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The Best Referral Source to Obtain New Accounting Clients

Accounting marketing can take many forms, but obtaining high quality referrals is the gold standard for attracting new accounting clients.  In fact, if it were not for referrals from their existing clients many practitioners – whose “CPA marketing” is limited to a phone listing and website – would have to eventually close their doors.

But, this blog isn’t about just maintaining the status quo, it’s about growing your practice; not only gaining additive revenue but also increasing the percentage of the most desirable, “A” level clients in your book of business.

Looking at referrals in that light, what strategies can an accounting practitioner adopt that will maximize the value of the referrals that come their way?

I’m defining the term “referral” as a recommendation of you/your services to a third person from someone who knows you.  Referral sources can include, e.g. clients, friends and professional contacts such as attorneys, business people, bankers and consultants.

If you receive a referral from a remote source, such as an association, network or directory, I suppose that is technically a referral, but in this article I want to focus upon referral sources who have actually dealt with you.

The first source is your clients.  It is important to understand that people tend to refer those who have relatively similar circumstances to their own.  For example, a successful owner of an auto dealership will tend to refer similarly successful people.  If you are doing 1040s for a number of high tech workers, they will typically refer others with similar tax filing requirements.

Therefore, to take advantage of this reality, the best practice is to invest your marketing time with your better clients not only because you want to deepen the relationship as a means to encourage referrals to similar, high level prospects, but also because quality “touches” enhance the probability of retaining them as clients.

Nevertheless, most practitioners have good clients that they instinctively know have little likelihood of sending them desirable prospects.  That’s OK.  You only have limited marketing time anyway, so you concentrate on the best opportunities.

How about commercial bankers?  They can be good, but typically they work with lots of (credit line, lending, et al) business clients, all of which already have accountants.  It follows that these bankers interact with a lot of accountants.  In this environment, how do they spread the referral wealth around?  Generally, it’s by parceling out a bit here and a bit there; with care not to favor one over another.  Rarely will a banker give you all or even more than a fraction of their referral opportunities.

Then there are consultants.  They can be good, and the best sources appear to be those who are really focused upon a given niche.  For example, I’m aware of one CPA – Bob – who has a marvelous referral source who consults solely to ophthalmology practices.  When she makes a referral to Bob it is always an excellent opportunity.  In contrast, several other clients have told me that “general” business consultants are not particularly good referral sources … perhaps because they are in fact generalists and don’t form as deep a relationship with their clients as the specialists do.

Social friends and acquaintances?  The referral potential depends upon the particulars, but the odds are long … like drawing to an inside straight.  Most of the responses I’ve received suggest that the bulk of the referrals received are not in synch with the accountant’s practice, e.g. “Thanks for your interest in my services, but I’m not set up to handle basic 1040 filings.”  (which is much gentler than “Sorry, my minimum fee for a 1040 is $750.”)

Now we get to attorneys.  If the right elements are in place, these are by far the best referral sources.  Here’s what you’re looking for:
•    they have the same clientele as you do (e.g. small – medium businesses);
•    they’re a partner (or owner) and have been practicing for awhile
•    they believe in you; that is to say
–    they believe you are a reasonably pleasant, engaging person;
–    they believe you are technically competent, and
–    they believe you will provide good client service

If the foregoing are all present, not only will referrals be forthcoming, they will be good referrals.  Attorneys occupy a high level of trust with their clients and any recommendation they make has great credibility.  Also helpful is the fact that the client is paying hourly fees to the attorney that are almost always higher than what you will charge.  This reduces the “sticker shock” effect.  Finally, the attorney is your ally in helping the client understand that they no longer operate in the TurboTax realm and now require more sophisticated accounting, tax and advisory services.

How do you develop relationships with the “right” attorneys?  There’s a straightforward, proven process I teach my business development clients who wish to cultivate attorneys as potential referral sources.  However, to avoid this blog entry becoming twice as long as it already is, I’ll describe the process in a posting next week.

In the meantime, please let me know any input you have about referral sources; what’s worked and what hasn’t.  I’ll pass on what you’ve learned in future posts.

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