Referrals from existing clients are the most effective way to grow your business, but only if you make a conscious effort to get them.
Many accountants and bookkeepers admit they get the bulk of their new leads from client referrals and word-of-mouth recommendations, rather than through advertising and direct marketing.
These leads are also easier to convert because people trust referrals. According to various research, up to 70% of us will ‘buy’ when a product or service is recommended to us by someone we know.
Carl Reader, director at accountancy firm d&t, confirms: “Our conversion rate is significantly higher if a lead has come from a referral, rather than through our direct marketing efforts.”
You may have adopted the ‘wait and see’ approach to referrals. That’s fine if you are comfortable with what you’ve got and see no need to chase new business. But if you want your practice to grow, you can’t be passive about it – you need to actively encourage referrals, rather than sit back and hope they will come to you.
In other words, you need a game plan.
The blanket approach
At the risk of pointing out the obvious, you need to ask for referrals to get referrals.
“Send an email inviting referrals to your client database and if you are already sending out newsletters, make this invitation part of the template,’ says Charlotte Sheridan, marketing consultant at The Small Biz Expert.
She also recommends adding a “New client referrals” or “Refer a friend” form to your website and emailing the link to your existing clients. “This makes it very quick and easy for people give you referrals, and the easier it is to do, the better the response rate.”
Give people social media tools for referring you, too: Facebook and LinkedIn ‘share’ buttons require little effort on their part.
Sheridan adds: “Put a referral request at the bottom of your and your staff’s email signatures and if you have a ‘please hold’ recording on your phone, you may want to include a ‘call to action’ there too.”
You can also reinforce the message that you’d welcome referrals on invoice footers, in footnotes to client letters and in other client facing materials.
The targeted approach
Another strategy would be to look at your existing clients, identify those who could be good referrers and target them first.
Bob Brown, director at business consultancy inspire2aspire, recommends grading your clients using the following criteria:
a. good future economic potential (they will continue to be a viable client, with money to pay your fees)
b. you satisfy all of their bookkeeping and/or accounting needs (they’ve no reason to go elsewhere for other services)
c. they refer you.
Grade 1 clients satisfy all three criteria, grade 2 – two, and grade 3 – one.
Brown says: “Start with trying to get referrals from grade 2 clients that don’t give them and look to upgrade them to a grade 1.”
He adds: “When they are or become a grade 1 client, institute a personal introduction scheme which works much better than just referrals. Rather than just pass on their contact details, your client calls their contact to check that they are happy to see or hear from you and you contact the introduction once this has happened.”
Accountancy commentator and mentor Mark Lee points out that you can also look beyond existing clients for referrals: friends, family, and local influencers and introducers. But you must let all of them know (and this includes your current clients) who would make a good referral. “Who, not what. No one can refer a business turning over half a million pounds. But they could refer the owner of such a business if they’re looking for more advice and support than they are getting from their current accountant.”
The clearer you are in this respect, the less likely it is that you will land a bad referral.
“Fortunately, our clients and associates also tend to refer ‘people like them’, meaning that we have some level of reassurance that they are the kind of people we’d like to do business with,” says Reader.
Should you offer incentives or rewards?
Some firms thank their referrers with Amazon vouchers, finder’s fees of up to £100, and discounts off the following month’s service.
Sheridan says: “It’s also worth considering rewards that benefit both the referrer and the referral.” For example, the referral also gets a discount, say 10% off the first month’s package.
Making your rewards ‘programme’ fun or memorable can encourage long-term engagement and participation, too.
Lee says: “I know of an accountant who set up practice some years ago, in the summer. A few months later she invited her clients and business friends to a Christmas get-together, to thank them for their support and their referrals. She named one client in particular and presented them with a nicely wrapped thank-you gift. She repeated this process each Christmas, in effect creating a friendly competition among her clients who wanted to see who would be rewarded for the biggest number of successful referrals each year.”
Sheridan points out that you must always make it clear what constitutes a successful referral: they must sign up as a client and they must have paid their first month’s fee. “But do send a thank-you note even if the prospect doesn’t become a client, it’s good manners,” says Lee.
Just remember that incentives and rewards are not enough if you want to keep those referrals coming. “You need to keep the referrers updated and reassured that you are looking after the contacts they’ve referred to you. Without that trust, there’s no way that they will refer you again, whatever the incentive,” says Reader.
Iwona Tokc-Wilde is a business journalist.