Guest Blog Post by Lee Frederiksen, CEO of Hinge Marketing
Featuring the results of a joint XPX - Hinge Study
For many professional services firms, referrals are a key source of leads and new business. In Professional Services Marketing Priorities, a study that my firm, Hinge, recently conducted in collaboration with several organizations, more than half of respondents indicated that generating more referrals was their number one planned marketing initiative.
Clearly, referrals are a big deal.
Unfortunately, referrals can be limited by a range of factors: the number of clients you have, how many appropriate contacts they have, the quality of your firm’s reputation, and your level of visibility in the marketplace. To make matters worse, getting those referrals is only half the battle. Our study revealed that more than half of those referred prospects didn’t even bother to talk to the service provider. Ouch.
Just Released: Referral Marketing Study
To dig a little deeper into the referral dilemma, we conducted a referral marketing sub-study with the Exit Planning Exchange (XPX). We surveyed 262 professionals, of whom almost 69 percent were senior executives or partners in their organizations (see figure below). These are the people who usually make referrals.
In this sub-study report, we uncovered some surprising insights into what factors influence referrals in the real world. Here’s what we found:
1. Visible expertise is the major factor in referrals.
The Internet has fundamentally changed how business professionals research service providers, providing quick and easy access to information about products, services, and people. Individuals who publically demonstrate expertise in a field or niche have a distinct advantage over others who have little or no visibility. We call these individuals Visible Experts®. In fact, our study revealed that visible expertise accounted for 27.4 percent of new referrals. How do you become a Visible Expert? The most common way is to write and speak extensively on topics that are relevant to your target audience—topics that address their business challenges and demonstrate your expertise.
2. Relationships are important.
Nurturing relationships as a referral source may be old school, but it’s still important. So important, in fact, that it drives 21.8 percent of referrals. Many of these referrals are triggered by intersecting social and professional relationships — think business and golfing buddies. However, purely social relationships are far less meaningful for referrals when there’s no visible expertise to add value.
3. Quid pro quo goes a long way.
Referring someone else is a great way to get a referral in return. Our research revealed that the top 20 percent of referral-makers had given an average of 20 referrals and received 24.7. It’s still true: givers gain.
4. Stop asking.
Asking for referrals is an old piece of advice that has been around for years. But our study shows that it simply doesn’t help generate referrals. Ditto for attending or sponsoring events. They may increase brand awareness slightly and even open some doors, but they don’t drive referrals.
5. Reputation is everything.
Reputation can be broken down into two parts — general (you’re a good accountant or you’re a nice person) and specific expertise (you’re a top-notch discrete manufacturing accountant). It’s the specific expertise reputation that is a significant referral-driver — it produces 60 percent more actual referrals.
In our research with XPX, we discovered that the most successful firms follow four key guidelines:
- They make their specific expertise clearly visible, regardless of the referral source. They achieve visibility by publishing educational content, speaking at conferences, and showcasing successful projects.
- They maintain a high-quality website that features high-value, educational content. Research has shown that prospects often rule out potential service providers if their websites are poorly designed, outdated, or ineffective at communicating their firms’ expertise. When a website contains a wealth of free, educational content people can sample a firm’s expertise before buying.
- They develop and maintain good social relationships with other professionals. Highly successful firms cultivate strong social ties with contacts who also value their expertise, making it more likely that the firm will be recommended to others. However, as noted above, friendships alone are much less valuable and effective for referrals.
- They make lots of referrals because reciprocity pays. The average study participant received only 9 referrals in the past 6 months while the top 20 percent of referral makers received over 24.
Become a Visible Expert®
If one of your marketing goals this year is to increase your leads from referrals, the most important thing to do is increase your visibility. That means more speaking at conferences, seminars, and other events, as well as writing frequently on subjects that interest your target audience. As your visibility increases, prospects will start to recognize the experts in your firm, seek you out when they have a need, and refer your firm to others.
Here are the results of the joint
XPX - Hinge Referral Marketing Study
To learn more about the “must-haves” for a successful referral strategy and becoming a Visible Expert, download Hinge’s free Rethinking Referral Marketing Guide.