Lessons From the Dow Jones Man-on-the-Street Referral Survey

A recent video blog post demonstrates why target marketing is so important.

Veronica Dagher of Dow Jones recently posted a video in which she asks passersby on a Manhattan street what would cause them to make a referral to their financial advisor.  Some sample questions and answers include "What do you like best about your advisor?" "He gives me thoughtful ideas."

"What could your advisor do to improve his service?" "Focus on what I need and my objectives."

"What does it take to get a referral?” "The confidence that they will continue to do a good job for whoever I referred over." "They would have to do a good job throughout the market cycle."

Does it strike you that any of these people come off as particularly enthusiastic about making referrals to their financial advisor? It doesn't come across to me like that. Notice, for example, they answer the hypothetical question “What would it take for your advisor to get a referral” rather than responding “I give my advisor referrals, and this is why.”

My conviction is that the key to being referable is to provide a specific set of services tailored to the needs of a well defined target market. What is the trigger phrase that would get any of the subjects of this survey to tell someone about their advisor? Would one of their friends have to say "I wish I could find a financial advisor who will do a good job for me through the market cycle?" People don't talk like that!

If you have carefully and specifically defined your ideal client and tailored your services to the needs of that group, and that client was interviewed by Veronica, I can envision their response to the referral question to be something like "oh I do provide referrals to my advisor. He works with people exactly like me, and understands the particular things I need. So, when I hear a friend like me talk about their challenges with money, I always pass his name along."

If Veronica buttonholed your clients and asked about you, what would they say? Would it be "he listens to me and does a good job." Or, would it be "he knows me. He specializes in people like me." And which do you think would get you more referrals?

How Selling Screws Up Your Marketing

Even advisors who "get" the marketing concept frequently sabotage it when they sell.

The key to niche marketing and, by extension, successfully attracting referrals, is identifying a target market and delivering a customized service mix to that audience. For many advisors, that whole idea (which involves deliberately ignoring a lot of promising prospects) is a difficult one to endorse and adopt. But even those who embrace that concept frequently undermine their own efforts when they get in front of the prospect one-on-one.

A wealth management practice I work with recently hired a new business development officer. The new vice president is a gifted salesperson. Put a qualified prospect in front of him, and there is a high probability they will become a client. He has introduced many high net worth clients to the firm, and attracted millions of dollars to manage. Long-term, however, we have an issue that may compromise the company's brand.

What makes him great is his natural, intuitive ability to connect with people, identify something of concern to them, and assure them that his company will provide a good experience. The issue is that the experience he sells could change with every person he meets. In a recent client advisory board I facilitated for the firm, I asked the group "how would you describe the ideal client for this firm?" He was quick to raise his hand and reply "Let me tell you how I answer that question when I am meeting with someone: You are."

So, if he is attracting millions of dollars to the firm, what could possibly be the problem with that?  Individual selling cannot be replicated across other people.  And it will not build your referral stream. In effect, you will have to rely on his selling for most of your new clients. You will not be able to magnify his efforts with a referral stream that builds on his spectacular selling ability.  You will be prevented from farming, and will have to revert to hunting for your food.

One of the critical components to successfully attracting referrals is to represent a particular kind of solution or experience to its target client. If everyone you meet is your ideal, then you are ideal for no one. And none of your clients will remember to refer you because they will not have a clear idea who your ideal client is.

When you craft your marketing plan and identify your ideal client and the particular mix of benefits you provide especially for them, make sure that you reflect that whenever you have an opportunity to describe your firm to someone new. Bring your selling efforts in line with your marketing efforts and they will be synergistic. And your ability to attract referrals will be magnified.

To Get Your Clients Referring, Teach Them the Trigger Phrases

The new referral conversation is about interacting with our clients the way friends would interact with each other or enlist their help in problem-solving. Whatever approach we take, it should be a conversation that delivers benefits to the client.

One aspect of the new referral conversation is that it can naturally grow out of educating the client. You have worked hard to determine who your ideal client is, what problems they have, and what kinds of solutions or experiences they seek. Ideally, you would have reviewed your service mix and made some adjustments to more closely tailor it to that ideal client. So, the natural place for the new referral conversation to begin is in describing the problem you have decided to focus on solving or the need you have determined to fill. By extension, you will be drawing a picture for your clients of your ideal prospect. Our objective is to identify and reinforce expressions the client may hear that we hope will prompt him to mention you. We want to be teaching the client how to know who a great referral would be.

In The Referral Engine, John Jantsch says “I believe any salesperson worth their salt has developed a list of phrases, situations, and verbal clues that, if heard during a sales presentation, signal it’s time to take the order. The same idea is true of a qualified referral.”

What are your trigger phrases?

• ·         I was just awarded another allocation of stock options, and I'm not sure exactly what they can do for me.
• ·         Our company just moved to a cash balance retirement plan.
• ·         My best friends husband was just diagnosed with Alzheimer's.
• ·         We went to my son's high school last night to you the guidance counselor talk about financial aid.
• ·         My sister just had her first child.

Take some time and talk with your clients about who you have realized your ideal client is. And discuss those ideal clients in terms of needs they might express that you are particularly good at fulfilling. Teach your clients those trigger phrases so that when they hear them again you will pop back into their mind.

Separate Yourself From Other Advisors By “Productizing”

Face it – what most of us do for clients is indistinguishable from what other advisors do for clients, at least from the clients’ perspective. Claiming that we provide great customer service, financial planning, or adherence to the fiduciary standard won’t work. So, how can you differentiate yourself? One effective way is to “productize” your offering. Document your process, define what problem it solves and for whom, and package it as a single deliverable.

Here are a few examples:

• ·         RealLifeFinance^TM (GersteinFisher, New York, NY)
• ·         Parent Care 360 (Andrew L. Comins, CLU, ChFC, MSFS)
• ·         RetireSmart (Mass Mutual)
• ·         Divorce Survival Kit (Carol Ann Wilson, CFDS)
• ·         Rescue Your IRA (Brogan Financial, Knoxville, TN)

To productize your offering, first decide what issues it will address. Will it be oriented to risk management, college savings, retirement planning, a major life event like the loss of a loved one or a divorce, or some aspect of investment management? Identify what you will help clients work through and what the result will be at the end of the process.

Determine the outcomes and deliverables of your service. If it involves financial planning, decide what components of the plan will be fundamental. List what kinds of analysis you will perform. Decide what you will deliver and how it will look. Will it be a plan, ongoing reports, personalized page on a website, or a report? Will this be something that is delivered once during your relationship with the client, or is it an ongoing service? If it is ongoing, how frequently will you deliver it to the client?

Give everything a consistent look. The plan you deliver, any ongoing reports the client receives, the worksheets you use during the process, and the marketing material to promote the process should be named and design so that it is clear it all belongs to a cohesive system.

Once it is complete, give it a compelling name. If it is descriptive, a list can work well (our 10 point…, Our seven step…). If you can come up with something more like a brand name, consider trademarking. Whichever way you go, the point is to offer people something brief and memorable. If you have done it effectively, you can mention the name of your service to someone who is in your target market and they will ask you to tell them more about it. People will not remember everything about the description of your process or the steps involved in it, but they may remember the name. Once they have that in their memory, it gives them something quick and interesting to mention to other people.

For More Business, Prospect Fewer Clients

It is utterly against the DNA of most advisors, but if you want to be a success at attracting referrals you must choose not to pursue good prospects.

A lot has been written about target marketing and having a niche. Yet I am surprised by how many advisors I meet who cannot bring themselves to commit to a market because it means not attracting some profitable clients.

Here's a classic example: I was conducting one of my Secrets of Referral Marketing workshops and we were discussing finding a niche. We talked about how specialization and aiming at a small part of a market can bring more clients than that advisor can successfully service. Think about it – if you are the one advisor that 1% of the people in your geographic area really needs, how many potential clients is that? Where I live, that's about 800 households. So it is okay to basically ignore 99% of the population. If you can be the advisor with the most compelling value proposition for that target market, what do you need to achieve your goals? Ten percent of that potential market? 20%? And that's without leaving town. I can drive an hour east or west and have another market almost as big.

Everyone agreed. If we designed an irresistible message for the 1%, we can accomplish as much as we would ever want to. Nods all around. Is everyone okay with that idea? Yes, all the participants say it makes perfect sense. We will determine who we can specialize in, and create plans that will successfully attract them, even if no other prospects (outside the niche) respond to the message.

And advisor raises his hand. "So, if I meet a prospect outside my target at a cocktail party, and he has a rollover of $1 million, and I tell him what I do and it doesn't interest him at all, it's okay?" Yes, it's okay.

Immediately another participant objects. "But we have to say something that would get them interested – he would be a great client!"

From the day we enter the profession, we are trained to pursue any prospect who could be profitable. Eventually, we end up with a diverse client base that can be a challenge to service and a value proposition that attempts to attract everyone and is compelling to practically no one. When we first try to market to a target audience, we find ourselves unable to resist the dilemma of "and I do that, too. And that…" It is counterintuitive.  As much as we have discussed it, many, maybe most, advisors still cannot bring themselves to focus on a single, targeted client profile.

But if we want people to talk about us, to refer us, we need to be known for something specific. And that means leaving a majority of the population out of your marketing and prospecting plans.

Narrow and deep beats wide and shallow. Less is more. Get known for being the single go-to advisor for something specific, and you can eventually get to the point that many of those prospects find you.