Referral Relationship Basics – and a Fresh Idea!

As firms seek to cultivate growth, referral sources continue to rank at the top of the list for developing new client opportunities. Referral relationships take time to mature and develop, and are built on a foundation of trust that we tend to protect like a parent protects their children. Because we hold referral relationships so dear and they are such a vital business development strategy, I thought I’d cover some core tenets for new business developers to consider (or for experienced developers to remember and resurrect). And, I also want to share an innovative idea we’ve seen successful firms employ.

Fundamental Referral Relationship Principles

A successful referral partner relationship is one where you share a similar target client and you can easily refer clients back and forth to each other. Typically, you’ll have complimentary services that allow you to make a bigger difference for your clients. Beyond shared clients, referral relationships also benefit from each other through information exchange and learning about each other’s experience serving a specific segment and introductions to other contacts in your respective networks.

One challenge most business developers encounter is determining where to spend your limited referral relationship development time. To help prioritize where to spend your time, consider these strategies:

• Qualify potential referral sources initially via a phone call (before an in-person meeting). Invite potential referral sources to have a phone call by emailing them or sending them a private message on LinkedIn. Then, in that “get to know you” call, ask them to share their story about their business, team make up and clients and you share yours. You may find immediate opportunities to help them and can explore whether you feel there are possibilities to collaborate in the future. If you feel there are future collaboration opportunities, invite them to a face-to-face meeting (otherwise share that you don’t immediately see ways to help each other and commit to stay in touch, adding them to your firm’s e-mail list).
• Track your opportunities in a referral spreadsheet.Keep track of your referral sources so you can stay in touch and don’t let long periods pass without contact. Be sure to track your last follow up date (whether in person, phone call or email check-in) and your next follow up date. You don’t have a real referral source if you’re not reaching out and/or meeting with some regularity. Over time, you will be able to determine which referral relationships are the most fruitful and those “A” relationships are where you should spend the majority of your time. You can then scale the time you invest in your “B” relationships and decide if you should replace your “C” relationships with new ones.
• Ask for specific referrals (once you’ve established your relationship!).It can be awkward, and potentially time consuming, for both parties to determine which clients to introduce without turning over your entire client list – which is not the intention of either party. Consider simply asking your referral source for an introduction to specific people in their network or specific people or positions in companies whom they know. Check LinkedIn to see who they are connected to so you can request an introduction by name and encourage them to do the same.

These tried and true referral relationship ideas will cultivate relationships that produce real benefits.

An Innovative Idea To Take Your Relationships Further
To invigorate your referral relationships – and those of your clients and target prospects, consider what we’ve been calling a 2 x 5 meeting approach. And it will save time, too, as you leverage your relationships! The idea is to hold a lunch or dinner with two of your clients, two referral relationships, two prospects and two people from your firm. Do this with the same group of eight two times a year.

As an example, you may have two prospects and two clients in the real estate industry and two referral sources that include a commercial real estate banker and an attorney. From your team, you may invite a partner and manager from your tax service area or someone from tax and someone from your wealth management group.

Your goal is that everyone attending the dinner feels like they learned something from the conversation and benefited from new relationships as a result of the dinner, furthering your relationships. Ensure that you set expectations up front (especially with your referral sources and YOUR team members) that there should be no selling, no agenda, and no brochures at the meeting (business cards are okay, but you’re trying to avoid this feeling salesy). Your focus is to explore a discussion of market trends and understand what each entity is doing as a result.

Firms that have employed this 2×5 strategy have experienced tremendous results by building credibility and value in their network, expanding their learning and understanding of their key industry niches and fostering deeper, more intimate relationships with their clients, prospects and referral relationships. Some firms expand these groups to include hiking groups, fly-fishing excursions and more. This idea has been so successful that some firms have had to set up additional 2×5 groups within the same industry – some even have a waiting list to get in!

What tried and true referral relationship practices do you practice that continue to prove successful? What innovative strategies have you employed that you’d be willing to share?

About the Author

Tamera Loerzel is a partner and co-founder of ConvergenceCoaching, LLC, a leadership and management coaching, consulting and training firm that specializes in helping leaders achieve success. Learn more about the company and its services at www.convergencecoaching.com.