Solid practices that continue to thrive have one thing in common; they have diverse lead and revenue-generating sources and are not one-dimensional.
Much like financial planning, relying too heavily on one source 1) elevates your risk in changes to that source, 2) leaves your practice vulnerable to competitors and 3) minimizes your ability to adjust to changes in the market and target audience behaviors.
One of the most overlooked and underutilized sources for new business is professional referrals, which at one time was the biggest source for new business. Prior to Bates v. State Bar AZ (1977), practices were not able to advertise their services and built solid referral networks and relationships (without the Internet!).
Since that time, practices have refocused their energies and invest a significant percentage of their revenues into advertising directly to consumers, and largely ignoring professional referrals.
Why Invest in Professional Referrals?
Practices that continue to invest a reasonable percentage of their marketing time and budget to professional referrals experience a number of related benefits.
Little of No Competition – As mentioned earlier, most practices invest no time or resources into professional referral marketing and most of their referrers simply send them out of convenience or habit. Changing referral patterns is possible with some planning and common sense execution.
More Qualified Prospects – Practices that invest solely in direct-to-consumer advertising recognize advertising leads come with a wide scope of questions, different levels of interest and relevant knowledge, and are at different stages of the decision-making process. Your intake staff needs to invest more time, energy and training to qualify and convert these elusive leads. Prospects from professional referral sources have already been somewhat vetted prior to contacting your practice. In addition, as referral sources become more familiar with you and your practice, they will be able to send even higher quality leads.
Higher Close Percentages – Strong advertising practices invest heavily in specialized intake staff to convert harder to qualify and close advertising-driven leads. Unfortunately most practices either do not have the resources for this position, or experience turn-over and constantly struggle having highly skilled sales intake staff. Not only are professional referral leads somewhat pre-qualified, they come to you and your practice already endorsed by a trusted advisor. Whether you have highly experienced, or newly trained intake personnel, you will close a higher percentage of these types of prospects.
Consistent Leads – Of course every industry experiences busier times and slower times. However, different industries and practices have varying ebbs and flow of business and seasonality. Thus, more diverse and extended professional referral networks typically have more consistent lead generation with fewer peak and valleys.
Solidify Reputation – Review and reputation marketing is changing and becoming even more important. Although actual customer reviews still drives much of this industry, effective marketers also leverage professional endorsements and recommendations. Generating and promoting endorsements and recommendations on LinkedIn and Avvo (attorneys) have always been an easy way to engage with your professional referral network and build your online credibility and reputation. Even Facebook’s change from Reviews and Ratings to “Do You Recommend [business]?” may change how your practice can leverage your professional network.
Client Referrals – We all recognize that the value of any marketing goes beyond the initial new clients it brings in and is magnified when they refer your practice to friends and family. In many cases, referral sources have highly desirable customer bases that “fit” your practice and target audience profile. By accessing these practices through professional referral marketing, you can extend your reach to more qualified audiences. Although it may be an old marketing saying, but birds of a feather still flock together.
There are a lot more reasons and benefits to invest in professional referral marketing. The challenge for most practices is to determine the steps necessary to start building a referral network, or take existing referral marketing to the next level. The following are some tips to help you get started.
7 Tips To Grow Your Referral Network
- Recognize and Commit – Some practices have been able to generate professional referrals without any real concerted effort. However there growth is very limited and not long-standing. Your practice needs to recognize the opportunity and commit to incorporating it into your overall marketing campaign. The most important aspect to building referrals is your commitment.
- Set a Budget and Resources – Like any other marketing, professional referral marketing requires and investment of time and money. Many practices generate a decent amount of revenue from professional referrals, but spend nothing to get them. Even if professional referrals only make up 10 percent of your practice revenue, what other marketing investment generates this return on investment? You can probably instantly identify a variety of marketing expenses that should be replaced by a referral marketing budget. Many referral marketing campaigns can start as little as $500/month.
- Planning – Recognizing the opportunity and committing a few dollars is the easy part. Effective professional referral marketing requires planning, research and execution. Not only do you need to stimulate your existing referrers, you need to identify other potential referral sources, their needs, how you can help them, etc. Take the time to plan and develop effective messaging and materials before your start an outreach campaign.
- Internet Outreach Campaign – The biggest hurdle for most practices is how to reach out and connect with potential referral sources. In most cases, I recommend a practice retain a marketing partner to conduct strategic, consistent, and higher volume outreach campaigns to highly targeted professionals. Starting with LinkedIn, well-planned campaigns can not only connect you with hundreds of potential referral sources, but engage with them on your behalf to elevate the relationship into a telephone conversation or meeting.
- Invest in Relationship and On-going Thought Leadership – As much as the Internet can help you initiate a connection, your practice must be willing to build relationships. Professional referrals are built squarely on solid relationships and communication. Take care of the people that take care of you! In addition, first impressions are important. Make sure your website projects a credible image and provide high-quality collateral materials. Ongoing, be sure to include referral sources in your database marketing, so they also consistently receive useful, informational updates and e-newsletters to keep you and your practice top of mind.
- Tracking – Equally, if not even more important than other advertising and marketing, referral marketing needs to be tracked and actions taken. Most practice management and marketing software offers the ability to monitor your referral sources. And just like your advertising and marketing results, they need to be reviewed and acted upon on a monthly basis. It is also important to know when active referrers stop referring. Most will not tell you; they just stop referring. Tracking can identify when you need to reach out and address underlying issues.
- Avoid Doing Things That Undermine the Relationship – Another important part of not only generating new referral partners, but keeping them is to avoid doing things that turn them off. Poor communication can lead to oversight, neglect, omission and even create the feeling that you are stealing business. Keep them informed. Follow through on referrals promptly and even go out of your way to accommodate referred prospects. Avoid forwarding referred prospect to another provider without communicating with initial referral source. Consistently acknowledge and show appropriate appreciation for each referral.
Every market has a handful of thriving practices that spend very little on direct to consumer advertising and marketing. Those practices typically have strong referral networks and programs to stimulate leads and expand.
Call us (303-233-3886) or email us if you want more information on generating a lot more professional referrals for your practice.