This case study is based on the situation of a client of the Covenant Group. Names and details have been changed to preserve privacy.



Mike had no problem getting referrals. “In fact,” he says, “I get too many.”

People were always calling Mike, saying that one of his clients had suggested they call. Too often, however, that referral wasn’t someone Mike wanted as a client. “I don’t want to offend the person giving me the referral,” he says. “So, I take on clients I’d rather not have.”

Mike is a well-established advisor who was participating in a round-table discussion I was facilitating as part of his company’s top performers’ conference. The dialogue began with the topic of the best way to develop new business in a mature practice. Everyone agreed that their existing client bases held huge potential for more sales and as a source of leads.

“That’s one disadvantage of success, Mike,” I responded. “Everyone wants to do business with you because of your reputation among those whose opinion they trust and respect. I’m sure it wasn’t like that when you started in the business. Then, you would have been thrilled to have a strong referral from a satisfied client.”

“Of course, and I worked hard to discipline myself to ask for referrals as often as I could,” Mike said. “I guess that’s why all my clients think I need or want referrals forever. So, they just keep sending people to me. But my practice has changed, and now I have too many smaller clients. I still love to be referred — but to better prospects.”

“Do you have an ‘ideal client’ profile, Mike?” I asked.

“Do you mean: do I know the type of clients I’d like to have? The answer is: yes. They are age 55 or more, earn good incomes and are thinking seriously about their retirement.”

“Anything else?” I asked.

“Obviously, they should have some assets with which to work,” he replied, “and, hopefully, be healthy enough to qualify for the insurance products that might also be part of their plan — such as critical illness coverage.”

“And when you have asked for referrals in the past,” I asked, “is that how you described the type of person you were looking for?”

“Actually, initially, it wasn’t even that specific,” Mike said. “I would simply ask ‘Who do you know who might need my products and services?’”

“So, your ‘ideal client’ profile has evolved as your business matured,” I said. “You have become more selective.”

“Yes, in my mind, I have,” he said. “I guess I just have to convince my clients of that.”

“I recommend you take this opportunity to go a couple of steps further,” I told him. “The profile you just gave us — age, income, assets — paints a reasonably clear picture. But, unfortunately, it describes a lot of people. So, the first step is to tighten up your definition of the ideal client. The second step is to communicate it effectively to your clients. And the third is to turn the referrals you receive that do match your ideal client profile into face-to-face introductions. Having a satisfied client personally introduce you to a prospect, while not guaranteeing success, certainly goes a long way. Your credibility is immediately established.”

“So, the first step,” Mike said, “is to raise the bar, in terms of the calibre of people I’d like to have as clients — higher income level, more assets and so on.”

“That’s part of it, Mike,” I said. “But you also want to expand the description to include some ‘psychographic’ characteristics of your ideal client as well — such as the client’s values, sense of family, openness to your advice and even willingness to help you grow your business.”

“I’d describe my ideal clients as being within 10 years of their planned retirement,” Mike said, “with children who have already or are about to ‘leave the nest’ so the clients can allocate more money to fund their dreams. They helped their kids through school, demonstrating a ‘sense of family,’ so they want to ensure a legacy to their children. They do not want to ‘die broke.’

“They have a household income of $150,000 or more and at least $250,000 of investible assets. They appreciate a comprehensive financial planning approach to analyse their situation and value my recommendations. I don’t have to educate them too much on investment or insurance options because they are ‘with it’ intellectually.

@page_break@“Finally,” he continued, “they understand that we are in a long-term partnership. As a result, they are interested enough in my success to want to help me grow my business by introducing me to other quality folks just like themselves.

“Oh, yeah, I also enjoy them personally, so we have some fun in the process,” he concluded. “How’s that?”

“Wow, that’s good, Mike! Now how are you going to get that message out to your clients so that any future referrals come as close as possible to that profile?”

“I’ll just tell them the next time I see or speak to them.”

“I’d rather you be more proactive, Mike,” I said. “Take control of the process.

“First, analyse your existing client base to see who approximates the profile you have just laid out for us. They are the ones most likely to have relationships with others who would meet your new criteria.

“Next, organize your contact with them. If you have review meetings coming up soon, prepare a written agenda and put an item on it that will remind you to have that discussion with them. If your next contact isn’t for, say, 60 days or more, prepare a letter to them.

“Make it a general ‘thank you’ to everyone who has volunteered referrals in the past and acknowledge their contribution to the growth and success of your business to date. Go on to state that you have done an analysis of your practice and have determined that, going forward, you have the capacity to add only a few new clients each year. So, to preserve the high standard of service you have promised your best clients, you are hoping to narrow new clients to those with whom you are most likely to have a mutually beneficial relationship. While not precise in every case, your experience is that people who — describe your ideal client profile at this point — generally benefit most from the process and relationship with you.

“Follow up with those clients to whom you have sent the letter to confirm they have received it. Ask if they have any questions or concerns about your direction. After you come to agreement that what you are doing makes sense from a practice-management perspective, ask them if anyone immediately comes to mind that fits the description. Chances are good someone will. In that case, ask if you can create an opportunity to be personally introduced to that person.

“State that the strongest reference you can receive is a handshake initiated by a satisfied client. It gives the prospective client confidence, as well as the referrer, because he or she will be able to see right away that the ‘chemistry’ is right.

“You can have a similar dialogue path with those whom you are meeting face-to-face.”

“I’ll get started right away,” Mike said. “But what about the unsolicited referrals to people who don’t meet my profile?”

“Do you have an associate in the office to whom you can, in turn, refer them?” I asked.

“Yes, there is a sharp young woman, relatively new in the business, who is doing a great job building her book of business,” he said. “She is still looking for new clients. But how do I manage the hand-off without offending anyone?”

“When you get that referral you don’t really want,” I said, “simply say that, unfortunately, your practice is full right now and you cannot accept new clients without affecting the high standard of service that you want to provide. However, you have a great associate with whom you are working closely who can be of service, and you would be happy to make the introduction.

“You can even say that the other associate is free to consult with you anytime so the prospective client will receive the same calibre of advice, along with more personalized attention. That is normally sufficient to keep everyone happy.”

“I’ll do it!” IE



George Hartman is a coach and facilitator with the Covenant Group in Toronto. He can be reached at george@covenantgroup.com.