Recommendations from existing clients are the best type of new enquiry.
They have an immediate need and will have heard good things about you. That means the conversion rate is higher when compared to enquiries created by other forms of marketing and the Customer Acquisition Cost (CAC rate) is lower.
What’s not to love?
But hold on a second, there’s a problem: most advisers and planners do nothing to maximise the recommendations they receive or get enough to meet their growth ambitions. That means they’re working less efficiently, spend more on marketing than they need to and make less profit.
That’s hugely frustrating for us and them. We hate to see advisers/planners waste money unnecessarily on marketing. So, over the coming weeks we’re going to focus our blogs on helping you maximise recommendations. Starting this week by explaining three simple changes you can make immediately.
1. Prioritise recommendations ahead of other forms of marketing
Most advisers and planners don’t have a defined recommendation strategy.
Instead, they employ a series of disjointed marketing tactics. It’s astonishing that firms put PPC, SEO (no, being on the first page of Google isn’t the answer to all your marketing dreams) or the latest shiny new thing, all of which cost more and convert less frequently, ahead of recommendations from existing clients.
Sure, if your growth ambitions can’t be met through recommendations alone, you will need to use other tactics (as part of a wider strategy), but these should be considered after developing a recommendation strategy not before.
So, mindset is the first change many advisers/planners will need to make. Instead of employing some of the tactics we’ve listed above, resolve to focus on recommendations. Start by agreeing your objectives then move on to strategy and tactics. Over the coming weeks, our blogs will help with each of these.
2. Stop talking about referrals
You might have noticed that this article refers to ‘recommendation’ rather than ‘referral’.
That’s entirely deliberate. Language is important. For example, you’ve probably noticed that we refer to advisers and planners, that’s because they are different, and the terms shouldn’t be used interchangeably. Well, the same is true of recommendations and referrals.
For us, the term ‘referral’ is problematic for advisers, planners, and consumers alike.
For advisers and planners, the term is outdated. It conjures images of 1990s product pushers asking their clients to bring two books to the next meeting: their cheque book and their address book. It’s a barrier to developing a strategy that will yield more recommendations from existing clients.
When it comes to clients the word ‘referral’ might simply be misunderstood. Recommendation is simpler and easier to understand. Introduction perhaps even more so. Plus, the very word ‘referral’ is dripping with negative and unpleasant connotations. In schools we have pupil referral units, if you go to the GP and they think your symptom requires specialist investigation they will refer you elsewhere. Earlier in the year my dentist referred me to a specialist for root canal surgery. None of these ‘referrals’ are pleasant. The root canal certainly wasn’t!
So, that’s why we’re on a mission to use ‘recommendation’ rather than ‘referral’. It’s a simple change and one worth making if it makes life easier for your clients and breaks down barriers in your thinking.
3. Fill two key gaps
Your recommendation strategy needs to close two gaps.
#1: The gap between the proportion of your clients who say they will recommend you to other people and the number who actually do
Our research shows that 94.99% of clients would recommend their adviser/planner to other people. However, only 37.40% have done so in the past 12 months.
#2: The gap between the number of people who are recommended to you and those who actually get in touch.
Let’s say the average adviser/planner has 150 clients, that would mean 56 people are recommended to them each year.
In our experience though, it’s very rare for an individual adviser/planner to get that many recommendations in a single year. That’s because not everyone who is recommended to you gets in touch:
- Life gets in the way and a potential client’s priorities change
- They solve their trigger (the reason why they needed to speak to you) in some other way
- They speak to a different adviser/planner (remember, competition generally happens online, before you meet a potential client)
To begin closing these two gaps, and maximising the number of recommendations you receive, you need to know three key numbers:
- The proportion of your clients who would be prepared to recommend you to other people
- The number of clients who have recommended you in the past 12 months
- The number of recommendations you have actually received in the past 12 months
Unfortunately, most advisers and planners don’t know these numbers. That means they can’t quantify the size of the two gaps in their business, which makes it harder to develop an effective recommendation strategy.
The two assets you need to build a successful recommendation strategy
Making these three changes will help you generate more recommendations from existing clients. Thinking strategically, and not leaving things to chance, is key. So, next week we’ll reveal the two assets you need to create to kick-start your recommendation strategy.
In the meantime, if you’d like to know more about how we help advisers and planners just like you generate more recommendations from existing clients email hi@theyardstickagency.co.uk or call 0115 8965 300.
