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Get the Word Out & New Business In: How to Build Your Referral Marketing Strategy

You want to impress clients for lots of reasons: to take pride in a job well done, for the promise of repeat business, and—maybe most importantly—in hopes that they’ll refer you to a colleague in need of your services. But referrals can’t always be traced back to clients. In fact, a strong referral marketing strategy should include three kinds of referrals:

  1. Experience-based referrals
  2. Reputation-based referrals
  3. Expertise-based referrals

While referrals have traditionally been thought of as coming from clients (experience-based referrals), a new research study from the Hinge Research Institute of over 500 professional services firms reveals details about where referrals come from today—and why.

The study indicated that 81.5% of professional services providers have received a referral from someone they don’t have direct experience with. Based on this, making your firm’s expertise and reputation visible are crucial to winning new business.

Let’s dig deeper into the two types of non-client referrals:

1. Expertise-based referrals

Let’s face it—every business faces problems that lie outside their field of expertise. This is where your expertise comes in. Keep in mind that expertise in this context describes fairly deep specialization. Being “in I.T.” doesn’t define your expertise. Being an I.T. firm that specializes in cloud-based customer management software for accounting firms, on the other hand, gives prospects a thorough understanding of what you do—and how your expertise is relevant to their needs. Your expertise differentiates you from the competition and signals your value to your audiences.

Here’s where buyers find out about professional services firms’ expertise:

Figure 1. Sources of Expertise-Based Referrals

Notably, in-person speaking engagements conveyed valuable expertise more than any other single source. However, the combined percentages of online sources accounts for 55% of sources. The key is to be where your audiences are—having an effective online marketing strategy is essential to making your expertise visible. Cover these bases and your referral marketing will be rewarded.

2. Reputation-based referrals

Getting reputation-based referrals relies less heavily on your firm having specialized expertise and more on an overall positive impression of your firm. Individuals or organizations make these kinds of referrals based on two sources: the firm has a good reputation and they’ve heard of the firm through friends or colleagues.

In the research, 45 percent of individuals or organizations simply have a positive impression of your services that has permeated the marketplace. No one’s whispering in their ears, because no one has to—your reputation speaks for itself. The rest of these reputation-based referrals come from friends and colleagues. Remember that these aren’t people who your firm has worked with before—these people are aware of your reputation and have, therefore, recommended your firm.

So, positioning your firm well in the marketplace—making your expertise visible where prospects are and building a positive reputation—can bring you referrals above and beyond those provided by your past and current clients.

However, the research study also found that getting a referral doesn’t always translate into new business. In fact, about 52% of respondents have ruled out a firm they were referred to before even speaking with them. Here’s why:

Figure 2. Why Buyers Rule Out Referrals

By a significant margin, many potential clients just don’t see how you could help them. The data is clear: poor marketing and branding can kill referrals. Make your expertise, value, and reputation impossible to ignore. Why? Because, if you’re like most professional services firms who identify “Attracting and Developing New Business” as their primary business challenge, you likely can’t afford not to. Make referral marketing a priority and start getting the attention you deserve—and the new business you need.

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