Expanding your tax practice through referrals

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There are many ways to grow your practice, but one of the most tried and true ways remains through referrals. When was the last time you received a referral? Who sent the referral? Was it a response to a concerted effort on your part, or did it come as a pleasant surprise?

Referrals are generally warm leads. That means that the prospect has a need that you are likely able to solve. The amount of time needed to close these leads is usually shorter because the prospect is taking the word of someone they trust. That’s why referrals will always be an important growth strategy, but you cannot leave them to chance. Referral sources must be developed and cultivated.

Identify your referral sources

A referral source can be a client or a center of influence (COI). You need both. Clients are easy to define, but COIs can vary. The typical banker, lawyer, and investment advisor is probably who came to your mind, first, but COIs are more broadly defined. COIs:

  • Do not do the same thing you do; as a result, they are not direct competitors.
  • Come in contact with people who are your target client.
  • Know exactly what you do and how you add value.

That means your COIs could include other CPAs, accountants, and EAs. It could also include software and equipment vendors who sell to your target market, fractional CFOs, private equity professionals, consultants, and association leaders. And, don’t forget those tied to specialty buyers you target, such as real estate professionals, bonding agents, art brokers, franchisors, and practically any other niche.

The amount of influence a person has over your target buyer does come into play. Those with greater influence will be your better referral sources. If you haven’t had a lot of success with referral sources in the past, it’s likely that you haven’t found someone who has enough influence over your target buyers.

Cultivate relationships 

Make a list of your current referral sources and what they do, such as “attorney.” Only include people who have referred work to you in the past. Just like you rank your A, B, and C clients, rank your referral sources. This will help you understand where an existing relationship may need a bit more work. You can do this same exercise with your clients to increase referrals there, too.

Now, make sense of what you see. Is the list long or short? Are there a lot of the same types of professionals, or are they in diverse areas? Have these people made a referral in the past year, or was it five years ago? Have you recently connected with each of these people? Is there someone you have been networking with that isn’t on here?

Use this knowledge to understand where you can improve. Your options of next steps are plentiful, so pick something that works for you to ensure you are successful. Here are nine examples of a few things you might decide to do:

  1. Come up with a process to ensure you meet with your COIs in some regular frequency, such as quarterly or semi-annually. This could be adding reminders to your calendar, or working it into your firm’s workflow or customer relationship management system.
  2. Make a list of people who aren’t referring to you, but you’d like them to. Set up an initial meeting and then work them into your process for regular outreach, so that you don’t forget them. This relationship is a process that won’t happen after one meeting.
  3. Reach out to those who are sending leads, but not great ones, for a mutually beneficial conversation.
  4. Remove people from this list; possibly replace with others if more referral sources are needed.
  5. Diversify the list to include more than one or two types of professionals.
  6. Scroll through your contacts, sent emails, or LinkedIn connections to remind yourself who you know that may be a referral source that you can begin cultivating.
  7. Look at trends to understand why your A COIs are A’s. Make notes of why your B and C referral sources are not A’s, and take steps to improve those relationships.
  8. Ask your CIOs for introductions. This could be by name: “Could you introduce me to [name]?” Or, by profile: “I’m looking to meet people who do [fill in the blank]. Is there anyone you can introduce me to?” If you’re feeling extra ambitious, go to that person’s LinkedIn connections in advance to make sure they know the person, or type of person, you’re looking to meet.
  9. Determine where you can go to meet potential referral sources. If you think fractional CFOs or bonding agents should be one of your referral sources, go to where they are so you can meet new ones.

Are all of these valid next steps? Yes. Are there other things you could do? Yes. Can you do them all? Probably not. Start small. If you pick one or two areas to focus on first, you should notice a difference. Accomplish them and add more to your list for greater results. The cadence and quality of outreach with your referral sources is just as important as the number you have – focus on both sides of the equation.

Give to give – not to get

Accountants often say they don’t have enough referrals to give. While some of your COIs may operate with this mentality, it’s shortsighted and not the best strategy.

Do you really want to refer your client to someone just because you “owe them one?” Of course not. You want to refer someone because you know they are best suited to help your client – and your client expects the same from you. That’s why they will ultimately refer you.

The popular business book, “The Go-Giver,” teaches that success comes from changing your focus from getting to giving. When you put other people and their needs first, you will be rewarded. Focus on handing out referrals to your CIOs based on what’s best for the clients, and know it will result in good things for you. If that means you lose some referral sources who don’t operate with this same mentality, that just might be okay.

Ensure future referrals

The best way to ensure you get another referral from a client or CIO is to say thank you. A quick email works, but a handwritten note is more memorable. This is also a great opportunity to offer to meet in person for a drink or a meal to say thanks, which can strengthen the relationship. It sounds simple because it is, yet people often forget this important step.

It probably goes without saying, but the service you provide needs to be quality and client-focused, too. That way, your COIs and clients will be confident in sending others to you in the future.

You also want to ensure your CIOs know why a referral was a good fit. Have open communications with them and you’ll get better ones in the future. Don’t ignore this step because it seems like a tough conversation. It’s beneficial for both parties who truly have their clients’ best interest at heart. It’s how you protect and grow that relationship over the long term.

When a referral source connects you to a prospect, you should know that it’s a result of your efforts to build the right relationships and put clients first. It’s likely not the only strategy to grow your firm, but it’s one that you cannot ignore.

Editor’s note: This article was originally published by AccountingWeb.

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