Every agency with whom I’ve worked or where I’ve worked, referral business is always their favorite lead source. However few have an actual process in place to obtain them. In fact, during most of our training programs, we often ask this question:
“Is asking for referrals important?”
I always get a resounding “Yes!” and a bunch of head nods. I then quickly ask:
“Are you consistently asking for referrals?”
The head nodding almost always stops. Some will reference the language at the bottom of their email that asks for the referrals or they have a program in place that no one is following. There are certainly exceptions as I have some clients that are excellent at obtaining referrals. The common theme with all of these clients is that none of them are relying on simply hoping to obtain them but instead have a specific process in place that is consistently followed to obtain them.
I always put referral sources into two different categories; referral networks and evangelical clients. Referral networks are amazing because they are scalable and most can be treated similarly and the process for all of these leads can be fairly uniform.
For this article, I focused on the top 5 reasons I give to my clients as to why they should be asking for referrals from their clients. Most people look at these referrals as more likely to purchase and while this is true, I like to discuss all five reasons to try to get people to push past simply knowing referrals are a great lead source and actively driving leads through this source.
More Likely To Purchase
As stated, this is the reason why most agents like to obtain a referral. Many people are looking to be given some direction and by being referred to you, most of the actual sales effort has been completed. It is much easier to confirm what someone already thinks about you than to try to convince them you are the right person from which to buy their insurance.
More Efficient Sale
Tied closely with the lead being more likely to purchase is the efficiency factor when it comes to working with a referral. The actual sales process on a colder lead is rife with time spent trying to convince the client we are worthy. This includes significant rapport and trust building, showing a lot of expertise, over delivering on promises made, and having to overcome objections right up until you make the sale. On the other hand, because the referral comes to you very likely to purchase, the time spent is more targeted to their needs than it is explaining why they should be buying from us. This dramatically reduces the time spent on the client.
Improved Retention of the Original Referrer
For the most part, satisfied clients are unlikely to leave you. Once they start referring business to you, it dramatically decreases the odds they will go elsewhere. If they are telling their friends and family to do business with you, it would be very hard for them to decide they want to do business with someone else.
Increasing Odds of More Referrals
When a person is referred to do business with you, they are a prime candidate to become a referral source for you. If they had a good experience and are appreciative of the original referral, they are very likely to be open to referring their friends and family to you. A good client referral source should actually be sprouting more and more generations of additional referrals.
If you are obtaining referrals from your best clients, it is very likely these are also your most profitable clients. They typically demand less effort and are better underwriting risk. Most referrals will be similar to the referrer. Getting referrals from your good clients results in more good clients!
The key is making sure that we are asking the right people and asking at the right time. Asking for referrals on every call doesn’t make sense as we may be asking the wrong clients or not asking at an appropriate time. To identify the right clients, you can survey your clients to find out which ones are raving fans or you can use a Net Promoter Score to identify your most likely referral clients. These clients can be proactively contacted to ask about referrals or you can tag them so when you speak with them you can ask them. Timing is also important. If someone just had an accident or has an issue with their policy, don’t ask for the referral. I always say the best time to ask for the referral is when you get the “thank you” from the client! Contact us today or check out our online resources to learn more about the importance of asking for the referral and how we can help you increase this amazing lead source.