Sunday, August 9, 2020

C-Suite Lifestyle

“Leads” Lead To More Money: Referrals Are Key

“You’ve got to give to receive.” It’s a phrase we’ve heard throughout our lives, but have you ever thought about it in a business context?

Throughout your careers as business owners, CEOs or senior leaders, there have probably been a few sleepless nights caused by one universal headache: leads. Have you got sufficient leads to enable you to hit your targets? Is there enough new business to support your growth plans? Can you afford to operate if you don’t secure some new clients?

As an entrepreneur myself, I have most certainly walked in your shoes. The stress and worry of trying to source new clients to sustain and grow my businesses has been one of the most significant hurdles I’ve had to overcome. And I’m certainly not alone, especially at the moment when this already testing problem is being compounded by a global pandemic and economic unrest.

So, what is the solution?

The clue is in the opening quote!  To gain more leads, you have to give back to your existing customers and clients.

In his monumental book Influence, Dr Robert Cialdini talks about reciprocity by telling the story of how a university professor sent Christmas cards to a group of complete strangers. He received replies from a good number of these people. They had never heard of or met this professor but, having received a card, they felt compelled to send one in reply. When someone does something for us, we feel compelled to return the gesture. Reciprocity is contagious.

In the same book, Dr Cialdini goes on to tell a story of Ethiopia and Mexico, and a $5,000 relief aid payment. In 1985, Ethiopia was in the heart of devastating poverty. Its food supply had been ravished, its economy in ruins and its people suffering as a result of an unrelenting drought and disease. To hear of a relief payment of $5,000 sent from Mexico to Ethiopia should not sound that unexpected. However, that relief payment didn’t go from Mexico to Ethiopia; it actually went from Ethiopia to Mexico. The money had been sent to help out with the devastation caused by an earthquake in Mexico City.

To understand this better, we need to look back to 1935, when Mexico had sent aid to Ethiopia when it was invaded by Italy. Despite the incredible need for the money in their homeland of the drought-stricken Ethiopia, the need to reciprocate and pay back the debt had remained for a half century.

The power of reciprocity seems to know no bounds. If you want to receive more referrals, you first need to think about how you can give. How can you create so much value and good feeling that the recipients of your gift are delighted to work with you?

The answer is under your nose

If you want to find more clients, there is a huge resource that can help you: your existing clients! By their very nature, your clients have already bought into what you do. They want to see you do well and they want to help you do that, because that makes sure that you are there to continue helping them in the future. So, why is it that some businesses get loads of referrals and others none? The answer boils down to how businesses deal with the following questions:

  1. How often do you make your clients think about referring someone to you?
  2. How easy do you make it to refer someone?
  3. How do clients benefit when they do refer someone?
  4. How does the referral benefit the person being referred?

Nobody wants to be pestered with being asked for referrals. Even worse, nobody wants to feel like they are pestering people for referrals! When I first joined the dark, sales-driven world of financial services, at the end of the second meeting with a client I was told to ask the newly signed up client for some referrals. I was told to say that it is how we keep their costs down, because it saved on marketing. I would sit there and write the numbers one through to six on a blank piece of paper, and then go silent. The intensely awkward feeling that was born of this situation still haunts to me this day.

Over time, I have learned to ask more gently, more often, and to build a process around it. This approach has meant that we’ve doubled our referrals year-on-year for nearly a decade.

But how did we achieve this?

One method is our annual Referral Dinner. This is an evening, held at a Michelin-star restaurant, to thank anyone who has referred us to a new client, and to share some quality time and a great experience with them.

What reward is appropriate is for you to decide. A client is of high value to us, so a Michelin-star dinner is right for our business. I know of one company that takes referred clients on a cruise for a couple of days. If a client’s worth justifies the cost, then go for it. Personally, I would shy away from giving money, but a voucher or some flowers could be a cost-effective solution. Ideally, though, make it an interactive experience, and a dinner works well.

But what about the client who has been referred? We give any referrals into our business a free initial meeting, usually charged at £197, plus a significant discount of their own bespoke Financial Plan. If you can do something similar, do it, but make sure you tell them why they are getting the benefit and the value of it. In my experience, people don’t value things they get for free. They only value it when they understand what the cost should have been.

You may be thinking, “I cannot afford to give some people a discounted fee or product.” If that’s the case, you probably aren’t charging enough in the first place. Even if you have to put your prices up to offset this discount to referrals, do it. These people are warmer, better clients than cold clients. They are less likely to mess you around, and they are more likely to become long-term clients, so they deserve a discount.

It doesn’t end there

In addition to asking for referrals, you need to make it part of your process, as otherwise it will get forgotten. We ask for introductions at the end of the Planning Meeting, because that is the time when clients most buy into what we do. But it doesn’t end there. We send a sequence of communications after a client signs up, some with gifts to create reciprocity and one of these specifically addresses the opportunity to introduce people to us, reminding clients that they also stand to benefit with a lovely dinner as a thank you. This acts as another opportunity for them to remember our request for introductions.

If that’s not enough, we also call a new client a couple of weeks after this meeting to check that their Financial Plan Implementation is going smoothly and to see if they have any questions. As well as being a great thing to do for the client relationship, this is another great opportunity to remind them about introducing you to people they know.

So if we want to generate more clients or customers, we have a lot to learn from sending Christmas cards to strangers!

Commentary by Charlie Reading. Here’s what you’ve missed?
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Charlie Reading
Charlie Reading is the director and founder of five companies: Efficient Portfolio, Efficient Portfolio Investments, Efficient Portfolio Wealth Management, E-Paraplan and Tribeathlon. He is a passionate entrepreneur who is dedicated to helping others thrive i their personal and professional adventures. Charlie is also author of Entrepreneurial Happiness (LID Publishing, 2020) and you can visit his website here. Charlie Reading is an opinion columnist for the CEOWORLD magazine. Follow him on Twitter or connect on LinkedIn.