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Why You Don’t Get More Referral Business

Referral business is the life blood of most professional services firms. Our recent survey of 100 firms showed that, on average, they receive about 50% of their business from referrals. To drive this point home we found that the fastest growing firms received over 60% of their business through referrals.

Yet, you probably should be getting more. Consider these two facts. When we talk to clients, most of them are willing to make referrals. And only about half of the clients asked actually do make referrals during any given year. Why is that the case? Here are some of the key reasons we uncovered:

  1. They are not familiar with all that your firm does. While your clients certainly know what you do for them, they typically are unaware of your full range of services. Usually 60-70% report being unaware of your offerings. This not only presents an obvious opportunity to increase business with your clients, it also prevents clients from making appropriate referrals. They don't recognize obvious opportunities.
  2. You're not a priority. While getting that referral may be very important to you, it is likely not something at the top of your client's to do list. They are not actually seeking opportunities to make new referrals. Sometimes an approach as simple as letting them know you are looking for additional business or thanking them appropriately for past referrals is all it takes.
  3. They didn't think of you when the moment arose. The old saying “out of sight, out of mind” can play a part as well. Infrequent contact makes it less likely that you will be top of mind when someone asks your client for a referral for which you may be well suited. It's just human nature.
  4. They don't want to distract you. Your client may be concerned that additional business may cause you to lose focus on their project or slow you down. We find this most often where the client sees your firm as having limited resources. Here again, some client education may help.
  5. Your client may not feel satisfied with your performance. Sometimes there are hidden performance problems. Why wouldn't the client simply bring them up to you? Clearly, some clients have no reluctance to do just that. But others may let it slide for fear of making matters worse. They may fear retaliation. We also see clients avoiding confrontation because it makes them uncomfortable or is simply seen as a big hassle that they would just as soon avoid or at least postpone.

If you look back at all of these reasons, two things become clear. First, you probably aren't getting as many referrals as you “deserve.” Second, many of these barriers can be overcome with sufficient attention and a little client education.

 

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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