3 reasons you cannot rely on referrals

Survey after survey tells us that most accountants get most of their best new clients through referrals. And many experienced accountants claim that no other activities and no marketing investment ever seems worth the effort. The following sentiment is typical of what I hear:

“I get all the new clients I want through recommendations and referrals. To be honest I don’t have the scope to take on lots of new clients. I’m happy with those I get simply by doing a good job for my clients.”

I have a long held view that these survey results can be misleading. Rarely do we get to learn whether the accountants in question are looking to grow their client base – or how established they are.

Don’t get me wrong, I am a firm believer in the value and power of referrals – and in creating trackable referral strategies.

Part of the reason for my cynicism about the value of the surveys is that well established accountants may not take on many new clients each year. They don’t do much in the way of marketing and may have an underperforming website. So the most likely source of those new clients they do get is recommendations and referrals. And this may well be right.

Given all of this, why do I say there are 3 reasons that you cannot rely on referrals if you want to grow your practice?

1 – It’s too random and uncontrolled

If you want to grow your practice you need to take a more active role in generating new prospects and clients.

2 – It’s too hit and miss

Few accountants I know planned to grow their practice by taking on more low fee simple tax return clients. If you don’t take active responsibility you are just as likely to get referrals to small as to big clients. Do you want to be sidetracked by people who don’t want to pay the fees you deserve to earn?

3 – It’s based on a misconception

The theory that you should focus on securing referrals is not borne of the experience of other accountants who are keen to grow their practice. No. Instead it comes from the experience of accountants who do NOT want to grow their practice significantly. Why should their experiences be relevant if you DO  want to grow your client base?

Don’t misunderstand me. You can grow your practice via referrals. But not if you do the same things as other accountants who are NOT looking to grow their practices.

One of the accountants I mentored told me that wanted to win about 45 new clients paying good fees over the next year. My role was to add a touch of realism, to encourage, cajole and support his ambition.

During our conversation I encouraged him to then think about how many of those 45 will become new clients in the next 6m? He thought 15. So I asked him “What will happen in the following 6 months that will enable you to double the rate of new clients to 30? That’s what you’ll need to reach your target of 45 in a year.”

My mentoring client appreciated the challenge. He said he hoped that the first 15 would each refer him on to at least one new client each.

I encouraged him to recognise that he will have to do more than rely on ‘hope’.

He will need to consider when he will ask new clients for appropriate referrals and how long it will take for those clients to identify realistic prospects.

I helped him to appreciate that, given his ambition to secure more high-value clients over the next year or so, he would need a more focused strategy than simply hoping for the right type of referrals.

Advertising

I’m not a big fan of generic advertising by accountants unless you have the time and money to create focused campaigns that interest and attract your ideal target clients. Few accountants do this very well.  Done badly these campaigns attract more the client types you don’t really want but that you feel you must take on to cover the cost of the campaign.

Online quote farms

I’m also not a fan of most sites that promise to drive leads to local accountants. These sites seem to exploit naive accountants who don’t understand how the site works.  I looked at another one recently. If someone visiting the site actually enters sufficient details, across multiple pages, this will be sent out to a bunch of accountants. You then need to supply a quote – inevitably based on insufficient details and where the lowest quote is bound to win.  This is unlikely to help you secure the type of clients you want – and you have to pay for the privilege of submitting a quote

Online listing services

Adding your name to online lists shared by your professional body, software houses and other online directories is worth doing. But you are reliant on people finding the online list and then picking your name from all those on the list.

Another option

Better, I think, is an online service that ranks highly on the search engines and only promotes you to people who are looking for an accountant like you. That probably means someone local(ish). Rarely do people in Birmingham seek out or choose to appoint accountants in Bournemouth. We may know that distance is irrelevant and you may have clients all over the country, but that doesn’t change how most people choose professional advisers.

As you may know I am Chairman of the Tax Advice Network – a lead generation website that ticks all those boxes. There’s a modest monthly fee but nothing to pay for leads or when you win the work. Even if you only picked up one new client a year you would more than repay your investment – and by joining the network you also secure a valuable inbound backlink to your website from a highly ranked long established website.

Other options

The bottom line here is that doing a good job and hoping for loads of referrals will rarely enable you to achieve your growth ambitions. You need to take action and to do more than simply hope that your ideal clients will turn up as if by magic.

If you would like to see whether my support and encouragement could help ensure you set realistic targets and can achieve your ambitions, please check out the ways in which you can secure my input and help >>>

By |2020-07-28T10:11:37+01:00July 28th, 2020|Accountants, Marketing and promotion, Referrals|

About the Author:

Mark Lee
Mark Lee FCA is an accountancy focused futurist, influencer, speaker, mentor, author and debunker.

Leave A Comment