Increase referrals by creating a niche

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Although 84% of customers are comfortable referring friends to their adviser, only 29% actually do, according to survey results from Julia Littlechild in Anatomy of a referral. So how can you ensure that your clients find the opportunity to bring you up in conversation?

President of The Client Driven Practice coaching firm, Stephen Wershing says advisers need to establish a niche; to become the solution to a certain problem. “A niche is not a demographic, a niche is a need. A niche is what makes a group different to the rest of the population. What is the need, that a group needs to have solved, that makes them different to the rest of the population?”

By forming a niche, Wershing says clients will be able to recommend you when they hear friends, family or colleagues, with a specific problem. Rather than a broad “he’s really nice” comment, they can say “he specialises in helping with that and can tell you what to do”.

John Anderson, head of practice management at SEI Adviser Network in the US, says the more you remind clients of the value-add and specific solutions you’ve provided, the better they’ll be able to describe what you can do for other people.

The niche marketing idea hasn’t convinced everyone though. Financial adviser Beth Blecker says she tried to establish a niche in her area, but it was too limiting and didn’t work. She has since changed the way her practice works to meet the different needs of individual clients. When people first sign up to become clients they fill out a survey asking:

  • How often do you want to meet?
  • What is your best means of communication?
  • Do you want us to telephone you/meet one-on-one/email?

She also finds out if they have hobbies and runs a monthly reward program, where she can do something nice for a client. “If I find out they’re going on a cruise to the Mediterranean, I can send them a book about places to see.”

Wershing is wary about gift-giving though, and says it can cheapen the experience. “If you reduce it to a transaction, then you take your eye off the ball about why clients do it [refer] in the first place…they get a bigger reward internally by turning on a friend to a solution that they’re really looking for.”

What are your thoughts on why clients refer? Do you think targeting a specific problem or gift-giving are good ideas? Share your thoughts below.

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