Business Development


Business Development Best Practices— Part III: Working With a Referral Network

In the last two articles, we covered developing a business development plan and the importance of a strategy and consistency of execution. This article will focus on your referral network: identifying the right partner and establishing service models that work.

You receive a proposal request from an Advisor, you attempt to discuss plan design options and ask to be involved in the sales process only to be told, “thanks but I can handle the meeting myself, just send over the proposal with your fees…and would you put a rush on that?” Sound familiar? How do you avoid wasting time on these Advisors and develop a network of Advisors with whom you can truly partner?

The first thing you should do is take stock of the current referral sources in your database. Identify those relationships that are successful. What does that mean? Are they someone who considers you to be a partner, do they bring you good prospects, and do they consistently bring your firm new business? Develop a list of the characteristics these Advisors share such as:

  • A retirement plan focus;
  • In business for a certain number of years;
  • Respect for you and your business;
  • A certain amount of assets under management; or
  • Similar personal interests as you, such as golf, a favorite charity, or children in the same school.

From that list, you can establish a profile of what your best referral source partners look like. This will help you to cull out those that do not meet the profile requirements and are, therefore, not your best partners. In addition, you can use this as a guide when seeking out new referral sources.

Once you have completed this exercise, the next step is to segment your referral network. Segmentation is a filter system that helps you to successfully focus your efforts. From the list of positive characteristics you identified, determine how many are required for an Advisor to hit your A level, and then move down from there. For example, you may determine that, in order for an Advisor to be considered as an A relationship, he or she should have at least five of the characteristics you identified, whereas a B relationship may have three to four, C two, and D one. After developing your system, segment your existing network by assigning each referral source to the appropriate category based upon their number of positive characteristics.

You now have a segmented referral network; so what does that accomplish? Not much yet, as you need to develop a service model for each segment. This is all about pouring on the love where it counts and not wasting your time where it does not. What I am talking about is focusing your efforts where you have the most to gain. Your best relationships are those you should work the closest with, so institute a service model that supports those Advisors and their clients at the highest level. For instance, you could have a schedule for a certain amount of face-to-face meetings, phone call and email response times, proposal turn around, sales support, appreciation events, and gifts. On the flip side, the D Advisors would not get any support; they should receive only services that require no extra effort, such as electronic newsletters or invitations to educational seminars. For the B and C Advisors, the models would fall somewhere in between.

Keep in mind that your business development efforts do not end with your sales team, but include your entire staff. Each touch, from onboarding a plan to ongoing administration, can affect the relationship your firm has with its referral sources. I recall, from when I was a TPA, one Advisor in particular that could bring our firm up to 35 plans year after year. In her mind, that gave her the right to be somewhat demanding and I would say, within reason, rightfully so. There were many times that the staff would put off responding to her phone call because they just did not feel like dealing with her at the moment. While I understand that dealing with someone who is demanding has its challenges, this was unacceptable due to the relationship our firm had with that Advisor and the negative effect it could have on her continuing to bring us new business.

To develop and maintain a solid referral network, everyone at your company needs to be on board with the services standard models. Involve representatives from all areas of your business in the segmentation and service model exercises. Document both and communicate them to the entire staff. Ensuring that each staff member knows where to find the information and what their role is in the process may require training nd education. And, most importantly, you should be clear that what your staff does affects the relationships your firm has or is trying to build.

Each referral source’s category should be clearly identified in your contact management system. All other systems your firm uses should contain this information as well, so that when a staff member pulls up a plan, he or she recognizes the Advisor relationship and understands the service level afforded to the Advisor.

A final thought: the concept of partnering with your best Advisors is an important one. Believe it or not, Advisors are looking for partners—firms that are interested in their business, and how they can best support prospecting efforts, the sales process, and ongoing client services. Take the time to understand the Advisor’s business—know their challenges so you can develop a relationship that is mutually beneficial. Recall in the last article the discussion on the development of policy, processes, and procedures. The Advisors interested in partnering with your firm are those that hit your A and B categories and are those relationships on which to focus. Do not waste your time, resources, or money on those Advisors in the C or D levels; they typically spreadsheet your firm as part of their “due diligence” process and even worse can erode your brand and commoditize your firm. The process of segmenting or identifying those relationships that are your best and developing associated service models will drive success and profitability for your firm.

The final article in this Business Development Best Practices Series will cover dedicated sales models that work. It is not “one size fits all,” as each firm is unique, so stay tuned for some ideas as to how your firm can employ dedicated efforts in a model that works best for your situation.

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