serving them on a higher level, it just feels good. As you’ll learn in this book, all it takes to drastically impact the number of highly qualified referrals you’re getting is implementing a few key strategies with intentionality. The end result is you making a greater impact on your community than ever before and impacting your own bottom line in the process.

Another great thing about focusing on growth through referrals is that it’s easier than ever before, thanks to technology. We have incredible tools we can use to communicate and connect with people, form and strengthen bonds, and even get exposed to new networks of people, all with minimal time and effort on our part.

Before the internet era, the only way to really strengthen our relationships with people was by spending time with them in person or on the phone, but that’s not the case anymore with the advent of tools like social media. If you find yourself with a couple of minutes to spare between meetings, you can jump on Facebook and comment on a client’s post. When you do that, you begin to change your role in their life from just being their financial advisor to also being their friend, and people bend over backward to refer their friends.

Now don’t get me wrong, the internet is not a replacement for direct human interaction and it never will be, but it is a new tool in your tool chest.

Finally, focusing on growth through referrals is great because it’s something you can actually do despite all the restrictions and limitations on marketing in the financial sector. You don’t have to jump on the bandwagon of every new social media site that starts trending or try to stay up to speed with what everybody else is doing. After all, you probably can’t do what they’re allowed to do anyway. Instead of constantly chasing a moving target like most businesses have to, you can focus on mastering a handful of referral-oriented tactics to grow your business in a way that is both enjoyable and incredibly effective.

For more advice on building a referable brand, you can find The Referral Magnet on Amazon.

Kelly Edwards is the CEO of Lawton Marketing Group, a full-service agency specializing in marketing and branding for the financial services and insurance sector. The agency represents hundreds of top financial advisors and firms throughout all fifty states and Canada, and they have won more than fifteen national and international awards for their work. Kelly has been in marketing for more than twenty years, and her clients range from individual advisors and small family offices to Fortune 100 companies.