Let’s get the biggest myth in #sales out of the way: That ‘farming’ for #referrals is a passive activity vs. direct prospecting (cold calling, direct marketing, email spam from hell, etc.).
That is only true if you suck at #referrals and/or have no plan.
The people that fostered this myth that referrals are passive (basically saying that they are really nice, but that you can’t count on them to grow your business now) are those people, in general, that get paid to sell you training and or marketing tech to sell directly. Also, these people saying that farming is passive don’t know anything about actual farming.
Farmers are the opposite from passive. They work long hours, year round to make sure that they have the best possible chance to have a successful crop…they are planning to be successful year after year.
Let me ask you a direct question, if I may: What kind of business do you want to grow?!?
Almost every successful #financialadvisor, especially in the independent advisor space, wants to get as much of their business from referrals as possible. When you run the numbers, referrals beat everything out there hands down…because clients that are referred to you are more likely to refer you. Note: I am not saying that other stuff doesn’t work…it just doesn’t work as well and it is certainly not as much fun or profitable.
Let’s get to busting the myths:
- Farming for referrals is passive. False, in fact farming for referrals involves an engaging and curiosity based mix of strategic planning and having conversations with people (clients, COI’s) that want to help you. You will be doing just as much activity (or less) as before, but you will enjoy it because you won’t be nagging and begging for sales.
- Other forms of ‘active’ marketing are more ‘predictable’. False, that only is the case if (a) you believe that the number the marketing expert gives you for views/impressions/clicks is valuable and will result in business and (b) you have no understanding of how to create and run a strategic referral plan. Farming for referrals is all about the math. You start with where you are right now and then map out the next 12 months to 3 years to ensure you have a plan to guarantee the amount of referrals you need to meet and exceed your goals.
- You have to be successful already for referrals to work. Farming for referrals works from day 1 to the end of your career. Admittedly, the numbers are different if you are new to financial services, but it is still math. An experienced advisor is going to be (potentially) growing their network slower, but they will be doing similar amounts of work at a different level of their network. The less experienced advisor will be focused on building the RIGHT network and building a foundation for effortless growth throughout the rest of their career.
Sounds good? It really should because referrals are amazing at any stage of a financial professional's career.
The beauty of them is that they scale better, with training and coaching, than anything else and they certainly feel better and create better profitability.
Here are some things you need to know if you make a go of this on your own:
- Your average client value (both 1st year and on)
- Your average closing percentage by referral
- Your average sales cycle (from first contact to becoming a client)
- The amount of current clients/referral sources that are referring you right now
Related: Effectively Using Social Media As A Financial Advisor