Perhaps unsurprisingly, it is always a surprise that a significant amount of work, fees and revenue generated for professional services firms come from their referral network.
But actually, when you think about it, its source comes as a variant of the most powerful marketing tool of them all, the proverbial ‘word of mouth’.
So, just how can you manage a referral network most effectively, asks Jack Osbon?
Here are clues to three Qs that can help.
Qualification
It sounds so simple, but sometimes it isn’t. Where is the work coming from? A lot of the time this information can be in the minds of the sales teams.
The majority of the time, it’s through lack of a central process or lack of a need to note it, but on occasion also by an unwillingness to share the spoils.
A large part of successfully qualifying a referral network is getting the full picture down in terms of data.
It doesn’t have to be perfect – but it can be a good indicator for action.
Quality
There could be hundreds or thousands within a network, and so it is important to focus on where the biggest return on investment has been and could be.
Even in a relatively smaller firm, the types and sources of referrals can be very diverse.
A sensible option would be to focus on the top echelons of both value of work provided by referrers, and also the number of referrals provided by the referrers.
If both of the top of these lists are similar – great! Let’s focus some business development activity on those.
If they differ, then a collective judgement on firm and team priorities needs to be agreed on where to focus.
Quantity
How many is too many? Many referral relationships rely on reciprocity. This can often be a stumbling block for how to add value to the referral relationships.
Some form of segmentation might be best when determining the quantity of referral relationships to focus on.
Whether that be a tiered way, such as gold, silver and bronze, or a shortlist way of where there are more strategic opportunities with certain referrers, such as are they also a client, again it comes down to the quality factor of what feels right.
It is important not to have too many due to bandwidth across the team as well as the reciprocity element.
Bonus Q – Quietness
Keeping in touch is an essential factor of managing a referral network – avoid the quietness!
Being able to assimilate referrers into existing touchpoints, such as communications and events, is an easy win.
Where this isn’t applicable creating new touchpoints, such as a joint marketing initiative or a bespoke account plan to find other ways add value, can be more effective but takes more resource.
The tiering system can show you which approach to take for who. You can always attribute marketing spend bespoke to these and determine the ROI that way.
Jack Osbon is a is a chartered marketer in professional services.