It’s Time to SWOT Your Referrals

By Michelle R. Donovan

It’s no secret that making informed decisions is a must for business success. This is why firms invest heavily in research, analytics, and planning before buying another practice, relocating an office, expanding into another territory, or introducing a new product or service model. The more information they have, the more confident they are in a good return on their investment.

One of marketing’s foundational strategies for gathering an intense amount of information upon which to make sound decisions is a SWOT analysis. A SWOT analysis takes into consideration the (S) strengths, (W) weaknesses, (O) opportunities, and (T) threats related to a particular topic. When making decisions or developing a strategy or plan, strengths and weaknesses are key internal factors to consider, that is, factors you can control. Opportunities and threats are external factors, that is, factors usually beyond your direct control. Each component of a SWOT analysis includes various questions to explore in depth before time, energy, and money are invested into a project.

As a referral consultant, I see the value in applying the SWOT analysis to referrals. Many firms don’t take the time to know exactly what’s going on with their referral process. The only thing they know for certain is that they want more of them! A SWOT analysis of your referral process gives a clear picture of what’s happening and shines a spotlight on what needs attention. Let’s take a closer look at how you can begin a SWOT analysis of your referral process.

Referral Strengths

The strengths of your referral process should include everything that your firm does well. You should consider the specific ways you excel beyond your competition with respect to referrals, as well as any unique approaches you take to acquire referrals from clients, centers of influence (COIs), and other referral sources.

Here are four questions that will help you focus on your strengths.

1. Who is currently referring you and your firm?

If you are receiving referrals, consider that a strength. List everyone who has referred new business to you and your firm, especially any organizations, collaborations, or strategic partnerships that refer consistently. Include those who refer prospects who are not quite right for you.

2. What marketing tools do you use to support your referral efforts?

Some firms pay for leads and consider that a strength in their referral process. Others might consider it a weakness. You can be the judge. Many firms include billboards, ads, client thank-you gifts, events, social media, podcasts, and more as tactical marketing tools that drive new referrals. List every marketing strategy you currently employ for that purpose.

3. What networking activities do you engage in to support your referral efforts?

Referrals are born out of relationships. Consider everyone within the firm who engages in some form of networking. List all board activity, club memberships, organizations, associations, sponsorships, and annual events/conferences.

4. What referral training/coaching has your team had to enhance their business development skills?

If you or others on your team have participated in referral or business development training or coaching, consider that a strength. Some firms hire external coaches or consultants for this purpose, while others rely on internal mentors and resources from broker-dealers. Also include training or coaching on networking skills.

Referral Weaknesses

The weaknesses within your referral process could expose you to threats without warning. These are typically areas that are not currently done well in your referral process and that require improvement.

At times, some of your strengths could also be considered weaknesses if they are not used properly. For example, you may have many people who refer to you (strength), and yet the referrals don’t match your ideal client profile (weakness). Or you could have several people on your team who received wonderful coaching to improve their networking skills, yet many are not making the time to participate in networking activities. Be open and honest about your weaknesses because they could be sabotaging your growth potential.

1. What referral skills are lacking in you or your team?

If there are team members who avoid asking for referrals or prefer to let their great service speak for itself, you likely have a big weak spot in your referral process. Many firms struggle with advisors who are uncomfortable with seeking or making referrals and are ill-prepared to form reciprocal relationships with COIs. In addition, some advisors never learned how to network effectively, so they either avoid it entirely or reflect poorly on the firm when attempting to network. If you’re interested in creating a culture of referrals within your firm, consider the referral skills of all employees, not just those of your advisors.

2. Is your referral messaging inconsistent or unclear?

If you asked your clients, COIs, friends, family, and staff to describe your preferred client, would their responses be consistent and clear? Does everyone know, without a doubt, who you do your best for and why? If your messaging is consistent and clear, it eliminates confusion. People who are confused about who to refer to you likely won’t refer at all.

3. What stops more clients and COIs from referring you?

It’s possible that your responses to #1 and #2 may reveal why your clients and COIs aren’t referring you. That said, it’s important to stay top of mind with COIs to generate referrals, and many advisors never spend enough time and energy with their relationships to make that happen. Do your COIs know what’s expected in the referral relationship? Do you have the best COIs? Clients need to be taught how to refer effectively and given the resources they need to refer comfortably. Consider this factor from multiple angles.

4. What technology or equipment is needed to better support a comprehensive referral strategy?

A comprehensive referral strategy functions best with easy access to information. The ability to track referral activity and results positions you for sustainability and avoids the repetition of unproductive behaviors and tactics. Immediate access to referral statistics enables an advisor to strategically choose their activity so they get the most from their time. Some firms have the technology and/or equipment available yet lack the training to fully leverage its capabilities.

Referral Opportunities

Referral opportunities are external factors that potentially could improve your referral process and, ultimately, your bottom-line profitability. Examples of potential opportunities that could influence your referrals include a competitor retiring or selling their practice, new technology that focuses on business development, skilled advisors looking to move to a new firm, changes in compliance, specific trends that need to be leveraged, etc. Some opportunities will present themselves for a short time, making them unpredictable. Consider all opportunities.

1. What potential niche market is available to you that you haven’t pursued?

Niche markets are a hot subject right now in wealth management, and rightfully so. As competition continues to stiffen, niche markets provide a solid strategy for standing out from the crowd. Niche markets represent opportunities that will affect not only the bottom line but also marketing and sales efforts. That said, many firms have not been willing or able to make the decision to target a niche or two. Think about this as an opportunity for the firm and/or individual team members who are building their own book of business.

2. How can clients be better leveraged for referrals?

Client referrals continue to be a magnetic force within the profession. Even though the desire for client referrals exists, the time, energy, and resources dedicated to achieving those results typically fall drastically short. Considering the potential you have available to you and your current percentage of clients who have already referred, what are the opportunities in front of you?

3. How can COI relationships be improved or enhanced?

The vast majority of advisors I speak with complain about a lack of reciprocity from their COIs. The one-sided relationship leaves them feeling frustrated. In some cases, this happens because firms are investing time with the wrong COIs. I’ve known other advisors who can’t seem to find the time to invest in their COI relationships and then wonder why their COI doesn’t keep them top of mind. Typically, there are many opportunities to enhance your COI relationships.

4. What other referral sources have yet to be explored or leveraged?

The two big buckets that financial advisors rely on heavily for referrals are clients and COIs. Beyond that, advisors fail to see other referral sources and their opportunities. For example, belonging to a board or committee gives an advisor a unique opportunity to seek referrals when managed appropriately. A network of people connected to hobbies and special interests also could reveal hidden referral sources. Consider the broad network of all the people in your firm to see the scope of opportunities for new referral sources that are currently overlooked.

Referral Threats

Referral threats are mostly external factors that could significantly affect your practice. Like opportunities, referral threats can be uncontrollable if they catch you off guard. In fact, some opportunities could turn into threats. In some cases, a referral threat may be internal, as you’ll see reflected in the questions that follow. Referral threats could be cultural changes that affect investor behaviors, industry trends, new competitors, negative attitudes or beliefs, or shifts in the community composition, etc. Carefully consider all referral threats that you can imagine at this time.

1. What new competitors or new offers are entering your service area?

On any given day, the landscape of your service area changes. Firms enhance their offerings, move into your service area, re-brand their practice, modify their planning models, and branch out to serve niche markets. Personnel move to different firms, taking their expertise, knowledge, and sometimes clients with them. The threats of competition surround you daily and need to be considered seriously with respect to the impact on your referral capacity.

2. What trends could affect your ability to acquire referrals?

The tendency here is to first consider the noticeable trends in the financial planning market and their direct impact on your ability to acquire referrals. In addition, consider other trends, such as social media, niche markets, artificial intelligence, female and millennial investors, and video marketing.

3. Is the firm relying too heavily on one referral source, rainmaker, or COI to drive new referrals?

In some situations, having one outside referral source or primary COI to drive new referrals could be positive. However, in my experience, all too often, it’s not and should be considered a threat to your referral capacity. What happens if your referral source suffers a debilitating stroke or heart attack overnight or your primary COI moves overseas with her family? This threat is no different than putting all of your clients’ investments in one bucket. What needs to happen to eliminate this threat?

4. What resistance, beliefs, or attitudes exist in the firm that affect your ability to acquire more referrals?

Occasionally, generations and genders clash over their beliefs, attitudes, and ideas. Challenges occur when a top decision-maker influences a firm’s ability to capture referrals by limiting creativity and/or ignoring opportunities to enhance technology and marketing tactics. It can be uncomfortable to admit internal threats exist. However, avoiding them ensures negative consequences.

Looking Ahead

Now that you have listed these important factors in your referral process, think them over to provide clarity in moving forward. Notice, in particular, the glaring weaknesses, shining opportunities, and lurking threats that need to be addressed. Use this information as you strategically plan and allocate time, energy, and resources.

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Michelle R. Donovan is a referral/business coach for financial advisors and firms looking to significantly improve their referral capacity. Reach Michelle at Michelle@ProductivityUncorked.com. For help deciphering this SWOT analysis or purchasing the full version, click HERE.

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