This is the second in a series of posts on how Professional Firms can get more referrals. Read the first in the series – Referrals: You've Got to Have A System
To some degree, succeeding with referrals is something of a numbers game. More referrals equals more business. However, for busy professionals who need to balance business development with billable hours, it's rarely wise to sacrifice quality for quantity. Better to go for a smaller number of high probability referrals and devote enough time to convert them to sales.
So what makes a high quality referral?
Referrals work because of transferred trust. Obviously I am going to put more credence in a recommendation from a colleague or business partner I know and trust and who I know has experience in the area than from a casual acquaintance or someone I bumped into at a networking event (although it's surprising how much credence we do give to those more distant referrals). The higher the level of credibility of the referrer, the higher the quality of the referral.
In addition, the level of endorsement we get in a referral can be crucial. This is why referrals from clients can be so valuable. Referrals from clients are more credible because they have actually experienced our work. And if we have performed exceptionally well the referral will be much more complimentary than a referral from business partners who know us but have never worked with us ever could ever be.
Finally, a high quality referral is a targeted referral. We are far more likely to get a sale from a prospect who we know needs our services right now and has the budget to pay for them than from a random, unqualified “name and number”. This is one of the frequently overlooked strengths of referrals. In many professional service businesses, client needs are often difficult to detect from the professionals perspective. Businesses considering a takeover don't like to make their intentions public by announcing they're looking for M&A advisors. Couples with marital problems try to show a united face in front of strangers. Companies planning to make major layoffs and needing HR and employment law advice rarely want the news to leak out until after they've had that advice. As a result consultants, lawyers and other professionals rarely see these opportunities on their radar screens until it's too late. However, an insider or current advisor in frequent contact is often alerted to these opportunities well in advance. That's why accountants, who are in frequent contact with their client businesses, are such sought-after partners by lawyers and other professionals. They can give highly targeted referrals to clients with pressing needs.
Putting all that together gives us what I call the “Referral Formula” – a simple guide to the key areas professionals should work on to maximise the value they get from referrals:
Referral = Number of x Potential of x Credibility of x Strength of Value Referrals Prospect Referrer Endorsement
Future posts will go into more details on specific aspects of generating more referrals