Do you have enough of the right referral sources to grow a practice?
According to a recent survey by PSM Marketing, 46 percent of your new business comes either directly or indirectly through a referral source. When I put that statistic up on the screen, some partners challenge that the percentage is even higher in their practice. So, what does that tell you? For me, it tells me just how critical the role that a referral source network plays in practice growth.
The very next question that I think of is, knowing this, is your referral source network as strong as it should be? For many of you, the answer is probably no.
How many high-quality referral sources do you have?
For the past 10 years of my career, the record for the number of high-quality referral sources stood at 25. This was a number reported by a rainmaking partner in a construction practice at a large local firm who consistently brought in $250,000 of new work per year. How does that compare to your numbers for referral sources and new business revenue? The reality is that most CPA firm partners have fewer than five referral sources, and the new business number is significantly lower as a result.
My recommendation has always been that you need a minimum of 10 high-quality referral sources to grow a practice. High quality means these referral sources can be counted on to send you at least one high-quality referral per year. That is defined as in your sweet spot and, generally, not competitive.
But where do these high-quality referral sources hang out? How can you meet them and build a relationship with them? At the "west suburban high-quality referral source networking event?" Unfortunately, if it was that easy, we'd all have 25 great referral sources. The typical networking events at a chamber, business journal event or other general large format business event oftentimes don't have enough of the right people who can be great referral sources, and they end up feeling like a waste of time.
Start where you know
So, where should you go to find the best ones? Start with your client base first.
That's right -- every one of your clients has a circle of influence of people they trust. This includes you (hopefully!), their banker, an attorney, financial adviser, specialty consultant, trade group friend, top client and top supplier. It turns out that your client base is indeed the nucleus for great referral sources. All you need to do is have the confidence to ask for an introduction and you will be on a journey toward more and better-quality referral sources before you know it.
Bottom line: If you'd like to build a network that influences nearly half of your new business for the rest of your career, start with your clients as the easiest and, perhaps, most influential place to find them.
In the MNCPA Business Development Academy, we cover this topic -- and many others -- in detail, giving you tools to create even more business-building opportunities for your firm. If you're looking to grow revenue and improve your business development skills, consider signing up.