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Thursday, September 19, 2019

What percentage of business should come from referrals

Their View

By Jim Grandone | Nov 20, 2017

Much of a law practice’s marketing is targeting prospective clients and designed to inform them about your firm and its services, and to get them to call you when they need help.  Thank you Mr. Obvious! What if you could get business to come to you without the cost of advertising, public relations, memberships and other marketing expenses we all pay to get new business?

I am talking about referrals from existing clients. Look at it from a cost point of view. You’ve already sold them on the services they have contracted for you to provide. They already have a positive relationship with the firm and, assuming you do good work, they like your services. According to Allan Colman with The Closers Group, your clients should be a major source of new business. How much? Colman says 50 percent of your business should come from referrals.

Existing clients are already sold on your skills but how do you convert clients to referrals sources?

An average consumer prospect, who may know the name of your firm likely has no idea what you do or how you do it. That prospect will not need to understand the nature of your practice until such time as he/she needs your services.  Attracting new clients is another matter. To get them you need to reach out and inform them about what you do and that is expensive.

With existing clients, they know about the services you provide and we assume they are happy with those services. Ask yourself this question: “Do they know about all the services we provide?” The answer is probably “No.” How do you educate them about your other services without sounding like a used car salesman? How do you cross sell and why should you?

Harvard Business Review conducted a study of 10,000 accounts at a large German bank over three years.  The study, titled, “Why Customer Referrals Can Drive Stunning Profits” concluded that referred customers are more loyal and more profitable than other customers.  While the bank in the study offered a referral reward, the article said it probably applied to other businesses as well.

“We hypothesize that the referral effect applies to other consumer industries. In particular, we expect that referral programs would be most beneficial for products and services that customers might not appreciate at first glance and in industries where it is hard to identify valuable prospects. We encourage companies to compare the profitability of their referred and non-referred customers.”

You have a captive audience in existing clients. You know them and they know you. One way to inform them about your other services is through a brochure. They are relatively easy to put together and the costs are minimal. If you have in-house marketing staff, they can create it on their lap top computer it’s so easy.  If not, find a good design firm and work with them to create a brochure. I am referring to a paper brochure, not a Web site. 

While Web sites are useful and you have probably made a major investment in one, they are limited to reaching those prospects who are actively looking for a lawyer or law firm. What I am talking about is something that you can hand a client; a takeaway from a meeting.  

Brochures also can be mailed to existing clients, left in the waiting area at your firm or distributed at a reception or even a bar association meeting. It can even be mailed with your invoices. Don’t be shy about it. Create it and distribute it because a brochure is useless unless it is distributed to your prospects.

Do you have video or television ads? You can run them on a continuous loop in your reception area for new and existing clients to watch while waiting for an appointment. You can also add them streaming on your Web site for visitors. If you don’t have one, you can make one for a relatively low price today.

Finally, and perhaps most effectively, you can ask your client casually if they know about your other services. If they seem interested, you can hand them a brochure and give them your elevator speech about your firm’s capabilities. Take a client out to lunch and do it then, rather than on their billable time. Then ask for their business. They would at least appreciate the free lunch!

Jim Grandone is President of Grandone Media Strategies in Edwardsville, Illinois. He can be reached at 618-444-0971, or at grandone.james@gmail.com

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