Craig Parker looks at the crucial role partnerships and referral relationships can have on advisers looking to create a thriving, client-focused business.
It is well-known that keeping the client you already have is far less expensive than acquiring a new one. And that effective servicing is a good way to generate greater business growth. The longer a client has been with you, the more likely it is that the relationship will be based on loyalty and trust, and that the client will refer friends and family.
So it won’t come as a surprise to hear that the same goes for professional relationships. If your aim is to be truly client-focused, then you will need a network of trusted professionals to whom you can refer. Because unless you are a risk professional, financial planner, accountant, lawyer, real estate agent and mortgage broker all in one, chances are your clients will need to seek advice from someone other than just you. And the relationship works both ways. Clients seek out certain professionals when they are looking for trusted information and advice. While you may not be the first point of call, you should be able to rely on your professional network of contacts to refer to you when your expertise is required.
The reality is that apart from your clients, your business relationships are your most valuable asset. Contrary to what many might believe, the quality, number and depth of these relationships is the best predictor of business success, not your technical know-how. And it is virtually impossible to operate in a vacuum anymore. Waves of regulatory change have driven consolidation, and technological advances in areas like social media mean that clients are more informed than ever before. They research different professional service providers online and read reviews and comments from other clients like them.
This may feel overwhelming at times, as though the market is becoming more and more competitive, but the reality is that people are still people and human relationships still drive businesses. People like to do business with people they like, so businesses based on strong relationships, which offer value over and above expectations, will still be the most successful.
Building your professional network
So you’ve decided that you need to establish a network of professional relationships. Now, how do you go about choosing the right partners?
Step 1: Research the individuals and/or businesses you would like to do business with. A strong alignment on the basis of values, client service and business strategy means your relationship is far more likely to succeed over the long term. So try to identify partners with whom you have plenty in common. It’s also a good idea to service the same target market, as this will mean a closer fit between you and any clients you are referred.
Step 2: Define what you can do for these businesses. Think about the kinds of problems you could solve for them, and be prepared to give before you receive.
Step 3: Decide how best to approach and communicate with the businesses you have chosen. Face-to-face meetings are ideal, but if this is not possible in the first instance, you may need to consider other, less direct options.
Step 4: Once you have established a relationship, make things as easy as possible for your partner by creating collateral they can easily use, and clearly describing the circumstances in which you could be of service to their clients, and vice versa.
Step 5: Don’t set and forget. Be sure that you keep in regular contact with your partners, to develop the professional relationship and discuss ways of growing your businesses together.
Case study
Kris Mason, Founding Partner of MBS Insurance Advisers on Sydney’s north side, has established his practice on the basis of referral business.
“Our practice is entirely run on referral business,” he said. “They make up 60 per cent of new business but in one way or another all of our business has come from a referral arrangement we have in place.”
Kris and his partners deliberately structured their business around a referral model. This involved developing a proposition to partners, an approach to develop and maintain the relationship, and ensuring there was a feedback mechanism that spoke to their target audience which for MBS are accountancy practices.
Interestingly, much of this does not involve a commission or remuneration element for the referring partner. Partners see MBS as a value add for their clients and understand the alignment of interests. MBS also refers back to their partners.
“We have around 40 accountancy practices referring to us and to get there we had to present a value proposition that explained the benefits we could bring to their clients and firm rather than focusing on being risk insurance specialists,” Kris said.
“So it is important to demonstrate the client value and to use language and business documents that the partners understand. We always include the referring partner in the client communication / advice so they have visibility on what we are doing. We can also bring business back to those partners through additional accounting work like valuations for buy/sell insurance etc.”
Kris’s main piece of advice for those advisers and practices starting to build a referral model: “Stick to the big picture, move away from product in the discussion and focus on the benefits, both for their accounting practice and their clients.”
Craig Parker is general manager at Affinia Financial Advisers.
