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.

“People are afraid that you might screw them… or their clients”

Sometimes to understand referrals, referral marketing, client referrals (and business referral relationships in general), you’ve just gotta… well, you’ve gotta look at… the sick confines of people and their human psyche.

Because deep in that referral source’s grey matter lives some pretty twisted conniptions.

Let me explain.Let’s say that you’ve worked with a client for some time. You perceive s/he thinks you’re Grade A material. And naturally, you’re expecting them to refer business and start the yin and yang of introductions. In your mind, they’re a legit referral source.

But wait.

The reality may be they have certain silent reservations about you (Uh… they don’t always tell you).

Here comes the disconnect (and the marketing lesson): Perception versus Reality.

Positioning, or perception of you, is how that person imagines you versus other choices – namely, your competitors.

The fact that their may be a limited supply of others like you available, means… well… it means that referral source has limited choices.

The Good: Means as a good, short-term retention tool.
The Bad: It won’t yield any long-term consistent referrals.

For example, let’s take a niche like physicians.

Doctors are a busy group. They run hectic practices. They hire administrators to run the muck.

You’re a ”marketing” consultant. You help a doctor increase his or her referred patients. Your expertise is referral marketing.

A doctor may know other professionals, true. But they probably don’t know very many who are honed at practice management and referral generation, right? This reduces their supply of marketing consultants that they know.

While this is an advantage to you as the consultant (limited supply of competitors) it can seriously hurt your relationship. Why?

Human nature is twisted.

People worry. They get concerned. They wonder and fret. And all that angst eventually creeps in, silently reminding the physician, “You could be getting more referred patients, and there must be someone else you can work with who is good at referral strategies.”

The problem is relational-disconnect begins to form. This hurts opportunities for word-of-mouth introductions.

For whatever reason during the time you have worked together, the doc’s perception has now become that you are not as talented as he or she once believed. Or worse…

They may start to imagine and perceive even more: That you are preoccupied.

That you’ve become too busy. That you really aren’t as responsive as you once were. And those perceptions – false as they may be to you – continue to grow and grow into accepted reality of the doctor.

The truth is that, we as people, in our distracted, hectic lives, won’t always stop to “fact-check” ourselves and our misguided perceptions – to see if they are indeed real. Much like the Doctor, in my example.

To improve you referrals, word-of-mouth marketing and referred business, make sure people you are working with have opportunities to check their perceptions of you versus the reality of the situation. One of the easiest ways of encouraging this is via honest open communication that encourages complaints and objections.

Try saying, “Mr. Client, I’ve enjoyed our relationship. I’d like you to refer others to me. But before we discuss that, I’d like you to be perfectly candid with me: What have I been doing that has bothered you?”

The comments you hear will go a long way to helping you open genuine communication. They will also impact your chances to get more referrals.

When I mention procrastination as related to becoming active — as in, having an active referral marketing program – I’m talking about intentions versus actions.

Procrastination is intentional mental diversion. You delay today’s action, today, for a promise of tomorrow. Call it future hope, but I doubt few people ever honor that “deal” they make with themselves. I suspect that within this action lurks very tedious issues that cause frustration, as subtle as they may be. And the bottom line with anyone who procrastinates anything is they don’t like all the tedious frustrations. So they delay making a decision.

Sound familiar?

Think about something you are delaying a decision on now. I’ll be you’re perceived negativity or unpleasantness means you’d rather just duck the issue than deal with it.

Psychologists say this often happens when goals are large or unclear.  With referral marketing activities — and ones you are not currently undertaking — I suspect you are not getting the referrals you want because of this.

Now I’m not about to riff on goal-setting activities…. that’s not my point here. But trying to figure out how to get from a state of passivenes without continuing to procrastinate? Well, that indeed can be some evil psychology.

My best advice is for you to lay out specific plans of action that “kick-in” when certain conditions are present. This enacts your behavior to move from passive to active, and sidestep any notion you may have to procrastinate.

Follow-up with people? Stay in touch with others more regularly?

Send referrals to others so (you hope) they will (eventually) reciprocate with you?

Nope. None of these are the answers I am driving at with this lesson today.

The reality is that today–in 2008–people are overworked, busy, stressed and have a cram-packed agenda full of problems… whether its in their work or personal life. The key is they rarely ever tell you about it.

So the question concerning building relationships with them, and generating referrals together, really centers around doing what?

The answer?

When you… provide added value to a person’s life.

What do I mean? And how can you do this?

By sharing information, and doing so in a consistent, non-threatening manner (ie: Don’t be a pest).

I’m sure you can think of many ways of doing this in your own business, but allow me to suggest just a few quickly:

1. Provide helpful articles of interest to them about their competitors.
2. Suggest an area of marked improvement for them with their web site (or e-mails they send).
3. Fax a weekly roundup of advice or trends (mortgage companies do this with loan rates, etc.)
4. Invite a person to participate with you (as an observer) when you attend a sales call, appointment or out of office meeting.

Remember: Referrals come faster when you provide added value to others lives.