Five Ideas for Cultivating Professional Referral Relationships

In early March I posted a poll on my blog asking, “What has been the most effective form of marketing for you?”  While there were not enough responses to make the results statistically significant, the most popular answer was “Center of Influence Referrals”.  This is the result I was expecting to see when I posted my very unscientific poll since it’s what I’m generally hearing from my clients as well.  There are more scientifically sound studies out there that further prove the point that professional referrals are an effective way to grow assets.  Schwab Institutional recently published a white paper titled Best-Managed Firms: The Business of Serving Clients, which found that the best-managed firms are seeing the majority of new assets come from professional referrals.  In the study, assets gathered from professional referrals resulted in 7.5% asset growth.  Even for firms not categorized as best in class still saw 4.2% of asset growth result from professional referrals.  Clearly, developing relationships with professionals considered to be centers of influence (COI) deserves to be addressed in any marketing plan.

Average Annual Asset Growth (Excluding Market Performance)

Asset growth by source:                   Best Managed Firms                Other Firms
Existing clients                                                              3.1%                                                     0.8%
Client referrals                                                              7.3%                                                     5.9%
Professional referrals                                                7.5%                                                    4.2%
 All other sources                                                        2.7%                                                     1.5%
Total                                                                                20.6%                                                 10.8%

Source: Best-Managed Firms: The Business of Serving Clients, Productivity in a high-touch business, Schwab Institutional, page 41, 2009.

Once you have identified the COI relationships that you would like to cultivate, do you have a plan in place to ensure you are nurturing those relationships?  If you are only interested in having a couple of professional referral relationships, this may not be necessary.  However, if you are looking to make professional referrals a key strategy for your business, you will want to develop dozens of relationships.  COI relationships can sometimes take years to develop.  To efficiently nurture these relationships you will need an action plan to touch your COIs throughout the year just as you would with your clients.  Here are five marketing ideas that touch your COIs throughout the year and build lasting relationships.

1. Host a Networking Event
Most CPAs, attorneys, bankers and insurance agents are looking to network with other professionals to build their own referral relationships.  You can create a networking event and invite the COIs you are trying to nurture.  Have these people invite other professionals they know as well and soon you will have an intimate 25 person networking event.  Make sure that your event adds value to the attendees by inviting a diverse group of quality professionals.  This will ensure everyone who attends meets someone who can be of value to their business.  In my experience, the best networking events are happy hours held immediately after work where you host the appetizers and provide one drink ticket.  You can negotiate with restaurants for mid-week deals.  In this economy, restaurants might even provide complimentary appetizers if you are purchasing beverages.  If budget is an issue, consider partnering with a COI who you already have a great relationship with to split the cost.  Make the event a quarterly occurrence.  This will enable you to touch your COIs four times and will most likely lead to the introduction of new professionals who you can then start cultivating. 

2.  Develop & Distribute Useful Tools
Provide your COIs with tools that they will reference and use throughout the year.  For example, if you subscribe to Horsesmouth.com you can purchase two-sided 8.5″ x 11″ reference cards with Key Financial Data for 2009.  The card is a quick reference for tax, social security, long term care, HSA, and IRA information.  It also provides a blank area for you to include your contact information.  These are the kinds of tools you can purchase, or develop on your own, and then share with your COIs.  A tool like this  will constantly remind them of your firm and provides just one more touch. 

3. Schedule Lunch
It’s important to have one-on-one interactions with your centers of influence to further develop the relationships.  While inviting them to events and sending them financial tools may be an efficient way for you to touch your COIs, it doesn’t take the place of good old fashion face-to-face interaction.  Taking time to host a COI to lunch will go a long way in the development of the relationship.  Use your CRM to remind you to schedule lunches with all of your COIs quarterly or semi-annually depending on your preference.  This will ensure no one falls through the cracks.

4. Send Greeting Cards
Send greeting cards throughout the year to your COIs to keep your name top of mind.  The holidays are always a great time to send cards but also consider sending a birthday or other special event card.  It will show your COIs that you pay attention to details and take great care with your relationships.  They will make the obvious connection that this is how clients they refer to you would be treated as well.  You can use a service like SendOutCards.com that will remind you of events and send the cards for you using your personal handwriting font.

5.  Send Newsletters
Chances are you are already sending a newsletter to your clients.  Why not include your COIs on the distribution list?  It doesn’t require any extra work and it is just one more chance to keep your name in front of those professionals.  Plus, it gives them an understanding of your investment and planning philosophy.

If you implement these five suggestions, you will touch your COIs 12 times in a year.  That doesn’t include any additional phone calls or emails you may exchange in between marketing activities.  To see what an action plan would look like, I have included a sample calendar below. 

COI Cultivation Calendar
Month 1	Month 2	Month 3
Send Newsletter	Quarterly Networking Event	Schedule Lunch
Month 4	Month 5	Month 6
Send Newsletter	Quarterly Networking Event	Mail Financial Tool
Month 7	Month 8	Month 9
Send Newsletter	Quarterly Networking Event	Schedule Lunch
Month 10	Month 11	Month 12
Send Newsletter	Quarterly Networking Event	Greeting Card

 

Integrating a professional referral program into your marketing plan requires relatively little effort but opens up a whole new channel for clients.  Just remember the keys to success for this strategy are 1) Use your CRM system so that no one falls through the cracks; and 2) Create an action plan so that you are regularly reaching your COIs.  If you properly nurture your COI relationships, you will successfully establish another source of clients in addition to the client referrals and any other marketing you currently doing.

Kristen Luke is the Principal of Wealth Management Marketing, a consulting firm specializing in marketing solutions for independent financial advisors. She works with advisors to develop and implement strategies like the ones mentioned in this article. Visit www.WealthManagementMarketing.net for more information.