There are moments that stop me in my tracks and make me wonder if I have walked into an episode Candid Camera. I relive one such moment every year as I open the envelope that contains my car insurance renewal. It's the same every year - tucked carefully into the envelope is the note and three business cards. “If you like the service we have provided, please tell others about it.” Now the facts of the situation are these:

1. My agent is likely a very nice person but I've never met her.
2. My only interaction with the business is through a customer service line (if I happen to have a question) or the annual opening of the envelope.
3. The work is completed on time, the prices are competitive and no one has been rude to me when I call, so far.

Despite all of that (and I have to give her kudos for trying) she thinks it’s possible I will carry her business cards around and distribute those to my friends and family. Let's put that in the category of 'unlikely'. My agent came to mind recently as I was chatting with an advisor about his frustration with his center of influence referral (COI) strategy. He told me how he regularly contacted CPAs in the area, shared his expertise, followed up and, despite all of that, not one had provided a referral. He concluded that CPAs simply don’t refer. Respectfully, I beg to differ. While professional referrals can be one of the best ways to grow a business, the strategy isn't for the faint of heart, or the impatient. In a similar vein, I'm sure my insurance agent wondered why her clients simply don't refer.

Don’t blame the strategy, blame the execution.

To get it right, we probably need to accept six, potentially harsh, truths:

1. Generating referrals from professionals is a client strategy first and a business development strategy second. Counterintuitive, but true (more to come on that).
2. Your partners need to be the right fit for you and for your clients. Not every potential COI fits the bill.
3. It takes time. Enough said.
4. You’ve got to prove yourself. Like it or not, you need to actively build credibility and trust.
5. You need to help your COIs spot a good referral opportunity. Not every client is right for your business.
6. The COI is the ‘client’. The relationship requires on-going nurturing, as much as any client relationship.

Growth Strategy or Client Strategy?

I think it's possible that a large part of advisor frustration with COI referrals stems from the fact that it's seen, primarily, as a way to grow the business. In fact, professional referrals are a happy by-product of a strategy that is, first and foremost, about delivering a higher standard of service to your clients. Our client research shows that the most Engaged clients see their advisor as playing a coordinating role across the other professionals with whom they work – playing the role of ‘quarterback’. Stated differently – you build a center of influence network to bring a wider range of expertise to your clients and that, if done well, leads to more referrals for your business.

Creating Your COI Network

If you start with the client, the first step is to define your COI network, the composition of which will differ depending on your clients and their needs. Typically we think about CPAs and lawyers, but some advisors have expanded the notion of the network to include other professionals, from life coaches to personal trainers to psychologists.  I know one advisor who worked with a funeral director. Think of yourself sitting at the center (the hub) surrounded by all of the professionals that might be needed by your clients (the spokes) to start identifying your ideal network.

Perhaps more important than determining what kind of professionals are in your network is to figure out which professionals actually fit. Are they the right partners for your clients and for your business? If they aren’t then move on as quickly as you can. You'll surround yourself with the right professionals if you start with your client's needs and protect those at all costs. Do this and you'll start to think of an initial meetings with a COI as an interview, rather than a sales pitch. During that interview, you are looking to assess fit. A good COI partner:

• has similar clients,
• is willing to report back and share information when it is appropriate,
• will provide reciprocal referrals when appropriate,
• has similar client service philosophies and are willing to commit to specific standards. and
• has an office setup that meets your standards

So how do you tell? Here are a few questions to help guide the discussion.

• What types of clients do you/they serve?
• How to recognize a good prospect for one other?
• What are the processes you use to serve your clients?
• How you will become referable in each others eyes?
• How you will make the connections – give the referrals?
• How you will know if this relationship is working?
• How often you should meet and talk on the phone to keep the relationship working for both of you as well as your clients?

There are two primary center of influence strategies and you may want to focus on one or both. The first is generating more referrals from existing centers of influence and the second is finding new centers of influence. I’ll focus on the first in this post.

Generating more referrals from existing centers of influence

If you already have established relationships and your goal is to encourage more referrals, then your over-arching strategy is ‘active reassurance’.  In a nutshell, you are actively looking for ways to both demonstrate and reinforce the value that you provide in order to encourage more referrals. Too often we hear from accountants who are concerned about making referrals to financial advisors because they are unsure if their clients will receive the same level of service. Perception is reality, so find objective ways to demonstrate and communicate your value and don't get too hung up on whether you feel you should have to do this or not.  They may not know how wonderful you are, at least not yet.  Here are  a few tactics to help you reinforce your value.

The Report Card

I routinely recommend that advisors gather client feedback (obvious comment as that is the business of Advisor Impact). One way to demonstrate your value is to share those results with centers of influence. Write up a summary of your results and forward that to your professional contacts. It provides an objective snapshot of your value, through the eyes of your clients.

Communicate Your Standards

Find ways to quantify and communicate the value you provide. At a minimum, define clear service standards in your business and share those with centers of influence, including such things as response time to client calls or frequency of plan reviews. Even better, hold an annual ‘relationship review’ meeting with key centers of influence to discuss their perception of the service you are providing to their clients and to uncover unmet needs and opportunities.

On-going Communication and Education

Half the battle with nurturing COI relationships is staying top of mind. You might want to consider facilitating a quarterly breakfast meeting with yourself and several, non-competing, professionals. In those meetings you could provide a brief overview of financial matters that might be important to their clients and use the time to share ideas and information on the issues that affect all professionals; building deeper and more profitable relationships with clients.

Reciprocal referrals

Find an opportunity to ask your clients if they are working with an accountant, lawyer or other professional advisor and, if so, whether they are satisfied. If those clients are not fully satisfied with the relationship, you are in a position to let them know that you work with a select group of professionals (helpful to reinforce your professionalism) and can offer a referral. You’ll add value for clients and for your centers of influence.

One Best Idea to Generate More Referrals

The Value Check-Up

This is the one best strategy I have seen employed to generate more referrals. When you do receive a successful referral from a center of influence, send that new client a brief, one-page survey after three months. Let the new client know that you are touching base early in the relationship, to ensure that they are satisfied with the level of service provided. Ask a few questions about the transition process to date and also ask if you can share the results with the professional who made the initial referral. With permission, you are now in a position to go back to that center of influence, thank him or her once again and share feedback from the only person’s opinion they trust – their client’s. So how do you attract referrals from centers of influence? What is working and which tactics have been complete failures? I’ll post more on referrals through the eyes of the professional; they have much to teach us!