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Why Do People Refer?
2018-10-02 • 5 minute read

Why do people refer a professional to their friends, family, or people in their inner circle? Usually when I am discussing this topic with Financial Advisors, invariably the answer the Advisors come up with is that “they want to help that person.”

I don’t deny that this is probably true, but our belief is that the motivation is more ‘selfish’ on the part of the person that is referring. Yes, they want to help their friend or family member etc., but ultimately they want to hear back from that person, and they want to hear validation about the recommendation in question. That is true whether or not it is a Financial Advisor they referred, or a good book, or even a terrific bottle of wine.

Just as giving to charity makes us feel good inside, having someone come back to us and say: “Thanks so much for introducing me to John, he is a true professional” or “That book you recommended was amazing, thanks,” go a long way to validating the choices we have made in our own lives. We want to share the special things we have discovered. Put simply, when we get the positive feedback at the end, it feels great. We are also doing a good deed in the process, so let’s call it ‘enlightened self-interest.’

I mention all this because when someone has just signed on with a new Advisor, the new client’s propensity to refer that same Advisor to someone else is at its highest right at the very beginning. That said, this last fact is entirely dependent on the Advisor’s process for how that client was brought on at the beginning.

Did the Advisor use an agenda when we had our first meeting? Or did he take notes on a legal pad? Was there a pre-appointment process that made me feel I was heading into something special before I even met with the Advisor? Or did he see me within two days of the initial contact, projecting absolutely no scarcity in the process? When the papers were signed, what happened then? Did the Advisor just move on the next conquest, or was there a New Client Welcome Process that continued to validate my decision to work with that advisor?

All these things in concert with one another create an experience that makes people want to share the experience with someone else, and right off the bat too. If the Advisor is consistent with all of those things, and the person that I refer has the exact same experience that I did, I know that person will come back to me, and they will say:

“Wow, it was just like you said. I wish I had done that five years ago.”

Of course that makes me feel special, and the feeling I get is that I want to do it all over again with another friend so I can get that same emotional payoff. Better yet, now I am even more assured of the Advisor’s consistency because of the feedback I received. As a result, I am even more confident about referring someone else!

Examine your process for taking on a new client. Is it memorable? Would you refer someone into your process? Would you be confident that you would get glowing feedback from the person you sent there? These questions and answers have huge implications as to the number of referrals you receive.

If you don’t have a pre-appointment process, start one. Make it good and stick to it; you know; just how the dentist does it. Send out a letter, an Introductory Kit perhaps, and then make a courtesy call the day before the appointment as a reminder.

If you are not using agendas, start! Decide on a nice Welcome Gift that is sent out when all the paperwork is signed, and then be consistent with it. Also, when selecting an appropriate welcome gift, don’t pick something that looks like you walked approximately 20 feet down to the company gift shop. Make it seem as if there was some effort, and that will reflect that you genuinely value your new relationship with that person.

From what I have seen in my experience, this type of attention is so rare in today’s business world, that if you decide to get serious about some of the things I am discussing (hopefully all of them), people will be referring you all over the place. When you exceed someone’s expectations, not only will they contrast it with their prior experiences, they will tell others. It is basic human nature, and we all do it. Continued Success!

Contributed by: Duncan MacPherson

Pareto Systems
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