This other person is the friend or family member being referred. When you ask for a referral, you’re constraining the choices of two people—your client and the person the client is referring—because the other person didn’t ask to be referred! When you ask your client for a referral, you are trying to cause him to take an action he didn’t choose for himself. This constrains his freedom. In addition,you are trying to cause another person to take an action he didn’t choose for himself. You are constraining the freedom of two other people—and no one likes to have his freedom of choice taken away.
As confirmation, look at your own experience: most advisors who have asked for referrals have had a client offer a name or two and some phone numbers and then add, “Don’t tell them I told you to call.” In this way, the client avoids the double-bind: she can say “yes” to you without violating the trust of her friend or family member. Experience with such “cool” referrals over time has revealed that these types of referrals seldom turn into meaningful business.
Don’t Ask; Educate
Fortunately, there’s a strategy you can use that will inspire clients to make meaningful referrals to your practice without straining either relationship. Let’s review a key dynamic of the scenario I described above: the advisor asks for a referral, and the client feels obligated to provide a name of someone who did not ask to be referred. Essentially, the advisor is trying to control the behavior of the client in order to get something he wants—and no one likes to be controlled.
But what if the friend or family member of the client has a problem and needs to talk to an advisor? If the client has been conditioned to be aware that if a member of her social network has a problem, the advisor can solve it, she can respond effectively and connect the person in need to the advisor who can help. In this case, both the client and the person being referred enjoy freedom of choice, and no one feels any pressure of obligation.
An advisor can always feel free to clarify his position about referrals to clients and educate them on how to make appropriate referrals to the practice. So long as you don’t limit the freedom of choice of either party, you can talk about referrals without fear of stressing the relationship. The strategy is actually quite simple: educate your clients about the value you place on referrals and your willingness to be deployed as a resource to their friends and family members whenever there is a need. Remind them several times a year so that whenever they encounter such a friend, they immediately think of you and take action.
The most effective way to educate clients is at the end of a semiannual review. As the meeting is wrapping up and if the client is pleased with your services, you can safely say the following without any fear of stressing the relationship: “Historically, I’ve done a terrible job educating my clients about making personal referrals. As a result, many of the people I work with aren’t sure how to make a referral of a friend or family member. I am taking a few minutes with every client this year to remind you that if ever you have a concern about a friend or family member and you would like me to become involved, please don’t hesitate to use me as a resource. I consider a personal referral the greatest compliment you could ever pay me, and I would make it a priority to be available to your friend or family member.”
In this way, you haven’t just asked for a referral; you’ve preserved the client’s freedom of choice and defined your values. Instead of stressing the connection, you’ve deepened your client’s appreciation of you as a resource and the value of the services you have to offer.
Ken Haman is the Managing Director at the AllianceBernstein Advisor Institute, visit http://ria.alliancebernstein.com.