How Can Advisors Get More Referrals to Grow Their Practice?

How do you find more business, improve your speed to market, and create a network of raving fans? For financial advisors, it is critical to make every call count. Many sales experts say it takes over eight calls to close your first deal with a new client. Can getting referrals help shorten this lengthy process?

I believe the most important skill a financial advisor can have is the ability to get referrals from their prospective clients. I find that if you create an effective referral system you can shorten your sales cycles by 50-75%. That means you should be able to get a new client in two, or possibly three, calls.  I know what you’re thinking, why don’t more financial advisors and insurance professionals have a referral system?

Here’s what I’ve found out over the years, most don’t have a referral system because many trainers don’t even talk about referrals.  They leave that for a later training session, which many times never comes for new producers. They don’t last long enough to get this critical training.

Many financial service organizations evaluate new advisors on  the volume of calls not effectiveness of the calls made and completed. It made sense in the past when clients needed you because they had no other way to get the information you had. It’s changed.  Many potential clients know as much if not more than new producers.

Most new advisors are too busy learning to prospect, negotiate, and trying to close new clients that will never buy. Many spend all their early careers calling on unqualified family members and friends. Hoping someone will buy from them. Hope is not a strategy for building a successful financial advisory career.

Many are happy to get the business but could increase their success rates if they know what long-term producers know. Your best first call is to a referral. Social prospecting can increase your odds of success exponentially. We will come back to this strategy on a future blog.

Many first-time sales managers are too busy looking for large numbers than looking at making their teams more effective at leveraging every individual call that is made.  Many successful sales organizations in the past got their numbers in a time when the economy was growing quickly and even a bad sales professional could get the business in their growing markets.

This is the environment many senior sales executives worked in earlier in their careers. It reminds me of many of the leaders I work with who would never consider how direct marketing could make their jobs easier. Today you can cultivate many more referrals by becoming more active in your best clients’ industries through LinkedIn and professional associations.

In a slower economy and with the advent of many different screening tools, the person who buys your services can avoid most producers calls almost indefinitely. The power has shifted to the buyer in the last recession and they have no intention of ever doing business the same way again. What is the financial advisor supposed to do? 

The short answer?  Increase referrals and the ability to build successful referral networks. Today I’ll share several reasons why advisors don’t get referrals. Next week we talk about how to build trust in your referral network.

Here are the major reasons why most sales professionals don’t get referrals today. Ask yourself which ones apply to your current situation.  

The first reason they don’t get referrals is they don’t ask for them.  They spend so much time sprinting to make their next call, they just forget to ask when they get the person on the phone.  They go straight into their pitch and they never qualify the potential client.  They talk at the client.  They don’t build trust or confidence in the person they are talking with then they quickly move on to their next call.

The second reason they don’t get referrals is because they don’t really understand what their customer does.  They get trained in many things that will not impact their early production. They never take the time to understand a typical day in the potential client’s life. They don’t map out a plan to better understand who the client might know that could bring a wide range of referrals to their efforts.   

The biggest part of this failure is they don’t invest their time getting to know their potential clients. They struggle to understand what motivates them and would get them to take action on their behalf. Preplanning is critical to building  relationships with the centers of influence in their communities.

Many advisors offer the same features and benefits to every client, no matter who it is. They ask contrived questions and don’t wait to hear the answer.

The third reason they don’t get referrals is because they don’t know what the potential client’s business does. They have very limited understanding of their potential client’s business and their community. Because of this, they struggle through their initial calls versus increasing their knowledge with every call they complete. Successfully getting more referrals is as much about mindset as activity.  

Not knowing about their client’s business, they are stuck when it comes to asking for help or a referral. Doing research on a client’s business and interests can help ensure increased success when asking for referrals.

The tone and pace of your conversation changes dramatically when you know what you are talking about or the potential client feels that you’ve done your homework before the first call or meeting.

I’ve watched great introductory calls go down the drain when the sales person asks for a referral without hearing what the person on the other end of the phone was saying.

Actively listening and looking for opportunities to add value can pay huge dividends when seeking referrals. I used to have a sign above my desk  which said stop, listen, and ask. Be here now.

Now you have the basics. How do you build a referral network? Next week I’ll give you several ideas that can help you increase your referrals and revenue faster than you thought possible.

See you next week.  

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