ELITE ADVISOR BEST PRACTICES
Feed and Tell
The power of reverse referrals
By Guy Baker
- Referrals are a peer-to-peer alignment. If you want to upgrade your market, direct referrals are not going to do it for you.
- Seminars, cold calls, direct mail and unannounced visits can work to a certain degree, but they will not move you upmarket.
- Indirect referrals are the one method that will move you upmarket.
Obviously, referrals are not a waste of time. But let’s be honest about the referrals you have received in the past. How often are those referrals a good fit with your ideal client base or a direct hit within your target market? (For those who are already at the top of their market food chain, this does not relate to you. Take all the referrals you can get. But for the rest of us, we continue to work to improve the quality of the prospects we meet.)
Why do people refer you? It’s because of your competence, service, attitude, professionalism and results, to name just a few qualities. They are happy with you and they want their social network to know about you. You have status and credibility in this network. They trust you. These are all good things and are the result of your years of dedication and service.
Rule of referrals
Here is a rule about referrals: Attributes (like credibility) flow across or down the social network, but rarely do they flow up. So if you want to upgrade your market, direct referrals are not going to do it for you. Referrals are a peer-to-peer alignment. The janitor of a large corporation is not going to refer you to the president of the company. And even if he did make the referral, do you really think the president would look at you with the same esteem and respect as your friend the janitor does? Is this referral going to be valuable to you? In other words, it is very difficult to use referrals to improve the quality of your market.
So how do you move up the social network? How do you meet, on a quality basis, the type of HNW clients you want to develop? This is the art of prospecting. Are these potential clients going to come to your seminar about Social Security? Will they take a cold call? Can you get by their four assistants? Will they respond to a direct mail piece about your latest and greatest idea? If you drop by and ask for ten minutes of their time, will they let you in? Obviously, these are all methods that have merit, but only in the right market. I have used them all with varying degrees of success. But they do not move you upmarket.
There is only ONE method that will move you upmarket. I call it “indirect referrals.” You have to find the people whom people trust. If you can establish trust with people your market trusts, then that trust can be transferred to a referral. So how do you do this?
Power of indirect referrals
It is a three-step process:
1. Identify Target Market. First, you have to identify your target market and whom you want to meet in that market. This is done by networking with people you know in that market. Listen to who is doing well. Figure out who are the movers and shakers and who has influence. Who are the thought leaders? It takes time to develop an understanding of the market you’re targeting, so you have to be a good detective.
2. Identify Influencers Within Target Market. Once you have an idea about whom you want to meet, then you start to learn whom those individuals trust. Who are the leading professionals serving the market you’re targeting?
3. Build Trust and Relationships with Influencers. Now you have to start building trust and relationships with those influencers. They are more available. They are often rainmakers. They will show up at the social events, but you have to pick them wisely. You might find them through a charity, a political affiliation or a church organization. This is where wisdom comes into play. Who are you? What is important to you? Where do you want to invest your life? There is a price to be paid for going upscale. Are you willing to qualify for this opportunity? If so, you will need to earn the right. That right comes from serving and building a reputation that transcends your profession. You need to be known for your contributions and your willingness to serve. This takes time. But once you reach this level, you will discover the power of reverse referrals.
Feed and tell
Another way to express this is “feed and tell.” You ask your social network if any of them happen to know a particular person. Sooner or later, you will have the chance to meet this person on a favorable basis. In fact, if you network with the attorney or the CPA of the person you’d like to meet, often your common acquaintance will introduce you and suggest that you spend time talking about business. It happens frequently. You have to be where the people you want to meet hang out. You have to earn the right to be there. And you have to establish the credibility and trust in an entirely different way from your professional credentials.
There’s no substitute for a great referral from a trusted source, but not all referrals are created equal. In the next article, I will discuss how to build relationships with other professional advisors and how to network through their clients.