Referral Marketing or Networking: Which?

But should you budget money to spend on your referrals or networking activities each month this year?

Obviously, most people know that networking and referrals go hand-in-hand. Referrals become a by-product of networking efforts you put forth. And, in fact, many would argue, (and I’d agree) there’s no higher return on investment of your time (in terms of the earnings you generate) than actively networking.

 [This article is a guest article, contributed by guest contributor Stephen Labuda]

“3 Reasons Why Networking Should Be A Part Of Your Marketing Plan”
by Stephen Labuda

One of the first things that business owners cut from their budget when times get tough is marketing. Oftentimes, a business can be spending as much as 40% of their budget or more just on marketing alone. This huge number looms large as the business owner looks at the other bills they have to pay.

This leads many to slash it or remove it altogether. The question then becomes, if you are not marketing, how will you get new clients to pay the other bills? This is why getting rid of marketing makes no sense at all. Business owners should instead look at more cost effective ways to generate the business they are looking for.

One technique that is tried and true is networking. Going to networking events to seek new clients and business relationships is a fantastic and proactive way to keep your marketing alive even in a down economy. Let’s look at 3 reasons why networking should be an important part of every marketing plan:

1. It is inexpensive-In most cases, networking is probably one of the most inexpensive marketing tactics you can use to grow your business. All you need is a few business cards and perhaps a small entry fee to the event. Most networking events cost less than $30 to attend and feature 75-100 people or more. Those 75-100 people collectively know thousands upon thousands of people that you can bring into your network as well if you handle yourself properly. Compare this with a $2500 yellow pages ad. If someone is looking for what you do, and your ad stands out from all the other ones in there, they may choose to call…even then, there is not guarantee you will get the business. Networking is cheap, but effective.

2. You have control-With a normal advertising/marketing program, the control is pretty much in the hands of the person you pay to do the work. They decide how the campaign plays out and ultimately, if you will get results or not. This can be a scary thing when it is YOUR money they are playing with. Networking puts the control in YOUR hands. How many events you want to attend, how many people you want to meet, what you say to them, all of that and more is in YOUR control.

3. You can see results almost immediately-Another reason networking should be a part of your marketing plan is that you can see results very quickly, even if YOU are the one taking action. For instance, if you made a great contact at a networking event, you might choose to call them the very next day and set an appointment. You never could have done that had you not attended the networking event. With traditional marketing campaigns, you have to wait for potential clients to contact you; that wait can seem endless especially if you need clients NOW.

As you can see, networking provides some pretty valuable benefits over and above traditional marketing plans. For these reasons and many more, you should definitely include networking as one of your most valuable tools in your overall marketing strategy.

Stephen Labuda is an entrepreneur who built his businesses through networking. You can connect with him through the Boston Networking group website.

I was asked to give referral marketing advice to financial advisors– many whom have been kicked in the teeth by the financial markets and their clients. 

And regardless of your industry, there are many good nuggets of referral advice in this article that you can apply to your own biz.

Read the entire article below.

These days many advisors rightfully worry about portfolio losses—not only for the damage done to clients’ hopes and dreams, but for the psychological wedge those losses create between them and their clients. Advisors fear that their clients will never again be willing to introduce them to their friends or family. Their previous confidence about receiving referrals seems long gone.

The good news is twofold. First off, clients absolutely can reclaim their financial confidence and edge with your help. If they’re unhappy about the way things have been going, they don’t have to stay unhappy.

And second, market performance is never a good predictor of referral success in the first place. Don’t believe it? I hate to burst your bubble, but even in the bull markets of the mid-2000s, I rarely met anyone, not a colleague nor a family member, who gave much conscious thought to referring their financial advisor. Even when they believed their advisor was doing a fairly good job of managing their investments, they just weren’t tuned in to making introductions.

This may be hard to accept, but the truth is that people don’t brag about you in their day-to-day lives. They don’t spontaneously jump up and down on their friends’ couches gushing about your financial wizardry. It just doesn’t happen, at least not consistently. So regardless of market performance, it’s not likely that someone will spontaneously volunteer your name with a gasp of excitement when asked about who manages their portfolio.

Which gets us to the main point: if clients are slow to spontaneously refer you in a bull market, what are the odds of a client recommending you now, after a disastrous 12 months? Is it even possible?

Surprisingly enough, yes it is. I believe you probably have just as good a shot of gaining referrals now as you did when the Dow was up 16% back in 2006. And ironically, you could be in a position to attract even more referrals depending on your client communication strategy—because your competition is very likely not stepping up to the plate.

The post-market-crash referral guide
So, how do you bridge your own mental gap between your poor portfolio performance and wanting referrals? It seems counterintuitive, but it’s not.

1. Focus on what matters
The first step in your referral comeback strategy is to revisit your clients’ objectives and goals, and make any necessary adjustments. Call them in for reviews, and reassure them that they still have a plan going forward. Certainly, as wealth has evaporated, goals and objectives may have to be tweaked.

It’s never easy to discuss the loss of wealth, especially when you’re the overseer of that money. It causes feelings of pain and angst for you and your clients. But facing reality is a necessary part of being a professional advisor. Think of physicians who often must communicate bad news to their patients but are trained to focus on the options for recovery available in the present.

Before you can guide someone forward, you need to fully understand where he has been: you should retrieve past intake forms and profiles in your client files. Review his investment policy statements. Go over their risk tolerance and time horizon. Make notes, and follow up with a written letter confirming that clients are either still on track, or in need of a new plan.

2. Reconnect with your value
Despite the rough year, it’s vital to reflect on why clients originally selected you as their advisor and reconfirm that decision. This isn’t an exercise in reaffirming your own peace of mind. It’s designed to reinforce why your clients began the relationship with you in the first place. You provide value separate and apart from market performance. You help clients manage their total financial picture. They needed you for something other than a magical ability to make the markets move in a continually upward direction!

If you’ve been hiding out and ducking clients, it’s time to stop putting off your appointment with reality. It’s time to discover in detail whether or not your clients are still finding value in your professional competencies. Go ahead and ask clients how they’re feeling about the quality of your service and what you can do to serve them better. If a client has threatened to take her wealth elsewhere, try to remain neutral about other financial advisors and their services. Conduct an exit interview with those clients who do leave you.

There is an excellent opportunity right now to survey all your clients to find out what’s on their minds. Find out what they have valued about you in the past, and what they need from you in the future. Find out what’s keeping them awake at night, and you’ll likely tune in to where you can provide the most value in the future.

3. Stay top-of-mind
Once you’ve reconnected with your clients’ goals and rediscovered your value, you need to proactively communicate that value. I like to recommend communicating via entry points and low-cost experience points. Your website is one such experience point. Clients can connect with you through the site, and they can send friends to get a first impression of you there.

One of the simplest but most effective marketing moves you can make is to get your website updated now. More than ever, prospects judge you by your online presence. Your website is an online brochure and is equally important as any hard marketing materials you use or are planning to create. Your website should showcase your core competencies, include case studies, and offer stories that allow prospective clients to get an authentic experience of you and your work from the comfort of their homes.

4. Make referrals easier
Finally, are you making it easy for your clients to recommend you? As we’ve discussed, clients don’t spontaneously refer even in bull markets. Most of the time, the reason clients don’t recommend you is because they do not understand the full scope of what you do. People talk most about your work when they really understand it. But the truth is that the majority of our clients have experienced the benefit of only a few of our skills.

If you’re a fee-only advisor, for instance, your clients may have experienced your money management services, portfolio allocation, financial commentary, and investment review services. But those same clients have probably never experienced what you do when it comes to tax or financial planning assumptions (e.g., tax harvesting, time horizon management) or investment research (e.g., the mutual fund, stock, or bond selection process). They’re not aware of the continuing-education knowledge you garnered at a conference you attended this year. In other words, they never realize the full extent of your technical capabilities and how those skills can improve their lives.

Referrals come faster when clients recognize the extent to which you can and have improved their lives. So they must be able to understand all your services. They must be able to explain to others what you do. Focus on educating them about all areas of your practice, ideally by giving them the direct experience of benefiting from all your expertise—especially in times of crisis.

Bottom line
It’s been a tough year for folks in the financial services community. Many advisors feel guilty about client portfolio losses. But the reality is everybody is experiencing loss right now. So losses by themselves shouldn’t affect your ability to earn referrals.

Imagine a conversation one of your clients might have with a friend or family member after you have checked in with them as described here: “You wouldn’t believe what my advisor did. We reviewed all my goals, and we’re only slightly behind where we originally hoped to be. I feel so much better about my situation after our meeting. It’s not as bleak as I thought. You really should go see this guy/gal.”

Hey, it happens! You’ll only know how well if you try it out and see how it works for you.

The strategy and steps you gotta take still apply.

Plus, it’s somewhat of a universal subject related to referral marketing: There’s always gonna be cyclical times in business.

But how do you turn the current drag you’re seeing into a lot of new introductions for yourself?

Is it possible to even take the downturn and leverage it into new referrals??

Yes. And it’s easier than you think… with some slight focus.

Click the player to hear a 2 minute referral audio lesson I recorded -
“How to Get Referrals Even When Business Is Slow!”

Or check me out here:

http://www.maximumreferrals.com/6fm-audio

100% valuable content, no B.S. or fluff.

Warning: It does take some effort and focus like anything in life. There’s no magic “system.”

Anyone who tells you differently is yanking your chain.

It amazes me how most people use referral marketing and building referrals from their clients by offering them a (forced) incentive to get them to take action and refer business.

I suppose “forced,” is not really a good word because you can’t force someone to do something they don’t want to do, including sending you referrals.

And herein lies the problem: Referral fees inherently have two flawed notions when it comes to referral marketing:

People presume when they offer a referral fee, that:

1.       People actually like to give you client referrals;
2.       People will provide you those referrals conistently when you offer them a cash reward (or other incentive).
 
Both are dangerous referral myths.

Why?
 
First of all, I’ve rarely met anyone — client, colleague, or family member — who truly enjoys giving referrals to someone. Let alone, that person actually responding favorably and frequently when you go asking for referrals from them (however you do currently now, in your own biz).
 
It just doesn’t happen. At least not consistently.
 
So what happens?

Most people seeking referrals try to up the ante: They pile on $25, or $50, or $100 or $1,000 or whatever… if you send to them X-amount of referrals or referred business. They reason to themselves that if I offer a high enough bounty, others will get interested and that will create more referral flow for myself.

False.

I’ll explain why next time in Part 2.

Things are tough for a lot of people now. Karen Scharf, a marketing consultant based out of Indianapolis, offers some very good suggestions related to referral marketing.

Rather than what to do, Karen speaks about…

…what NOT to be doing. Read her 6 Common Mistakes in Referral Marketing.

I especially like #6: Don’t Forget To Followup…

Specifically, I’d add: Followup with whomever you are introducing others to! Too often, we simply give out a name or hand over a phone number. No good!

Act as a true matchmaker, and go the extra mile to ensure the people you’re referring or introducing truly get hooked together.

I really like what Scott Weisbrod said recently over at the blog Experience Matters. He was talking about referrals from the perspective of relationships. That’s assumed, but regulary forgotten in my view.

Scott went on to say…

…that we need to go deep, really deep, with our clients. Great point Scott.

In other words, we need to be sharing our hopes, dreams, aspirations and desires with others; and ask them to do the same with us.

Not always easy, for sure.

But absolutely essential to further the trust-bond relationships that encourages referrals and introductions.

How are you doing sharing this with your closest clients and associates?