Client referrals are a time-honored avenue of prospect generation for CPAs. However, coming out and asking for referrals can be a delicate matter to the firm/client relationship. Today’s guest, Stacey Brown Randall, author of Generating Business Referrals Without Asking, shares ways to ensure client referrals without having to be so forward as to inquire about them.

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By: Bill Hayes, Pennsylvania CPA Journal Managing Editor

Podcast Transcript

One of the major ways by which CPAs and CPA firms generate business is by referrals. Seems like fundamental stuff. You do a great job for a client and they tell other people about how wonderful a job you did. However, according to today's guest, there is a right way and a wrong way to go about ensuring you get referrals from satisfied customers. On this episode, Stacey Brown Randall, author of Generating Business Referrals Without Asking will dissect the art of the referral, including the effect it has on the CPA/client relationship when the CPA asks for a referral and misconceptions about referrals that need debunking.

This is probably something that most CPAs know, but I just want to set the scene here: If we can walk through, can you let us know what a referral is and why they're so important for CPAs and CPA firms?

[Randall] You know, it's interesting. When I typically define what a referral is, there's actually people who will be like, wait, I thought I knew what a referral was, but I realized I didn't really understand exactly what makes a referral a referral. I love that we're starting here because I think it's such a good, foundational place to start to really make sure that we're all talking about the same thing, and then we understand why referrals are so necessary.

Let me just set the stage by saying, if I were to tell you that you could have referrals every single year, you would immediately think to yourself, “Yes,” because that's the best way to grow a business. Because typically when I get a referred client, they are easy to close, quicker to close, less price-sensitive, and usually they show up ready to hire me and ready to hire my firm, and just let us get to work. So when you think about why we want a referral, because of all those reasons – quicker to close, easier to close, less price-sensitive, they already trust us. They're coming in understanding what we do for the most part. That makes us want more of them because they're just easier prospects to turn into clients.

Then it makes sense as to what the actual definition of a referral is, which is a referral has two parts. It has one, there's always a personal connection, which means you have a referral source, which is what I call the person who refers someone to you. You have your referral source, who is referring you a prospect, a potential new client. That referral source knows this prospect has a problem, and they transfer their trust that they have for you as a CPA to this prospect, which makes all those things work, and that trust is transferred for the prospect to want to hire you, or at least more willing to have a conversation with you. There's always a personal connection because that's where the trust transfer happens.

The second thing that a referral has is that there is always a need identified. This is a biggie. The prospect knows they are a prospect. They know they're unhappy with their existing CPA firm or they need to actually grow into a larger CPA firm, or downsize, or just change, or get their first CPA firm. Whatever it is, this prospect knows they need a CPA. From that perspective, they know they need to hire somebody, which means they're in buyer's mentality mode. They know what their need is, and they're trusting this referral source to connect them with the right CPA for their business. That is an important piece that most people overlook. Yes, connection from the referral source to the prospect with you, which typically happens over email, though not always, and of course the need being identified, the prospect knowing they're the prospect and that is why they are willing to talk to you about solving their problem to see if you're the right fit.

What I hear a lot of people say is, "I got a referral the other day. A client of mine told me that they told someone else about me and they are going to follow up." The need may have been identified, but they were never actually connected to you. That's just word of mouth or word of mouth buzz; it's not an actual referral. Or I'll hear people say, "Oh yeah, I got a referral the other day. It's great. We're going to meet for coffee next week," when in fact you got connected to somebody, but it was just an introduction because there was no real need identified as in you're meeting with a prospect who needs to hire a CPA. So that's the piece that people miss and they confuse warm leads, word of mouth buzz, or introductions with a referral. Those are actually different types of prospects. We have to understand the definition so that, when it arrives, we know what to do with it and we can actually identify this as a true referral.

You say that referrals can actually help CPAs stop selling. What exactly does that mean?

[Randall] Here's the thing: If there's one thing I know about most people who are experts in their field who go into business, it's to help people. It is not to become the world's best salesperson. I know that's not why I got into business. It's probably like most of your listeners: they didn't go into business because they want to be the best salesperson. They went into business because they're really good at being a CPA and helping their clients.

So when we think about it from that perspective, if we think about all the sales we have to do to be able to help people and to have clients, we still have to sell. We think about all the different types of sales we do, whether it's networking and trying to meet a prospect, cold calling or cold emailing and trying to get in front of a prospect. Whether it's stalking somebody on social media, like LinkedIn, and trying to get in front of a prospect, we have to know how to sell. We have to know how to prod for the pain and figure out do they have a need for a new CPA and talk about how you can solve their problem. We all have to know that. There's actually nothing wrong with us knowing that, and it's an important part of our process.

But here's what changes and shifts when that prospect comes to you by referral, instead of you meeting them at a networking event, or you're doing a cold call or cold email to them, or they happen to just come through your website. When that person is actually referred to you, and this is really important, when they're referred to you, they show up differently. They have a different mentality as being the prospect. Really, you shouldn't be selling, you shouldn't be pitching, you shouldn't be bringing out the brochure and showing them how you're different and prodding for the pain to figure out if they really need you. If you've been set up correctly and the referrals been set up correctly, that's already been done. What you need to do is approach that conversation from a place of curiosity to figure out if you're the right person to help them, and to build on how they're already showing up, which means you shouldn't be selling. You should be walking into a conversation to figure out if you're the right fit.

The dynamic of the conversation changes. You still have to get them to a yes at the end of the conversation, of course, but everything about your language and your demeanor and your confidence should be totally different when you're walking in, be it a phone call, a Zoom meeting, or face to face, to actually have a conversation with someone who could become your next client. If they're referred to you, how you approach it has to look different than if you found them at a networking event.

There's a term out there called fishing for a compliment. I feel like this next one may be kind of falling into that area, though you can correct me if I'm wrong. What effect does it have on a CPA and the relationship they have with their client when the CPA or the CPA firm finds themselves asking for a referral?

[Randall] It's such a good question, because here's the thing. When we think about referrals, it's not like it's only been around for the last five or 10 years that the advice we're given is to ask. We're talking about decades and decades, and more than likely, depending on how long the CPA firm’s been around, generations of believing and teaching other people within the firm that, “Hey, if you want a referral, you just have to go ask for them.” Most of us aren't built to go ask for those referrals because we have that little thing in our gut that was like, “This is awkward and uncomfortable. Am I desperate? Am I begging for business?” Guess what? Most people that teach you how to ask will tell you that that's just your head trash. But I believe if the majority of us feel that way, maybe it's just not the right way to go about generating referrals.

So when you pay attention to why a referral actually happens, why somebody refers you, fundamentally it actually has nothing to do with you. I know that's a hard pill for most people to shallow, but when a referral source is talking to a prospect, your potential prospect, they're trying to solve the prospect's problem. They're trying to help somebody else. “You're in a tough spot. You need a different CPA. Oh my gosh, I know your guy. Oh my gosh, I know you're gal.” We're trying to help that person, and how they're going to help them is by connecting them to you as the solution provider. You're the one who's going to provide a solution. But it's not about you. When you go in asking for the referral, you're asking to artificially create something that doesn't actually exist. So when they even give you names, they're never true referrals because usually no need has ultimately been identified.

Here's the problem: When we want referrals in our business, we have to be able to have a mechanism that triggers them. People think that asking or paying for referrals or being really promotional and gimmicky are the only ways to trigger a referral, or you sit back and do nothing and hope your great work will just give you some referrals and that'll trigger it. The reality of it is, if you understand the human dynamic and the psychology behind why that referral happened, somebody else is trying to help somebody else and you just happen to be a beneficiary of a new client. You understand that dynamic, you understand where these referrals come from, then it shifts your attention to paying it, to really making sure that where you're building a relationship with and with those referral sources who have the ability to refer you.

If all you're ever doing is the triggering mechanism is asking them, asking them, asking them every time they see you, every time the phone rings, they'll start avoiding you at events, they'll start ignoring your phone calls because that's your only triggering mechanism is the ask. And if you're not asking, you're not triggering it. But when you're asking, even if that is your trigger, it's artificially creating something that doesn't exist. What you need is a different type of trigger. What you need is that ability for them to be thinking about you from that referral perspective in a different way so you have a different triggering mechanism because when you ask for a referral and you make it about yourself, you turn off your referral source, and it ultimately short-changes the referral you could be receiving.

A lot of what leads to a referral is a current client having a positive experience with you, right? What areas do you believe need to be focused on in order to provide a client with that positive experience that will then lead to that referral?

[Randall] I definitely think it's like a barrier. It's like the first level of entry. You can't cross this barrier unless you do great work. It's definitely a piece of the process to generate referrals. But here's the thing: Just doing great work isn't going to necessarily guarantee you a referral. I think that's a misnomer out in the industry and every industry is, like, “If I just do great work, referrals will follow.” You cannot build it, they will not come. That's actually not how it works. It’s not Field of Dreams.

The reality of it is, yes, you have to be referable. You have to do great work. You have to have an amazing, what I call, client experience. But that is a foundational, like, check the box, you have that piece in place to make you referable.

But the reality of it is even a happy client, it doesn't owe you referrals. I believe if you do great work, you deserve referrals, but that doesn't mean you're owed them. What we have to do is we have to pay attention to the referral sources, the ones who are referring business to us, they're referring clients to us. The work we need to be doing above and beyond just doing great work and having a great company that people want to refer is in cultivating a relationship with those referral sources, making sure they understand how appreciative we are of their referrals. Using the right referral-safe language, taking care of them in an ongoing way, but not like every day, every week, every month, because that's not the point either. Just making sure they understand, and you coming from a place of gratitude and thankfulness for their referrals, but staying top of mind with them, cultivating the relationship with them, letting them know how valuable they are to you.

That's the piece people don't do because you can't just do great work and expect everyone to refer you. But if you have people referring you and you cultivate a better relationship with them and use the right language with them, then they start thinking about you from a referral perspective more often. And then that is what allows actually that triggering mechanism to happen, where you can receive more referrals.

We've established here that directly asking for referrals isn't preferable. For most, at least. What are the best ways to get those referrals? Without being as forward as just asking?

[Randall] Here's the thing: The way that I teach generating referrals, I tell people you're actually forbidden from asking for referrals and you're forbidding from doing anything that kind of is in the gray area of looking like you're trying to ask, but not trying to ask. Some of those things that I say that are in the gray area of asking, or what I call being overly promotional and gimmicky, is putting in your email signature line or in your e-newsletter, "The greatest compliment you can give me is a referral." Or, "We're never too busy for your referrals." That stuff is actually very gimmicky and promotional. It's the gray area of asking as well. The same thing with offering a referral kind of commission or some type of kickback or compensation for referral; they're all under that asking umbrella, kind of in that gray area.

What you need to do is actually say no to all of the asking advice and all the gray areas that are around the asking advice. You need to pull your referral generation out of your prospecting and your marketing. It doesn't belong in your tactics that are prospecting and marketing. Even if your CPA firm has a business development person that's actually responsible, in addition to your partners, to generate new business, we need to pull out the referrals that they do in addition to any of your firm's partners as well, or anybody who's responsible for bringing in clients, pull out referrals, make it a separate plan as part of your sales strategy, but it's separate from prospecting and it's separate from marketing.

Then what we need to do is identify who refers us now, and then build a plan. This is on a yearly calendar basis. Build a plan to take care of those people in a way that would obviously be authentic to the firm and to the people doing it, but see taking care of the referral source, knowing what language to use, and then taking that plan and who those referral sources are and creating a process and a system like that, which CPAs are usually great at. They're taking that plan to take care of our referral sources, understanding the language to use and knowing who our referral sources are, and creating a process and a system around it so that our triggering mechanism to generate referrals is what we call a referral plan. It's a planned approach of how you're going to take care of your referral sources through outreach, or what we call touch points, throughout any given year.

What we're talking about, we're talking about somewhere in the range of four to eight touch points or outreaches per year. You should not be doing something every day, every week, or even every month when it comes to generating referrals. Because if what you do is actually memorable and meaningful and keeps you top of mind and really triggers and impacts how they feel about you, and then you're using the right referral-safe language, then you don't need to do it that often. Four to eight ... though, I'll be honest, most people fall in the six to eight range of how they're going to cultivate those relationships. That's all you need because referrals only come from relationships. You've got to have a relationship strengthening and deepening mechanism in place.

But that doesn't mean we don't have prospecting and marketing. People still have websites, and they still do ads, and maybe they attend trade shows and have booths. But at the end of the day, your referral plan will be built and will look different. It will keep you from any of the things that you don't want to do when it comes to referrals, asking, paying, and being overly gimmicky and promotional.

Are there any misconceptions people have about referrals or the referral-generation process that should be debunked?

[Randall] We've talked about the biggies. Don't ask, don't pay, don't be promotional and gimmicky. But the other one I tell folks, and it just comes from decades of being drilled into your head. So it's like me trying to shift a decade or generational-long dynamic that people have believed and the belief that they have that, if they won't ask, they won't pay, and they don't want to be promotional and gimmicky, then it's just going to be left up to chance. I would tell folks, there's a fourth option to consider of how to generate referrals. Your referrals should not be left up to chance. Lots of people do it. You get to pick and choose what areas of your business from a business-generation perspective you leave up to chance. But referrals shouldn't be one of them. Of course I'm biased in that.

But the idea here is that if it doesn't just happen naturally, and I'm not willing to do these other things I don't want to do, then I just may not be able to generate referrals. I can't control it. That's actually not true. You can control it. I don't mean you can snap your fingers and be like, “Yeah, give me a referral. I don't mean like that. I just mean that there is a way to take action to do the right thing for the right people in the right way with the right language and referrals to happen. But there is this concept for people that they think I just have to do nothing. Maybe it'll come. Maybe it won't. I'll be happy if it does.

Then I would say some of the other things that people kind of get stuck in is just understanding that even though we want everything to be a silver bullet or an easy button or magic pill, even generating referrals in your business is still going to take some work. It'll be better than you doing all that networking and joining all those leads groups and spending a lot of money on advertising. It will definitely be better than cold calls or sending out cold emails to the vortex, but there's still work involved. We have to understand that piece of it because it is still a way to grow your business, which means obviously it's going to take some work.