Having worked with, consulted to and advised partners of accounting firms as well as countless owners of small to medium sized enterprises across Australia, New Zealand, North America and the United Kingdom, I discovered that without question – THE most wasted opportunity for all of those businesses - accountants or otherwise was:
FAILING TO ACTIVELY ASK YOUR EXISTING CLIENTS FOR REFERRALS.
Ask any small business owner: “What’s your number one source of new business?” The vast majority will tell you: “Word of mouth, referrals from our existing customers”.
Then ask the next and most critical question: “Do you have a system for consistently generating referrals?”
The answer, almost 100% of the time, whether accounting firm or SME:
Like those small businesses, accounting and professional services firms typically fail to create a system for generating referrals. Many firms have systems for tracking where new clients come from and others have systems for thanking referrers however, ALL BUT NONE have a system for actually GENERATING referrals from your client base.
Let’s explore this HUGE opportunity for your firm, to do that, let’s start with a simple calculation ...
Make a note of your average annual fees per business client, for example, $3000 p.a., $5000 p.a., $8000 p.a., $12,000 p.a., $18000 p.a., $23,000 p.a. etc.
Now make a note of how long an average client stays with your firm, e.g. typically, 5 or 7 years.
Now calculate the two i.e. your average annual fees per year, per business client, multiplied by the number of years they stay with you. For example:
$7,000 x 7 Years = $49,000.
That means every business client is worth $49,000 in gross revenue to your firm over time.
Now ask yourself this question ... Would you say, that over those 7 years each client would refer to you at least one other business client?
If the answer is ‘yes’ which is the typical response from most firms, then in reality every client isn’t worth $49,000, in fact they’re worth $98,000. They’re worth that via the value they add to your firm, by speaking positively about you to their colleagues and associates.
(If the answer is ‘no, we wouldn’t get 1 per client over time’ then frankly, you have some work to do within your operations. When you offer quality products and services and high customer service, referrals come naturally. Please note: your average fee per annum may be too low e.g. $3,000. It’s very difficult to add real value to clients and go over and above ‘standard compliance’ servicing in that price range. To quote Tom Peters: ‘we are rewarded to the extent to which we add value’, you may need to rethink your average hourly rate/value pricing to be able to offer more value to clients AND therefore, have talking about you positively as a result.)
Given the enormous value of a client and their referrals to you and your firm, the key then is to spend some time developing a system that captures referrals rather than leaving it to chance.
Just remember the three magic rs of referring
record, reward, remind
RECORD … the details of who has been referred when they make an initial seminar booking and when you enter their details into the database. That way you’ll know who is getting referred, who they are getting referred by and who is doing the most referring.
REWARD … referees generously and also make referred clients feel special because they have been referred by one of your top clients.
REMIND … clients regularly about referring people they know. It isn’t a case of sitting back and letting them come to you. It’s important to continue to maintain that WOW service experience and also to continually remind ‘A’ class clients about the need to refer.