No matter how much money you spend on advertising, marketing or lead generation, the single most effective way to boost any business is through word of mouth.
A word-of-mouth recommendation about your services is the most trusted source of new clients and is capable of accounting for up to 50% of your total business sales. In fact, a survey conducted by Verizon, in conjunction with Small Business Trends of business owners in Philadelphia in 2014 showed that a massive 85% of businesses receive new customers through word of mouth
Yet, encouraging clients to refer new people to your financial services firm can be challenging. While the majority of happy clients say they’re willing to refer their friends to your business, only a small percentage actually gets around to doing it.
Here are some ways to increase the number of referrals you receive in your financial services firm:
Under-promise and Over-deliver
When people are delighted with the level of service they receive from your financial services firm, they’re more likely to talk about it with other people. Work on creating an exceptional level of customer service and track how each of your clients found your business using good CRM software for financial advisors.
Stop Buying Referrals
It’s common for some financial services businesses to offer a financial incentive as a thank you gift for those clients who do refer new people. However, statistics show that money spent on paying for referrals is wasted.
Many people feel as though a cash incentive or financial reward cheapens an otherwise-credible referral. Clients who are pleased with the level of service your firm provides will refer friends naturally, whether they’re getting a reward or not.
Rather than trying to buy referrals, spend more time nurturing your good clients and working on improving your customer service levels so the referrals come naturally. Of course, it’s fine to offer a little gift to show your appreciation, such as chocolate, wine or champagne.
Do you work with a lawyer, insurance agent, accountant, or investment-specialist realtor? You could arrange to trade contacts with that person, or agree to exchange referrals between businesses.
Thank Your Referrers
One of the most effective ways to show gratitude for each referral your firm receives is to thank each referrer. A simple thank you card with a hand-written message shows your gratitude in a more personal way. It also has a bigger impact on a client than a financial reward, as it shows a level of sincerity.
Make It Easy for Clients to Refer Your Business
Happy clients want to help, but they often won’t go out of their way to actively seek out new clients for your business unless someone asks them directly if they know of a financial services firm.
The majority of people who recommend businesses to others genuinely want to help the people they know, so make it easy for them. Provide referral cards that your clients can leave with a friend. Prepare easy ways for clients to leave testimonials, either on a printed card or via social media or your website. If you issue a newsletter, make it easy for people to share that with their friends.
Raising the number of referrals you receive into your financial services firm is the most cost-effective way to boost business. Work on ways to keep your existing clients happy with your services and they’ll soon start referring people they know.
Toby Peters works as a financial consultant. He loves sharing his business insights on the web. His articles appear mainly on business sites.