Turning referrals into clients

Here’s Mark’s email:

“I’ve had a string of situations in which clients tell me they’ve given my name to friends, the best number ever. The challenge is I never hear from these prospects.

“When a client tells me this, I thank them for the referral, then thank them again four weeks later and then six months out. Even if I don’t get a call, I want clients to know I appreciate them passing along my name and also hope this gives them a nudge to check with their friends, although, so far, I haven’t seen much in the way of results from this. What is the best way to handle those great potential connections without appearing desperate?”

Below are three comfortable, low-pressure responses to “Have you heard from Bill?” These responses increase the odds of talking to your clients’ friends. First, though, let’s understand why you don’t hear from people to whom you’ve been referred.

There are several possible reasons that Mark hasn’t heard from the friends to whom clients have referred him, all beyond Mark’s control.

A leading cause is the simple reality that things change in people’s lives: the issue that had prompted the referral may not have been pressing or may have been resolved. Or the prospect may have gotten busy or put contacting Mark on his or her to-do list and just hasn’t gotten around to making that call. The prospect also may have had unpleasant encounters with previous financial advisors and is apprehensive that this experience may be repeated or fear being pressured by Mark, even in the face of the recommendation from the friend.

In light of this, here are three approaches you could use when clients ask if you’ve heard from their friends:

1. “Tell me more about your conversation with Joan”

Imagine that you’re meeting with two long-standing clients, Roy and Mary. During the meeting, Mary asks if you’ve heard from her co-worker, Joan.

The first approach is simply to ask for more information. After thanking Mary for her confidence, try to get a better sense of what she and Joan talked about. Here are some samples of the kinds of questions you could ask:

“Could you tell me a bit about Joan? What kind of person is she?”

“How did my name come up in the conversation?”

“Was there anything specific that made Joan raise this with you?”

“Do you have a sense of what Joan is looking for?”

“How did you and Joan leave it?”

This line of questioning helps you in three ways. First, it gives you more information about Joan. Second, it increases the chances that Mary will raise this with Joan the next time they talk to each other. And, finally, it may alert you to opportunities to follow up in an unobtrusive, low-pressure fashion.

Let’s suppose that Mary says: “Joan and I were talking about how little GICs pay today and I mentioned our last meeting, at which you recommended we reduce our bond holdings and add some bank stocks that pay high dividends.”

Alternatively, Mary answers: “We were talking about how many people at work are pushing back retirement. I mentioned that at our last meeting, you’d updated our financial plan and confirmed that Roy and I are still on track to retire in two years.”

Or the conversation could have been triggered by conversations about cottage succession or the difficulty in discussing estate plans with adult children. Regardless of what prompted the initial conversation between Mary and Joan, you have an opportunity to say:

“Thanks again, Mary, for giving Joan my name. I’d like to send her an article that relates to the issue you discussed. I can email it to you and you can forward it to her. Or, if you prefer, I can send it to her directly.”

Note that even though you’d prefer to send Joan the article directly, you’re giving Mary the choice about how to proceed. Going back to the initial email from Mark, you want to communicate that you’re interested in talking to Joan, but not desperate to do so.

@page_break@2. “I’d like to add Joan to my monthly emails”

A recurrent theme in my articles over the past few years has been the need to supplement your face-to-face and phone meetings with regular written communication. Traditionally, some advisors have mailed their firm’s quarterly newsletter. Although that’s better than nothing, I often hear complaints about the generic and impersonal nature of these newsletters, with the result that the envelopes often sit unopened.

That’s why a growing number of advisors have begun writing their own monthly or quarterly market updates, often emailing these to all but a few older clients who still prefer to get them by mail. And a few advisors have begun including links in their emails to relevant articles from credible publications such as the Wall Street Journal, Forbes or the New York Times.

Assuming that you mail or email regular newsletters or commentaries to your clients, this presents another low-key followup opportunity. If what led to the initial conversation doesn’t lend itself naturally to something relevant that you can send along, you can say to your client:

“Thanks again, Mary, for giving Joan my name. People often get busy; chances are that’s why I haven’t heard from her. If you’re talking to Joan, perhaps mention that we spoke and that I’d be happy to sit down with her. In the meantime, perhaps you could ask if she’s interested in receiving the regular emails that you and my other clients get. I’ll send you the most recent commentary and perhaps you can forward this to Joan to see if she’d like to start receiving these.”

Again, you aren’t asking Mary for Joan’s email address. Instead, you’re leaving control of how to proceed in the hands of Mary and Joan – showing interest but not desperation.

3. “I wonder whether Joan would like to attend my upcoming lunch?”

Another strategy for turning a referral into a client is educational sessions for clients. These sessions can take place over breakfast, lunch or in the evening, while afternoons can work well for retirees.

I’ve talked to advisors who successfully ran events for 12 clients around their boardroom table, 50 clients for an afternoon session or 500 attendees for an annual event for all clients.

Some advisors focus on market-related talks. Many clients who weren’t concerned about the global economy and markets as a whole in the past now are showing greater interest. Other talks are devoted to issues concerning taxes and estate planning.

One advisor who runs regular sessions for retirees says that the topic that perennially gets the best turnout is “10 common estate planning mistakes that cost people money.”

Most advisors target these events to their existing clients; the days of mass advertising to get prospects out to seminars are behind us. That said, a benefit of hosting a client event is the opportunity to invite prospects with whom you’ve been communicating and to encourage clients who are attending to invite friends along. (See page B6.)

So, in that case, you could say: “Thanks again, Mary, for giving Joan my name. I know you and Roy have attended the lunches in my office in the past. I have one of these lunches coming up next month. If you are planning to come, I wonder if your friend Joan might be interested in attending along with you.”

If you’re interested in conducting sessions for your clients, an interview with an advisor who regularly gets 60 to 70 retirees out to afternoon sessions, with a mixture of existing clients and prospects, can be heard at: www.investmentexecutive.com/-/five-musts-for-successful-educational-seminars.

As I said at the outset, in an ideal world, the words: “Did you hear from my friend?” would never cross your clients’ lips.

In reality, these kinds of conversations are inevitable. The key is to respond in a way that maximizes the odds of getting in front of referrals without having either your clients or their friends feeling pressured in the process.

Dan Richards is CEO of Clientinsights (www.clientinsights.ca) in Toronto. For more of Dan’s columns and videos, visit www.investmentexecutive.com.

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