August 3rd, 2011 by Dan Richards, ClientInsights.ca

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A sen­tence that tripled referrals

Every advi­sor rec­og­nizes that the best source of new clients is refer­rals. Despite this, even many estab­lished advi­sors with big books strug­gle to get introductions.

Recently, a suc­cess­ful advi­sor told me how he added just one line of text to his web­site — and got sur­pris­ing refer­ral results as a consequence.

That line:

New clients accepted by refer­ral only

Posi­tion­ing your­self as a “referral-only” advisor

Over the ensu­ing months, this advi­sor added a “New clients by refer­ral only ” agenda item to client meet­ings, saying:

“If you’ve been on my web­site recently, you may have noticed that I have a new pol­icy that I only accept new clients who are referred by my exist­ing clients or by accoun­tants and lawyers I work with.

That’s because I have lim­ited capac­ity to take on new clients — and in my expe­ri­ence, the new clients who I work with best and am able to help the most are referred by my exist­ing clients, as they’re much more likely to be a good fit. So should you be talk­ing to friends who might be inter­ested in sit­ting down with me, let my assis­tant Lori know — I’d be happy to sched­ule a time to meet.”

In fair­ness, this didn’t mark a big strate­gic depar­ture for this advi­sor — almost all of his new clients were already com­ing from refer­rals. But by putting this in writ­ing on his web­site and using this as a jumping-off point for con­ver­sa­tions with clients, the num­ber of refer­rals to prospec­tive clients has more than tripled. What’s inter­est­ing is that these refer­rals haven’t hap­pened imme­di­ately in client meet­ings. Rather the impact has typ­i­cally flowed in dur­ing the weeks that fol­lowed these meetings.

This advi­sor isn’t alone in mak­ing a pub­lic writ­ten state­ment that he only accepts new clients by refer­rals. For exam­ple here’s a line from the bio of a chairman’s club pro­ducer with Mer­rill Lynch in Dallas:

She accepts new clients on a refer­ral basis only, from a national net­work of accoun­tants, attor­neys and other pro­fes­sion­als as well as her exist­ing clients.

But cases like this are rare — even advi­sors who get the bulk of new clients from refer­rals don’t typ­i­cally put this in writ­ing as their policy.

Cre­at­ing exclusivity

There are at least two rea­sons that this approach works.

First, it allows the advi­sor to have con­ver­sa­tions with clients that raises the aware­ness of refer­rals and gets them think­ing about who might be a fit.

But sec­ond — and just as impor­tant — the writ­ten pol­icy ele­vates this advisor’s posi­tion­ing and cre­ates a sense of scarcity. Human nature being what it is, we tend to under­value things that are read­ily avail­able and want the things we can’t have. Being overea­ger can actu­ally work against you — some of us might remem­ber that from our expe­ri­ences dat­ing in high school. It can also hurt your chances when inter­view­ing for a job.

This also applies to attract­ing new clients. When sit­ting down with qual­i­fied prospects, your goal is to com­mu­ni­cate that you’d like to work with them but that you don’t need to work with them; even a hint of des­per­a­tion can sab­o­tage your efforts. By post­ing “new clients accepted by refer­ral only” on his web­site, this advi­sor com­mu­ni­cates a level of self-assurance, con­fi­dence and exclu­siv­ity that makes him more attrac­tive to exist­ing and prospec­tive clients alike.

Com­mu­ni­cat­ing confidence

This isn’t the only instance where com­mu­ni­cat­ing a sense of exclu­siv­ity or scarcity enhances your posi­tion­ing as a con­fi­dent, expert advi­sor and makes you more attrac­tive as a result.

A cou­ple of years ago, I talked to an advi­sor who had assumed some man­age­ment respon­si­bil­i­ties in his branch and could only devote half his time to clients. He’d writ­ten all clients a note about this change and said that as a result he’d only be able to work with clients with assets of at least $750,000.

Two inter­est­ing things hap­pened. First of all, some clients with less than $750,000 sud­denly came up with addi­tional assets to hit that thresh­old. And other clients asked whether he might be able to make an excep­tion for friends who only had $600,000.

Along sim­i­lar lines, I recently talked to an invest­ment coun­selling firm that raised their min­i­mum to $2 mil­lion — and found that the demand for their ser­vices actu­ally increased as a result. By say­ing they weren’t for every­one, they raised their appeal to clients in their tar­get group.

Finally, I talked to an advi­sor who’d acted on a sug­ges­tion in an arti­cle I wrote in Jan­u­ary about get­ting prospects off the fence. Again, the strat­egy is to com­mu­ni­cate scarcity and con­fi­dence. When some­one you meet with expresses strong inter­est and then doesn’t respond to voice mails and emails, I sug­gest leav­ing a mes­sage along the lines of:

“Just fol­low­ing up on our last meet­ing. I have capac­ity for six new clients in the next 90 days. When we met, I thought we might be a good fit and that I could help you achieve your goals. It sounds like you’re really busy right now, I’ll touch base in April. Let me know if you’d like to talk in the meantime.”

Feel­ing he had noth­ing to lose, he left this mes­sage for a prospec­tive client who had seemed inter­ested but then hadn’t returned his calls. To his pleas­ant sur­prise, the prospect called back the next day.

Less is def­i­nitely more

After his suc­cess in post­ing New clients accepted by refer­ral only on his web­site, this advi­sor told me that one of his team mem­bers had sug­gested putting this phrase on his busi­ness cards and includ­ing it in his newslet­ter — and asked me what I thought.

I advised against this for two reasons.

First, the rea­son this works is that this is a sin­cere expres­sion of where this advi­sor stands, rather than a sales pitch. And my con­cern was that adding it to busi­ness cards or newslet­ters would cross the line to the point where some clients would see it as a mar­ket­ing pitch for referrals.

Sec­ond, what makes this suc­cess­ful is not the line on the web­site itself but rather the sub­se­quent oppor­tu­nity to raise this in con­ver­sa­tion with clients. The only rea­son to add “new clients by refer­ral only” to other ele­ments of his com­mu­ni­ca­tion would be doing so facil­i­tated more client con­ver­sa­tions about this pol­icy. And in my view, adding this to busi­ness cards is unlikely to achieve that goal.

Remem­ber the key rea­sons this works: First it enhances this advisor’s posi­tion­ing as con­fi­dent and suc­cess­ful. Hav­ing done that, he uses this as a jump­ing off point to ini­ti­ate con­ver­sa­tions with clients. Com­mu­ni­cat­ing the line more broadly risks putting him into the “overea­ger” cat­e­gory and under­min­ing the sense of exclu­siv­ity and scarcity that has made this approach successful.

A final concern

Some advi­sors might be con­cerned that tak­ing a “by refer­rals only” stance means you have to turn down prospec­tive clients who would oth­er­wise want to work with you — and you will lose busi­ness and limit oppor­tu­ni­ties as a result.

Just to be clear, post­ing this on your site is really a state­ment of phi­los­o­phy and expres­sion of intent. While you can’t run prospect­ing work­shops or be cold call­ing if you go this route, there’s noth­ing to pre­vent you from mak­ing excep­tions if you encounter peo­ple who’d be a good fit on a char­i­ta­ble board or at a com­mu­nity event you’re involved in. In fact, those peo­ple may well value the oppor­tu­nity to work with you even more because you are mak­ing a spe­cial excep­tion for them.

About ClientInsights.ca A breakthrough in client communication Not long ago, clients read what you sent them. Today that's changed. In the You Tube world we live in, many investors would prefer to hear from a portfolio manager directly. And instead of reading an article on tax saving or estate planning strategies, more and more Canadians would rather watch an expert discuss the topic. Clientinsights.ca was developed in response to these changes - to deliver information in the form that investors want to receive it. It provides over 150 short video interviews, each about 4 to 6 minutes - you can email them or watch a video along with clients to start a meeting. No matter how you use it, Clientinsights.ca is designed to help you take client communication to a higher level. Dan Richards Founder and CEO, Clientinsights.ca Read more from the author/contributor here.

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Tags: Accountants, Agenda Item, Attorneys, Client Meetings, Consequence, Conversations With Clients, Fairness, Fit, Introductions, Jumping Off Point, Lawyers, Lori, Merrill Lynch, Positioning, Professiona, Prospective Clients, Referral Basis, Referrals
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