What You Can Expect from Your Referral Program
I have a few questions from our meeting that we held with our firm in January. First a little background:
Our firm is a very high-touch financial management practice that completes significant business in market alternatives (oil and gas, real estate, etc). Each of our sales personnel has between 80 and 120 clients that are all accredited investors. We provide, and our clients expect, first class service.
During our call you mentioned that a good salesperson could expect to generate 20 new clients through referrals each year. My questions:
During our call you mentioned that a good salesperson could expect to generate 20 new clients through referrals each year. My questions: Can you detail what kind of business this number would relate to? Is this representative of a phone based sales process or personal interaction? First, that number of 20 is very much a generalization. I have some clients who get 40+ per year and some only 8-10 per year. It depends so much on the type of work they do and where they are in their careers. Your question is really one that only you and your advisors can answer. What is a client worth to you – in the short term and over the long term? This is vastly different with different firms and different practices. However, it’s a great number to calculate. When advisors see the financial rewards that can come from generating more referral clients – that lead to second, third, and fourth generation referral clients, it’s very compelling.
What could we expect a “top producer” to bring in regarding new referral clients? – how successful are your top clients using your methods?Again, there are too many variables to answer this question with much authority. Most top producers are not as concerned with the quantity of referrals, but rather, the quality; referrals that fit their business model. Any top producer who has a great process and builds great relationships with their clients, should be generating a pretty nice flow of referrals. They key is getting the quality they want. And, every top producer has different goals as to how much they want to grow and what kind of lifestyle they want to live. In general, the principle key to getting higher-level clients through referrals is educating your top clients and centers of influence who your practice is geared for – so they are more likely to only send you people who they think fit your profile.
Of the personal referral leads generated using your methods, what percentage should we expect to successfully close as new clients?
Closing rates are affected by several things: the strength of the relationship between the referral source and the prospect; the timing of the referral related to the prospect’s perceived needs at the time; the advisor’s ability to create a compelling reason the prospect should meet with them; and the ability of the advisor to “close” the sale. I’ve seen closing ratios as high as 85% percent and as low as 30%. Many variables at work here. I recommend you track all your advisors and, over time, begin to develop your own numbers. Measure the following: number of value discussions; number of requests for referrals; number of referrals; number of solid introductions; number of first appointments; and number of closes. Every advisor will display strengths and weaknesses in the respective categories. Work as a team to coach each other, brainstorm challenges, and celebrate the successes.I hope you find this helpful. As you can see, your questions have no definitive answers. Feel free to bounce back with follow-up questions or new questions.
Bill