Maximizing Referral Systems in Practice
We all know that referrals cost you next to nothing to get and usually (if a good existing client has referred them) the new client is of relative good quality. The $64,000 question is “what systems do you have in place to make sure the referral happens?”
Before we look at the systems let’s look at the importance of referrals to your practice. To quantify how you can grow your practice through referrals, consider your existing client base.
Try this equation. Let’s say you have just 100 business clients. You encourage just 20% of your existing clients to refer 2 new clients to you each year. And let’s also say that each new client is worth on average just $3,500 to you annually. So that we can have a fair system let’s put in an annual defection rate of 5%.
So the table looks like this:
Existing clients – 100
Percentage referring – 20%
Referrals each per year– 2
Average fee - $3,500
Defection rate per year– 5%
Under this equation guess what your fees are in year 10? To save you doing the detailed spreadsheet the answer is…$6,962,101. An annual growth rate of 34.86%.
Wow – you might say.
No smoke, no mirrors – just the power of compounding. So why do practices not grow like this (well a few do) when clearly they could?
The answer is:
Lack of differentiation
Lack of systems
Lack of process
Lack of focus
And they think they’re too BUSY!
Consider the way you speak to clients when they ask how busy you are. The common response is – “FLAT OUT” – or a version of. If you want to garner referrals then why tell your clients (inadvertently) that you are too busy for any more! Far better to take the duck approach – cool and calm on top but paddling like heck underneath. You can say that you’re busy but always (unless you can’t of course) say that you have room for more quality clients.
Which leads on to the next part of this. If you want to accept new clients (of the type you want) then often you are too busy dealing with clients you do not want. Why not get rid of them – sell them! One of our clients has just announced that they are selling off the second block of $50,000 of fees to free up some more time to work with higher end existing clients and new clients – this firm has grown from $430k to $1.3m in 12 months.
And we need to look at why anyone would refer new business to you in the first place?
This is a question you need to ask yourself. There are 50,000 accounting firms in North America – what makes you stand out from the crowd? What makes you unique? Are clients blown away by what you do for them? Or do you do what the other firms do?
You need to be different to make a difference.
So how do you get clients to refer new clients to you? One of the easiest ways is to ASK them. Simply ask clients if they know anyone else that might benefit from your services. You need to set up your “asking” into a system so that it happens on a consistent basis. You can ask clients…
- Before they become a client – set the expectation of referring “up front” before the client becomes a client
- When the job is done – if you have done a good job ask them to refer someone to you
- To bring a business associate to your seminars
- To refer people who might benefit from your newsletter
You can also ask your “Spheres of Influence” to refer new clients to you. Lawyers, Financial Planners, Bankers etc.
Once you have a new potential client presented to you, always ask where they heard about you. If it was from an existing client make sure that you thank your existing client. This is very important. Unless you thank your clients they may not refer any more. You can thank clients in a number of ways – one of the best being a simple card.
At the end of the day you may not want any more clients – you may be too focussed looking after the clients you already have. If you do need new clients then you need to put together an effective referral system so it works time and time again.
Results Accountants' Systems
Results Accountants’ Systems provides systems, training and resources, along with the world’s largest worldwide network of independent accounting firms, the Results Accountants Network. Visit RAS at www.ras-net.com .