It’s no secret…
Consultants and other service professionals love referrals. A recent study from the folks at ConsultingSuccess shows that over 55% of consultants get 60% of their new business from referrals. It’s also the area of marketing that brings them the most money.
But can consultants live on referrals alone?
The answer – as any good consultant will tell you is – “it depends”. It depends on:
- your financial goals
- your average sales amount and
- your Return on Relationship or ROR
ROR is the return you get from your portfolio of relationships (repeat business from current and past clients plus business from referrals).
A good ROR to shoot for is 20%.
That means each relationship your portfolio generates one new transaction for your business in the next 5 years.
If you had 100 people in your relationship portfolio. At a 20% ROR, you’d generate 20 new transactions.
What would that do for your business?
Would those 20 transactions be enough to meet your financial goals?
Many people find they need to make a shift to reach a 20% ROR. They need to move from passive and reactive referrals to orchestrating them.
Passive referrals are those that come to you. Someone calls or emails you and says “Hey Bill, this is Bob. I’m looking for some marketing help and Dan said I should call you.” These are the most common type of referral.
Reactive referrals are when someone tells you about their friend and you have to call (react) them. They sound like this – “Hey Bill, this is Dan. I was talking to my friend Bob and he said he was looking for some marketing help. You should give him a call”.
An Orchestrated Referral happens when you do something to trigger a referral. For consultants, that “something” consists of:
- Reaching out on a consistent basis
- Telling how to recognize conversations about what you do, and
- Giving them an easy way to help their friends while connecting them to you.
What should you do if your main method of marketing is referrals and you’re not meeting your financial goals yet?
If a 20% ROR will help you meet your goals, but you’re not quite there yet, work on orchestrating more referrals. Put together a list of 100 – 150 people and start reaching out to them on a regular basis.
If your goals are greater than what a 20% ROR will provide, then:
- Continue to work on improving your ROR and
- Explore other ways of marketing. There are many ways to promote your practice. Pick one that you enjoy doing…so you’ll actually do it consistently over the long haul.
Want help improving your ROR? Contact me for a free strategy session.
Credit where credit is due – I learned the concept of ROR from one of my marketing mentors – Dean Jackson.
