[Image: the tale of Pinocchio - as he lied, his nose grew longer]
The moral of the fairy tale is that referrals are the mark of a good business.
Do good work, your clients will be happy, they will tell other people, and they too will become your clients. And you’ll all live happily ever after.
But there are plenty of finance professionals who do a good job. And for most, referrals are at best erratic. Haphazard, and a tenuous platform on which to build a business.
In fact, they are often a source of frustration.
Newcastle, my home town, is littered with joint venture referral agreements between businesses. That cost more money in legal fees than the revenue they generated. It’s much the same everywhere else.
» Good work doesn’t mean happy clients.
- Many can’t evaluate whether your service is good or not.
I got a tax return; my accountant must be good. Would another accountant have you paying less tax during the year? Could you have got more?
I have a financial plan and am on track. But ….
- It’s expected. I’m paying you to do a good job. So what.
- And for other clients they are not even connected to the outcomes you create.
» Misery is shared, happiness is personal.
- Do something wrong and clients tell the world.
- Do something good and people are happy, for a fleeting moment. Even then it does not mean they will tell others.
The fallacy of net promoter scores
It’s why net promoter scores are a feel-good placebo. The latent good will identified at the end of a carefully worded and structured survey is self-fulfilling.
Of course, people are going to say yes.
It does not mean they will refer. People are self-absorbed, lost in their own world and dramas. Clients might mention your service if asked who they use. But the idea that they actively promote it is fantastical.
Most of your clients or professional colleagues are not active promoters of someone else’s business.
Referrals - the cocaine of the business world
Referrals are great. Their conferred trust bypasses much of the initial selling process. Their conversion rates can be upwards of 90%.
Dangerously though, they reinforce the ego of the recipient.
I must be good at my job… and so the fairy tale loops again. No wonder they are so addictive.
Because we all want to believe that we are good at what we do. And the implied recognition of a referral is a huge dopamine hit.
Besides, it means less work in having to generate new business.
But success is not haphazard
There are businesses that do enjoy regular inflows of referrals. Dig deeper though and you’ll find someone investing a lot of time and energy into relationship building. Continuously, strategically, and over a long period of time. Because once the investment stops, memories fade.
Others have referrals built into their standard business practice. So that it becomes embedded into their processes, and those of their referrers. They become sustainable over a long period of time.
To find out how -
simply email Alex Meijnen on email@example.com and we’ll send you a “how to” that builds effective referral habits into your business.