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How to Build an Effective Referral Network – Part 2

Briefly recapping … Part 1 concluded with Best Practice #3, which is to make an approach to a prospective referrer in a manner that satisfies their needs.

The fact that you and Sylvia, a local attorney who’s also on the Board of the local SPCA, are personal acquaintances is a good beginning, but that isn’t enough for Sylvia to become an enthusiastic referral source.   She has her own professional reputation to protect, so she’s looking for something more than that you are a good guy.

Here’s what Sylvia and every other potential referrer is looking for:
1)    That you are personable and easy to work with;
2)    That you possess sufficient technical knowledge, and;
3)    That you will provide decent customer service and charge reasonable fees.

Let’s look at each one of these three elements …

1)    This one should be easy.  You’ve already done it with Sylvia and everyone else you are friendly with.  Be pleasant, agreeable, personable, polite, etc. when you meet and interact with others and there shouldn’t be a problem.

The referrer’s priority is that whomever they refer will find you to be pleasant and easy to work with.  They don’t want to get a telephone call and hear someone complaining about your attitude, demeanor or whatever else it is they are finding fault with.

2)    You’ve passed the first test, but even if you’re pleasant and easy to work with, Sylvia doesn’t want to send anyone to you if she has any questions about your technical knowledge and capability to deliver quality accounting services.

Fair enough, but how do you convince Sylvia you DO possess the requisite skill(s)?
You could give her a list of all the CE classes you’ve attended, but you know instinctively that won’t do it.  You could also wait until you have an opportunity to work on something together and show her how technically competent you are.  But, that means you have to wait for that happenstance, and we want to convince Sylvia now.

The proven means to immediately convince Sylvia you are technically adept is to ask a question that reflects the requisite level of knowledge.  So, if you are at lunch with Sylvia you could say, e.g. “Some of our clients have executive compensation and employee benefits issues and we’re wrestling with how to design around certain aspects of Section 409A.  Has your (law) firm had occasion to take a look at the Section and have you formed any approaches you can share?”

Sylvia will immediately conclude that you couldn’t even ask the question if you didn’t have at least some grasp of this complicated and far reaching Section.

Even if she doesn’t have a clue about Section 409A you will still have conveyed to her you aren’t a technical lightweight.   Needless to say, read up on 409A before you toss your little chestnut into the fire … for all you know, she may have expert knowledge so you must be ready to discuss the subject.

An alternative technique you can employ (though it requires advance preparation) at the same hypothetical lunch is to say, e.g. “By the way, since our business clients tend to have similar issues, I brought you an analysis we just did on Section 409A.  It addresses some of the thorny accounting problems the Section raises vis-a-vis executive compensation and, because the accounting and legal issues overlap in this area, I thought it may have some value if the issue arises with one of your clients.”

Again, Sylvia can’t avoid he conclusion you – and your firm – have a strong technical capability.

We now project forward a couple of weeks and Sylvia has a new business client who needs accounting help.  The owner’s brother-in-law who works for H&R Block and took a few accounting classes has created some very messy problems.  She could call Pete, an accountant she knows really well and who’s a good guy, or she could call you.

Bearing in mind that the last thing Sylvia wants is blowback from a client, my experience suggests that she’ll call you unless she is SURE Pete has the expertise to untangle the mess.  If Pete hasn’t ever made it a point to convince her he’s really sharp, I think the odds are he’ll be on the outside looking in.

3)    Of the three elements this is the one that has the lowest bar for you to jump over.  If you (and/or your firm) have been around for a while and have a good reputation with no horror stories circulating among the local accounting practitioners, most referrers will take it on faith that you are sufficiently client-centric, fairly priced, return client calls, etc.

But you don’t need to be passive.  Sylvia’s perception of your client service and fee level can be managed by what you say to her.  For example, if you were to say, e.g. “I don’t know if you’ve ever done one, but we just completed a survey of all of our clients from the past five years and it’s been a real eye-opener.  We’ve appointed a committee and they’re coming up with recommendations for all manner of changes ranging from how the receptionist answers the phone to how our engagement letters are structured.  We got pretty good marks overall, but I think this will really help improve our client’s experience and ultimately increase retention and the number of referrals we receive.”

When she hears this Sylvia can only reach the conclusion that you try to provide superior client service.  Another example is an approach available to firms that are growing rapidly.  If you make it a point to tell prospective referrers about needing more space, people, etc.,  the listener is almost forced to conclude you are attracting and retaining clients (and providing a good client experience) or you wouldn’t be growing at that rate.

Create your own approaches to satisfy elements 1) through 3); reinforce them with ongoing personal contact, and you’re well on your way to building an effective referral network.  Get together in person at least once (twice is better) a year for lunch or similar and also stay in loose contact via phone, email or social media. Needless to say, when you have the opportunity, reciprocate by directing opportunities their way.

4)    Finally, not all referrers are the same.  Your time is limited, so prune the referrer tree every now and then and encourage growth with those who are delivering (or showing promise they will).

As always, please pass on any thoughts about this post and also any ideas you may have for future posts focusing upon other aspects of networking.

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1 Comment for How to Build an Effective Referral Network – Part 2

Andrew | January 10, 2013 at 9:30 am

Many thanks for author for such insights. The thoughts you presented are good for someone who is in this business for some time. Could you share your thought on building low-risk high-return referral network for new accounting practices?


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