Stop reverse referrals from destroying your business

For the last few weeks, I’ve been writing mainly about getting referrals. The biggest driver of insurance revenue into your business isn’t knowing what to say to a prospect but getting that prospect in front of you to talk about things like insurance planning.

So, if I can help you drive more high folks in front of you, you’ll have much better results.

On that note, I’d like to talk about reverse referrals and how you stop them.

Let’s first define what I believe to be referrals.

This is when someone you know and who knows what you do (a client, COI, etc) connects you with a prospect who has a problem that you can solve. They have not only identified the problem with the prospect, but they have connected the prospect to you (usually over email or text), so that you can work them to help solve it.

As you can see, there are two things at work:

1. They identified a need with the prospect; and

2. Connected you to them, thus transferring some of their trust to you.

This is the holy grail of business development. It essentially has no cost and attracts a high-quality prospect to you and one you will likely close (due to the trust transfer).

We want a lot more of those (by the way, I’m now helping more than 20 Advisors build these into their business, so let me know if I can help you too).

But, what about “reverse referrals”. This is a concept that I’ve just made up by the way.

So, let me define what I view as a reverse referral.

I’ve defined what I think to be a normal reversal up top. At it’s core, it is new people coming into your network.

A reverse referral is the other way. A referral from your network going out.

You want to stop these in their tracks. Because, they will hurt your business.

Let me tell you a story about a reverse referral that just recently happened.

I have a friend who is an Advisor. He does a good job, and in this case, he did a great job for his client. His client was a small business owner who was growing his business. My friend put in place the risk business (DI, CI, and term life) and a small Par. The intention was to increase the Par size in later years as the business grew.

They had a good relationship by all counts and nothing was amiss.

This business owner has done very well and is in the early stages of selling his business for 8 figures. It’s grown quite a bit. This is the moment my friend was waiting for, the liquidity event that could lead to some assets to manage and an increased life insurance policy.

Yet, he received a message from the client stating that his accountant had referred him “out” to another Advisor to do a “full review.”

This is another way to say that another Advisor was about to take all that my friend has built because of the amount of trust that is built up in their accountant.

I know what some people will say here:

“If only you built a better relationship with the client, they wouldn’t leave. None of my clients leave.”

First off, that’s a bunch of bullshit. If you have first-rate clients, they are always being targeted by slick Advisors and others. And, it’s true if you build a solid relationship, they will probably stay.

But, when there are strategic considerations, it’s really tough.

I want to say, I don’t know the ins and outs of why this client might be leaving. But, I can tell you I was on the other end of a deal not too long ago.

There was this very successful business services company we were targeting. They had a long-term and very trusted Advisor who they liked a lot. But, when it came to doing the financial planning and estate planning and big insurance policy. They didn’t go back to their trusted Advisor. They went to my friend.

Because, there was strategic reason. By doing business with my friend, they would further enter his network, which is where all their future business was going to be.

They deduced very clearly that the insurance and wealth products they could purchase were essentially the same from one Advisor to the next. So, why not do business with one that will likely get them to places where they can further grow their business. Use their personal needs for strategic purposes.

It's a very savvy business move, in my opinion.

So all this, just offer great service, and no one will ever leave you; it is pure hogwash.

Now, that’s not to say there aren’t things you can’t do to protect your business.

And, I want to give you the Advice that I gave to my friend in this case.

You need to make your presence known. You need to get to know your clients' accountants (even if it will never lead to a referral). You want them to know that the client they share with you is your client. So, if there is ever a chance to do some additional planning work, you are the person.

I want you to make the accountant feel UNEASY about making a referral out. Most people don’t like conflict and you want to make the accountant feel that there will be conflict is such a thing happens.

You need to be respected and discourage any action that would put you in such a position. Now, some of the things you might do and say, might lead to you not building a possible referral arrangement with this accountant.

So, here’s how I’d approach it: Meet your client's accountants and see if you can build a relationship. If so, follow what I have taught in other emails.

If that is not possible, you’ll run this other program of making them uneasy and discouraging any type of action that would put you in a bad light. This isn’t doing anything bad, by the way; it’s simply creating an aura that any negative action for you will lead to conflict (i.e., negative conversations). Most people will do anything in their power to avoid conflict.

When it comes to the moment of a possible reverse referral, we want the accountant (or whoever) to think second about hurting you and your business.

This doesn’t stop the client from leaving, but it does stop COIs in your network from referring your clients to another source.

This is an aggressive strategy that most people won’t want to use. But if you do want to protect your business from reverse referrals, you might want to start using it in certain instances, especially for high-value clients who will be targeted by various sources.

Do not rely simply on your likability. There are people trying to take your clients all day every day. The horde is at the gates and you need to protect yourself.

So, on that sombre note, if you need help growing your referral business, you know where I am.

Have a great weekend,

Andrew