The best referral sources are existing clients. When they refer someone, there is an implied endorsement almost like a presale certification. It is also a sign of satisfaction with your services and performance.
I find there are four types of positive and two types of negative referral sources. Let’s examine these six situations.
Positive referral sources
1. Long-time existing clients
Existing clients should be your best referral source. They are satisfied customers who want to help their friends and also help you. A problem with getting referrals from clients is that many of us either do not ask for them, or we ask too much. Asking needs to be done. A suggestion is to tell clients that we are adding staff and infrastructure and would appreciate referrals, or that business is great but you would like some more clients. Perhaps you can provide some suggestions for whom they could refer, such as a friend in a business or a supplier of theirs. You need to gently ask, but don’t ask too much; then it becomes background noise. Ask! I’ve noticed that many accountants put a notation for referrals at the bottom of their email signature. It looks nice but doesn’t substitute for asking.
2. New clients
I find that new clients are great referrers. They are excited to be working with you, anticipating great work and a great relationship. You are probably overservicing them to bring them onboard and they like the attention, which they might never have previously received. Harness the excitement into referrals. Suggest you would appreciate any referrals they could provide to help your practice grow and that you would be grateful for any such efforts.
3. Fellow professionals
This includes other CPAs and colleagues at other firms (for services they do not perform), attorneys, insurance agents and people who worked at clients. You should be in touch on a regular basis with these people. It never hurts to tell them you are looking for some more business to take advantage of staff and firm expertise. People who worked at clients and moved on usually move up, and you should be first on their minds when they decide to change accounting firms. Keep in touch!
4. Alumni
Unless you fired a staff person, they could be a loyal referral source. Stay in touch. Put them on client mailing lists and possibly your internal distribution list for technical updates and firm information, and invite them to inhouse CPE programs. A suggestion is to have biannual alumni parties.
Negative sources
5. No referrals
There is always a group that will never refer you just because they “don’t do that.” However, some clients might like you, appreciate what you’ve done for them, and will not leave you but are not thrilled with the service. You might always be late in your work for them, not return phone calls or emails or continually provide deliverables with errors. They won’t leave you, but they won’t recommend you. Some clients might love everything about you but think you charge too much. If you identify these clients, you can correct your performance or these misconceptions. After all, if your fees were so high, you would have barrels full of money and no need to continue working, unless it is your hobby. If you always present a harried, overly busy look, they won’t refer you. These clients need talking to in order to preserve the relationship and then work to improve it.
6. Negative referrals
Some clients might not be happy at all and are looking for an opportunity to go somewhere else. They will badmouth you if asked about your firm. Also, clients that left might also give you very bad reviews if asked, and sometimes, even if not asked. Try not to have people leave with bad feelings.
Referrals are a low-cost, low-effort way to get additional clients. However, many referrals won’t suddenly appear unless you ask for them. Try asking the next client you talk with after reading this column and get in the groove of asking everyone afterwards.
Do not hesitate to contact me at emendlowitz@withum.com with your practice management questions or about engagements you might not be able to perform.
Edward Mendlowitz, CPA, is partner at WithumSmith+Brown, PC, CPAs. He is on the Accounting Today Top 100 Influential People list. He is the author of 24 books, including “How to Review Tax Returns,” co-written with Andrew D. Mendlowitz, and “Managing Your Tax Season, Third Edition.” He also writes a twice-a-week blog addressing issues that clients have at www.partners-network.com along with the Pay-Less-Tax Man blog for Bottom Line. He is an adjunct professor in the MBA program at Fairleigh Dickinson University teaching end user applications of financial statements. Art of Accounting is a continuing series where he shares autobiographical experiences with tips that he hopes can be adopted by his colleagues. He welcomes practice management questions and can be reached at (732) 743-4582 or emendlowitz@withum.com.
