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Why asking directly for referrals isn’t a smart idea

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Referrals are vital for building a practice, especially if they come from clients with whom advisers enjoy working.

However, directly asking a client for a referral isn’t the best way to gain one. It is more impactful if clients recommend an adviser to family members or friends of their own accord.

Eighty-five percent of small businesses say that word-of-mouth is the No. 1 way they get new business, according to a Small Business Trends and Verizon survey.

However, asking for a referral can be tricky and uncomfortable. To avoid asking directly, advisers should use these marketing strategies to help encourage clients to spread the word.

Why should clients refer someone to an adviser?

Generating a referral takes more than providing good service.

More than 75% of investors are loyal to and satisfied with their advisers, according to the report, “Anatomy of a Referral” conducted by Advisor Impact, Charles Schwab and Texas Tech University.

More than 90% of respondents also said that they were somewhat or extremely likely to continue working with their advisers.

However, just 29% of respondents said that they had referred someone to their advisers in the past year.

The report also showed that when clients felt inclined to refer their adviser, more than half the respondents referred a friend to their advisers after they asked, and nearly half did so because the friend faced a financial challenge. Just 2% referred someone because their advisers asked.

So, it stands to reason that if advisers can effectively create more situations that inspire clients to pass their names along to a friend, they will see a higher success rate, without outright asking.

Part of advisers establishing themselves as sources for financial answers is building a good digital presence. Maintaining an up-to-date website and using digital-marketing strategies can help keep advisers at the top of clients' minds.

Here are four ways to do that.

1. Invest in the firm’s website. The website serves as a first impression. Nine of 10 prospective clients will Google a firm's name and check out the website before they arrange an appointment. Outdated, poorly designed or mobile unfriendly sites can kill referrals before an adviser gets a chance to meet them.

2. Be open about the referral process. Keep clients in the loop. Unless they know referrals are something on which the firm relies, they may not even consider referring anyone.

One of the best ways this is accomplished is through a blog post.

One adviser wrote about how his business runs on referrals, outlining the reasons why he thinks that many of his clients refer him to family and friends. Not only does writing a blog such as this help maintain a high level of transparency, it also serves as a gentle nudge for clients to take action.

Strong blog posts often feature a case study or study. It is a good way to help the reader visualize how an adviser can help with financial objectives and is far more effective than just talking generally about financial planning.

Even if a case study doesn’t speak to a particular client, it may generate a referral.

For example, an adviser wrote about helping college-aged children of clients set up their finances. This caused one of her clients to refer a friend with college-aged children.

3. Make resources free and shareable. Blogs and educational content show effectiveness in building trust and encouraging contact. If blogging is too much of a time commitment, use a content library service or create fewer larger pieces of content, such as whitepapers.

Use the content to address common questions from clients. Share it through email and on social media, encouraging them to pass it along to family and friends.

Email isn't solely for communicating with and educating clients and contacts. It can also help advisers connect with prospects.
Encourage existing contacts to forward emails to friends or share them on social media. One way to do this is by adding a line that says something such as “if you enjoyed this information or know someone who would, we encourage you to share this message with them.”

Advisers can also use email templates and programs that allow them to include social share buttons on all messages.

Adding social sharing buttons can increase click-through rates by more than 150%, according to digital asset management solutions provider WebDam.

4. Get useful feedback by sending a client survey. Client feedback helps advisers improve their service, which may inspire client recommendations. Advisers should collect client feedback at least once a year, and an easy way to do so is through a client survey.

Using a free tool such as SurveyMonkey, create a survey with both freeform and multiple-choice responses so that clients can express concerns and opinions. Send the survey via email to all clients.

Compile the data and share the planned changes with clients. Transparency often increases referrals in the long run because clients feel as if they are part of the firm's success.

Incorporating these digital-marketing strategies can continuously remind clients of the guidance they receive and help advisers stay at the top of their minds, naturally boosting the rate of referrals.

This story is part of a 30-30 series on strategies to boost your practice. It was originally published on Sept. 30.

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