(Originally published January 12, 2012)
Here at TaxCoach, our Wednesday Member Call-In has become my favorite appointment of the week. It’s more than just a traditional “Q&A.” It’s become a real group discussion. I know I learn as much from you on each call as anyone on the call learns from me. And it’s become a centerpiece of the TaxCoach community.
Yesterday, a member from Florida posed the following question to me and to the rest of the group:
[An unnamed marketing services company that helps clients find good accountants] keeps calling me about a potential new client. The last guy called and said they guaranteed $10,000 in new business for an investment of $5,000. Has anybody had experience with [the unnamed marketing services company]?
It turns out several of our members are familiar with this organization, and they quickly chimed in with their opinions:
“Most leads are not quality leads.”
“My old firm tried them and basically wasted their money…”
“A $5,000 investment would be better spent on TaxCoach/AICTC and you’ll get a lot more than $10,000 in add’l revenue.”
“Caution!!! [The marketing organization] is a rip off!! They do not provide viable leads and their guarantee is useless!!! They will keep [the $5,000] and you’ll never get anything for it!”
And I couldn’t help but think “ouch” at another member’s comment:
“Great!… I just sent [them] $5K last month!”
But I was especially impressed with one member’s alternative to the “good accountants” program — or any other cold marketing program:
“People need to put their $5000 on building referrals — take your top 50 clients out to a $100 dinner and thank them for their business and ask for a referral. If ½ give you a referral, that’s 25 with an average of $900-1200/client, that’s better than [the marketing services organization]. In fact — forget the social media networking website stuff all together and focus on the fact that this is a referral business… That’s what people need to FOCUS on and that’s how we’ve been successful with TaxCoach with our clients more so than selling original plans to unsuspecting web inquiries.”
My only objection to the member’s plan is that if I took 50 clients out for $100 dinners, I’d gain back all 30 pounds I lost last year, and then some!
Seriously, though, our member is on to something that most of us completely miss. I’ve spoken with literally hundreds of you over the past few years. Most of you tell me that referrals are your biggest source of new business. But barely any of you tell me you have any systems in place for generating those referrals!
Most of you are sitting on a literal gold mine of referral business. You really just have to ask. Yet, when it comes time for growing your business, most of you think first about throwing thousands at direct mail, online search, pay-per-click advertising, or other tools for attracting cold leads who have never heard of you.
Do I really need to remind you how much better referrals are than other clients? How much faster they decide to do business with you? How much easier they are to train and manage? How much more willing they are to pay premium fees? How much more willing they are to refer you even more clients?
Our member on the call says if you take your top 50 clients to dinner, you can expect 25 referrals. I think that’s pessimistic. If you’ve already got 50 good clients you can approach for referral, you’ll get more new business than you can handle. Seriously.
So here’s your 7-step formula for cloning your best clients. Pay attention — if you do this right, you’ll never drop $5,000 on a “lead generation system” again:
1. Identify the clients you want to approach for referrals. I’m a big fan of target marketing, and here’s where you target your new referrals. Start with your “A” clients — those you can happily spend all day working with, and those that you would clone if you could.
2. Identify how you have helped those clients over the course of your service. This is the key step that most of us miss! You’ve got to give your clients a reason to refer you — and communicating your value, in dollars and cents, gives them the best possible reason to do just that. You want to be able to sit down with each client and say “here’s exactly how much I’ve been worth to you since we started working together.
3. Make the calls and schedule the meetings. Don’t be afraid to drop the price of a nice lunch or dinner — clients will appreciate it, and you’ll easily make it up with your first new client. Pick someplace that has at least a couple of healthy entrees. And tip your servers well, so they remember you and treat you well. I’m not kidding here — it will make you look good and reinforce your credibility in your clients’ eyes.
4. Make sure your clients understand how valuable you really are. This is where you take the number you develop in Step 2 and hit the client with it. (Gently, of course. But hard enough to matter.) I’ve said before that clients come to you for “the numbers,” right? So how the heck are they going to know how valuable you are if you don’t tell them?
5. Ask them who they know, just like them, who wants the same value or benefit you’ve already given them. Many of us are reluctant to ask clients for referrals because it feels like we’re begging for favors. Someday I’ll write another Briefs explaining why this isn’t true. But for now we’ll do an end run around the whole question. Asking your client who else wants the same value you’ve given them means you’re not asking them to do you a favor at all — you’re really asking them to do a favor for the unnamed referral who wants the benefit. See the difference?
6. When they give you a name, say “Thanks… and who else?” — and keep your mouth shut until you get another name. A client who’s willing to give you one referral probably knows several more. One TaxCoach member in southern California told us he’s gotten as many as 18 referrals in a single conversation by saying, “Thanks… and who else?”
7. Just do it — over and over! If it works once — and it will, I promise — it will work again and again. Get in the habit of asking for referrals. Don’t do it for a week or a month and get lazy. The recurrence and reliability of a habit will keep the pipeline flowing, even when you’re not thinking about it. Just like how you always put on your seatbelt whether you’re thinking about orphaning your kids or not.
Years ago, the makers of Prell shampoo were faced with the challenge of increasing sales. Shampoo isn’t hard to use, so the instructions on the bottle simply said “Lather. Rinse.” Legend has it that the makers were able to double sales by saying “Lather. Rinse. Repeat.” They doubled it again by going to “Lather. Rinse. Repeat. Use Daily.” (Ooohhh, so THAT’s what I was missing! — Keith)
I could spin that formula into an entire book. Or TaxCoach University class. But really, those seven steps above are all there is to it. You don’t even have to be good at asking for referrals to make it pay.
Remember, a baseball player who hits the ball just three out of ten at-bats makes the All-Star team. A player who hits .350 is a shoe-in for Cooperstown. (Even the utility infielder hitting .223 makes a million bucks a year!) You’ll have no problem beating those averages. You just have to get in the game!