So…What IS a Referral?

The process of directing or redirecting (as a medical case or a patient) to an appropriate specialist or agency for definitive treatment. An individual that is referred. An act of referring; the state of being referred. A person recommended to someone or for something. A written order from your primary care doctor for you to see a specialist or get certain medical services.

As an advisor, rep, agent, broker, planner, wholesaler, or other sales producer, is that what you mean when you say you would like more referrals?

Probably not!

There are those that don’t like the term “referrals” because it sounds too clinical or too much like a term straight out of their HMO Primary Care Service Providers handbook.

Like it or not, the term “referrals” is here to stay because it’s part of the wiring in so many industries, including insurance and financial services. You can change the name or call referrals what you want as long as you are generating the type of relationships to effectively grow your practice.

What is a referral? BaldwinHere’s why the whole “referral” thing gets confusing. Producers often use the terms “referral,” “introduction,” “favorable introduction,” “connection,” “contact,” and “lead” interchangeably. But they’re different and it’s important to make the distinction. Beauty is in the eye of the beholder.

My favorite reference to a referral is when a residential real estate agent says, “A good referral for me is the mailing address of houses with a For Sale by Owner (FSBO) sign in the front yard.” Realtors, especially new or those struggling, must find themselves knocking on a lot of doors.

Anyway, here’s my take!

Referral
“Here is the contact information for my neighbor Bill. We were discussing life insurance yesterday over my back fence and he said that he and his wife need to get coverage now that they’re settled in their new home. Since you’ve been my advisor for so many years, I mentioned you to him and he’s interested in speaking with you. Bill is expecting your call to set up some time to discuss.” I think of a referral as an introduction to those ready to become a client. A “true” prospect!

Favorable Introduction
These days, FI’s are typically made through email. “Bill, I’d like to introduce you to Tom. Since you are a seasoned and successful accountant with a client base of mostly small business owners and Tom is a well-established financial advisor targeting the same type of business owners, I thought you would be tremendous resources for one another. Please coordinate and let me know how I can be of service to both of you. Good luck!” Of course, these introductions can be situational and may happen at a networking meeting, holiday event, or even in social settings.

Contact
Ever have someone give you a scrap of paper or a beverage napkin with someone’s name and contact information on it? Maybe you’ve reached out to someone randomly through social media that has no relationship with anyone you know. Or you’re making calls off a “leads” list. Remember the scene in the movie Glengarry Glen Ross? “The leads aren’t weak. You’re weak.”

Anyway, I would consider any name of someone that you don’t know – that doesn’t know anyone you know – a contact. When you’re a new advisor, this might seem like the world. Ironically, it’s hard to make contact with a contact.

Lead
“Give my neighbor Bill a call. He just moved in next to me with his wife and they no doubt need to discuss life insurance. Here are their names and phone number. Feel free to give them a call and use my name.” I view a lead as someone offering you an opportunity with all the best intentions but without “setting the stage” for the two willing participants – you being the financial advisor and Bill being the “probable” prospect. As the advisor, it’s best if Bill can be notified by the “match maker” to see if he would take your call. If that happens, it will be a much more successful call. Ah – a referral!

The terms “introduction” and “connection” seem to fall somewhere in between favorable introductions and referrals. Of course, “connection” means something completely different on LinkedIn, just like “friend” has its own meaning on Facebook. “Follower,” well, that’s another story for another day. It’s all semantics, really.

Whatever term you use, the important thing is to understand (and have your prospects, clients, and referral sources understand) exactly what you mean and what you’re asking for. So be very careful what you ask for.

Otherwise you could find yourself knocking on a lot of doors.

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