This White Paper explains why you need a referral system and how to implement an effective one.
As you can see, ‘Referral’ is the first Practice Multiplier…
Why You Need A Referral SYSTEM
Our research has shown that accountants acquire 93% of their new clients by referral. That’s a huge number which highlights two key issues…
- In general, accountants are very good at converting referral enquiries into clients.
- Unfortunately it also demonstrates a lack of application in non-referral techniques (General Marketing – see above).
We also learnt that 97% of accountants are dissatisfied with the volume of referrals they actually generate, whether through clients or other referral sources such as the banks, solicitors, IFAs and others. In other words, they believe they should do a whole lot better.
There are three significant reasons for this ‘under-achievement’…
REASON #1: APATHY
Most people simply don’t recommend their accountant because they have no cause to. The referral process for accountants is a reactive one (people only ever suggest an accountant if they are asked. This is because they have no real reason to enthuse about their accountants). Yes all good businesses get referrals but clients need to have a reason or/and an incentive to recommend other people. We call the incentive a ‘Customer Incentive Reward Scheme’.
Putting in place a Customer Incentive Reward Scheme (alongside a Unique Competitive Advantage – see below) which focuses on getting referrals is one of the easiest and most beneficial things you can do.
A structured Customer Incentive Reward Scheme when combined with your Unique Competitive Advantage will give your business the following benefits:
- A constant supply of quality referrals.
- Increased enthusiasm dealing with people who are highly interested in your services.
- An increase in the quality of clients.
- Increased profits. You spend less time and money converting referred people. They have already been recommended and therefore trust is already established.
As a result, referred people tend to value your services more than an ‘ordinary’ prospect. They usually don’t ‘shop around’ to get the best price. This means you’ll be able to sell your services at an optimum price (or at least at a good level).
An effective Customer Incentive Reward Scheme will help strengthen relationships with your clients. By helping their friends, colleagues and business associates, you make clients look good in the eyes of their peers.
If you’ve tried a Customer Incentive Reward Scheme before without success (like many other firms) there are two simple reasons why it probably didn’t work as well as you had hoped (1) see reason 2 below, and (2) because the media pieces you used to promote the scheme weren’t effective (see White Paper No. 11 for more details).
So please don’t say to yourself – “We’ve tried this before and it didn’t work – so I’m not trying it again”. The simple fact is they DO work; you just have to know how to do it.
REASON #2: NO DISCERNABLE DIFFERENCE BETWEEN ACCOUNTANTS
Just being a good accountant isn’t sufficient. You see, as you know, most people think all accountants are the same. Why would they recommend their accountant to someone else when they think all accountants are identical?
REASON #3: NO SYSTEM
Research has shown that some two thirds of clients say they are prepared to recommend their accountants to others, but only 6% say they have ever been asked. That’s a shocking statistic, but shows that most accountants just don’t have any system in place for requesting referrals from clients. If you don’t ask – you don’t get.
The good news is there is a simple formula you can use to rapidly improve the number of referrals you get…
The Formula To Getting A Constant Stream Of Referrals
- Good Accountant
- Referral System (Client Incentive Reward Scheme)
- Highly Sought After Uniqueness
- Effective Communication of Scheme
= CONSTANT STREAM OF REFERRALS!
You need ALL 4 elements of the formula to really motivate people to recommend you. If you’re missing just one of these elements, then the number of referrals you get is significantly reduced.
Now we’re taking for granted you offer a good level of service to your clients, therefore you need to focus on creating a ‘highly sought-after uniqueness’, together with a ‘Customer Incentive Reward Scheme’.
A customer incentive reward scheme is literally the system you use to ensure ALL clients are aware that you want referrals and the incentive can be anything from vouchers, money off their services, or anything you believe will incentivise your clients to give you more referrals. Experience has shown us that the more generous you are – the more you get.
One thing to think about with referrals and the incentives you offer clients, is that a referral doesn’t cost you anything to get.
Therefore, other than the cost of your incentive, your acquisition cost is ZERO. So you can ‘afford’ to spend more on the incentive to acquire the referral in the first place.
The ‘highly sought after uniqueness’ is a more challenging element for you to create. I mentioned earlier that most people believe all accountants are the same. You have to come up with something that’s not only highly desired by your clients and potential clients but something that your competitors don’t offer (more details on this in White Paper No. 8).
And finally you need an effective method to communicate the referral scheme to your clients (and 3rd party referral sources such as solicitors and IFAs).
What you need here is something that really stands out and ensures clients and other 3rd party referral sources are motivated and excited about the scheme once they read or listen to your message.
If you’d like to use an “referral system” that’s already getting accountants and CPA’s clients week in week out then click on the banner underneath this post…