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Increasing Professional Service Referrals

If there is a holy grail in professional service marketing it is probably referral business. Whether it's accounting, IT services, engineering or management consulting, most professional service firms rely on referrals from satisfied customers as a primary growth engine. But there is a key problem with referral business. How do you influence it? We just completed a study of 100 professional service firms that sheds some light on this predicament.

The average firm gets just under half of its business (49.1%) from referrals. High growth firms (those that grew over 50% last year), however, get 59% of their business from referrals. The question is why? We've identified three primary reasons.

First, high growth firms focus more on delivering a valuable result to the client. They don't “offer service,” they deliver valuable outcomes.

Second, they put a much greater emphasis on generating awareness and getting their message out. And they do this without spending more marketing dollars as a percent of revenue.

Finally, there is the ability to respond to the simple question, “What does your firm do?” In our survey we asked CEOs that very simple question. Then we scored their responses. A score of 3 or better meant they had articulated their purpose, their target audience and why people should choose their firm over another. Surprisingly, less than half (45.2%) of CEOs got a passing grade. Among high growth companies, that percentage was dramatically higher (72.7%). In short, they provided a message clear enough to make referrals easy.

This advantage was vividly captured for me just the other day. I was talking to a friend at a law firm when the name of a mutual acquaintance came up. My friend admitted that while he had known this person for over six years — and liked and trusted him — he had never made a referral to his IT consulting firm. When asked why, he replied, a little sheepishly, that despite asking his friend several times, he still couldn't understand what his friend's firm did. My friend admitted he wouldn't know an appropriate referral if it came up and sat in his lap. Ouch. No clarity, no referral business.

 

Author: Lee Frederiksen, Ph.D. Who wears the boots in our office? That would be Lee, our managing partner, who suits up in a pair of cowboy boots every day and drives strategy and research for our clients. With a Ph.D. in behavioral psychology, Lee is a former researcher and tenured professor at Virginia Tech, where he became a national authority on organizational behavior management and marketing. He left academia to start up and run three high-growth companies, including an $80 million runaway success story.

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