Referral Marketing: Where Are You Now?
Optimizing a referral marketing strategy isn’t easy. Your firm will need to take a good, hard, and honest look at your approach to referral marketing as it exists today. It’s a crucial and highly beneficial process – but it’s also one that can easily stir emotions among colleagues.
Many people in the professional services industries, especially established decision-makers, have closely held conceptions of referrals and how they work. At times these assumptions can start to look a bit like sacred cows – untouchable and often unexamined. Unfortunately, it’s precisely because of these qualities that sacred cows have a tendency to hold businesses back. If you can’t test or question a strategy, you can’t improve it.
Changing Minds with Data
When you come up against these kinds of entrenched attitudes about referrals, the first step to improving your referral marketing strategy has to be internal education. And the best way to demonstrate the facts on the ground clearly and effectively is through data.
Whether you need to educate colleagues or you’re ready to start assessing and improving your strategy, it will be crucial to establish the baseline performance of your current activities and the impact those activities are making on your firm. Factors you will need to examine include:
1) Marketing activities
What initiatives are you currently undertaking as a firm in order to generate referrals? Who is responsible for these initiatives? How consistently and robustly do you invest time and resources in these activities? Ultimately, how well are you implementing your current activities?
These questions define where you stand today, and you’ll need answers in order to evaluate your strategy, improve, and move forward. Consider these key marketing activities:
- Speaking engagements
- Asking clients for referrals
- Your firm’s website
- Social media presence
- Educational content
Ideally, each of these tools and techniques should be working together to form a comprehensive referral marketing strategy.
2) Sources and types of referrals
Who is referring you, and why? Are you taking advantage of all of the major referral types? Most firms consider and place a strong emphasis on experience-based referrals – typically those rooted in a provider/client relationship. But firms often don’t recognize the power of brand-driven referrals, based on characteristics such as your reputation or expertise.
As you identify your referral sources, make sure to evaluate their impact on your firm. How well is the current strategy working? You can assess the answer by asking further, more detailed questions:
- What kind of referrals are you getting?
- Are they based on experience, your reputation, or your expertise as encountered through a talk or book?
- How many referrals are you receiving?
If your firm isn’t taking advantage of brand-driven referrals, this is a key area for improvement as your optimize your referral marketing strategy.
3) New business
Referrals must ultimately result in new business in order to benefit your firm. This, then, is a key metric for your referral strategy. How much new business are you generating through referrals? And how many of your referrals are actually translating into new business? This should be the ultimate guide for your referral-building activities, determining the degree of your success.
You can’t stop measuring your performance after you’ve baselined your activities, however. It is crucial that you continue to track your activities as you implement your strategy.
Benchmarking to Find Your Way Forward
How can you measure your referral generation effectiveness, once you’ve assembled the data above? Our research has found that on average, 69% of professional services buyers are willing to provide referrals for their service providers. If you are not meeting or exceeding this percentage, this is a strong sign that you are leaving business on the table. Remember, too, that brand-based referrals should drive your referrals well beyond the percentage provided by willing clients.
How, then, can you begin to improve your numbers? In the next post in this series, we’ll explore key strategies for understanding your target audience.
- Get a step-by-step guide to building a powerful referral strategy with our free Rethinking Referral Marketing Guide.
- Dig into the research behind generating referrals today with our free Referral Marketing for Professional Services Firms research report.
- Our Social Media Guide for Professional Services is designed to give you everything you need to know to build a comprehensive social media strategy for your firm.
How Hinge Can Help
It’s time to rethink your referral marketing strategy. The Visible Firm℠ is the leading marketing program for delivering greater visibility, growth, and profits. This customized program will identify the most practical offline and online marketing tools your firm will need to gain new clients and reach new heights.
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