News article

The problem with referrals and why some marketing experts make it worse

If the person or agency you trust to drive your marketing forwards isn’t talking to you about referrals and recommendations, you have a problem.

Give me a couple of minutes (it’s a short blog this week) and I’ll explain why.

Prospects who come through a recommendation (“referral” is such a negative word for both consumers and advisers/planners) have an immediate need and are pre-sold on working with you.

Consequently, compared to all other enquiry sources, recommendations have:

  • The highest conversion rate
  • The lowest cost of acquisition

That makes them the best type of new enquiry.

Let’s have some data to prove that point.

We recently crunched the numbers to analyse the conversion rates (all new enquiries to new clients) of the top three lead sources for a couple of firms we’ve recently started working with.

Firm A:

  • Client referral: 39.42%
  • Website (organic): 9.09%
  • Pay-per-click (PPC) advertising: 8.80%

Firm B:

  • Client referral: 33.77%
  • Website (organic): 13.05%
  • Local advertising: 10.17%

Point proven?

5 compelling reasons to develop a recommendation strategy

Maximising the number of recommendations you receive from existing clients:

  1. Drives growth in your business because it’ll lead to you taking on new clients
  2. Reduces your reliance on other marketing tactics, all of which are affected by outside influences
  3. Creates efficiencies because you’ll need to meet with fewer prospects to take on a new client
  4. Means you spend less money on other marketing tactics and consequently improve profit margins
  5. Improves morale, because receiving a recommendation makes you feel good while holding 10 initial discussions with prospects, only to get one new client, will have the opposite effect.

Houston, we have a problem

Despite all the evidence pointing to the benefits, most advisers/planners don’t have a defined strategy to get more recommendations. They simply take what comes their way and don’t think about actively increasing the number.

To prove that point, research from Elevation by VouchedFor shows that 85% of advised clients have never been asked by their adviser or planner for a recommendation.

The blame doesn’t entirely lie at the door of advisers/planners though. Most marketing “experts” and agencies don’t talk about recommendations:

  • The SEO expert will claim that being on page one of Google is the only way to get new enquiries
  • The PPC agency will tell you that Google Ads are the way to go
  • The social media guru will sell you a package they’re convinced will generate new enquiries.

All these tactics are valid, and you might need some of them to plug the gap between your enquiry requirement and the recommendations you can realistically expect. But the conversion rate stats prove that maximising the recommendation opportunity should be prioritised over all other tactics.

So, if you’re targeting growth by taking on new clients, please take away two things from today’s blog.

Firstly, if you have a defined recommendation strategy in place, built on fantastic service, high-quality conversations, client appreciation and impressing prospects on their digital journey to your door, you’ll work more efficiently and spend less money on marketing.

Secondly, if your marketing support prioritises other tactics over recommendations, it’s time for a rethink.

We’re here to help

Earlier this week, we ran our recommendation workshop, which has been described as “punchy, relevant, a go-to guide on how to create more recommendations and prompts action with no exceptions. Great workshop.”

If you’d like to pre-register for our next workshop, click here and we’ll add you to the waiting list.

Alternatively, if you’d like some one-to-one support to increase the number of recommendations you receive, email or call 0115 8965 300 to find out how we can help.

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