Why Some Center of Influence Relationships Produce Referrals… and Others Never Do
According to a recent report from Invesco Global Consulting, top-quartile advisory teams maintain an average of 4.3 formal strategic partnerships, more than twice the average of lower-performing firms. Those same top-performing advisors also generate 29% more client referrals.
If you want to build a thriving advisory practice through referrals, developing productive relationships with Centers of Influence should be a high priority and one that translates into consistent action.
First – Become Referable
Giving referrals to COIs does NOT necessarily make you referable. It can certainly help a bit, but if the COI doesn’t yet know your full value and isn’t clear on what happens after they make an introduction (your process for contact and follow-up, etc.), they may not be ready to make introductions.
One of the more interesting conversations related to this topic I’ve had recently was with Duncan MacPherson (Episode #80 on the Top Advisor Podcast). Duncan challenged the term “Center of Influence,” suggesting that we think instead about strategic partners whose primary purpose is to elevate the client experience. In other words, shift the emphasis from referrals to asking, “How can we serve our clients better by knowing each other?“
While I suspect the term COI isn’t disappearing anytime soon, I think his point is an important one. Per MacPherson, if your first objective is getting referrals, you’re already starting in the wrong place. Your first objective should be creating value. The referrals are often the natural result.
Your first conversation with a COI should focus on them – their challenges and opportunities – and how you might be a resource for them in some way. This doesn’t necessarily mean sending prospects their way. It could mean providing ideas and perspectives around client service or client attraction. It could mean introductions to other resources. It could mean providing articles for their newsletter.
Think about it from the CPA’s or attorney’s perspective. Every introduction they make puts their reputation on the line. They aren’t simply deciding whether they like you. They’re deciding whether one of their best clients will thank them for making the introduction six months from now. To many COIs, providing introductions often feels risky. Your job is to eliminate that sense of risk.
That’s why buying lunch once a quarter or sending the occasional article rarely moves the relationship very far. Trust develops when they consistently see your professionalism, expertise, communication, and genuine commitment to serving clients well. In other words, they have to see you as referable. Never assume they automatically do.
Here’s Where Differentiation Really Matters
Not all prospective clients care what makes you different. At the end of the day, they want to know if you are right for them.
For COIs, however, how you articulate your differences helps your COIs determine how your expertise intersects with their client base. It helps them recognize why they should introduce you to a client over another advisor.
Imagine a CPA wants to introduce you to a client. How would they describe you? “He’s a really good financial advisor.” Not very motivating, is it?
Can the COI clearly explain who you serve? What types of clients benefit most from working with you? What’s your specialized expertise? Do you have a process that distinguishes you from the dozens of other advisors they know? And WHY their client should at least have a conversation with you.
MacPherson shared a wonderfully simple question advisors should ask new COI relationships:
“If I ever have an opportunity to make an introduction, how would you like me to describe you?” After they answer this important question – most will turn around and ask you the same question. Be ready. Your answer shouldn’t sound like a commercial. It should give them an easy way to recognize opportunities and confidently explain your value to others.
Productive Relationships Need Not Always Be Reciprocal
Remember that productive COI relationships aren’t built solely on exchanging referrals. Some of the strongest partnerships I’ve seen provide value in many different ways. You may share ideas, collaborate on client situations, introduce useful resources, brainstorm marketing strategies, or simply become a trusted sounding board for one another. Ironically, those relationships often produce the most referrals because neither person is keeping score.
The focus stays where it belongs: helping clients make better decisions and creating better outcomes.
I once interviewed an advisor (Jeremy Davis) who had 30 CPAs feeding him with a continual flow of quality introductions. This was not a reciprocal referral relationship. Jeremy became an educational resource for these strategic partners. He also provided case studies on a quarterly basis – putting his value proposition front and center on a regular basis.
Here is a Simple Action Step
Reach out to one CPA, attorney, or other COI you respect. Not to ask for referrals. Not to pitch your services. Simply to explore how the two of you can work together to create more value for clients you already have in common. If you don’t yet share clients, learn about each other’s businesses, exchange ideas, and begin building the trust that productive referral relationships require.
The advisors who consistently receive referrals from Centers of Influence rarely get there by chasing them. They get there by becoming the kind of professional other professionals are proud to recommend.
Here’s a GIFT for you!
I’ve developed a simple Referral Strength Assessment that will help you in at least three ways:
- Elevate your awareness on what it takes to develop a strong referral culture with your clients and Centers of Influence.
- Expose potential gaps in your processes that are costing you referrals.
- Receive a complete action-step checklist to drive new behaviors and better results.
Take the 10-minute Referral Strength Assessment here: www.CatesReferralAssessment.com
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