A referral strategy is a key component of your growth plan. Here’s why.

It’s simple: you play a critical role in your clients’ personal and professional lives.

They rely on your ability to advise, track and execute their financial goals and responsibilities, and run a successful business. And your ability to provide this underpins your referral strategy.

Here’s why you should be giving more attention to the potential opportunities for growth this strategy can have for your accounting firm.

Referrals are built on trust

Referral marketing—or word-of-mouth marketing—harnesses the power of client recommendations.

And accounting firms have a unique advantage over most other businesses when it comes to referrals.Share on TwitterShare on Facebook

You’re entrusted to deal with your clients’ most sensitive and important information. You’re responsible for individual taxation, and business advisory and compliance. Ultimately, you play a part in your clients’ success as business owners and/ or financially savvy individuals.

So potential clients need to know they can trust you to do the same for them. This is where your referral strategy comes into play.

People are naturally skeptical of traditional advertising and marketing strategies. And why wouldn’t they be? Companies explaining why they’re brilliant is two-dimensional—you need extra insight.

But there is no form of marketing more powerful than a prospect hearing about the positive, honest experiences of current clients, directly from the source. They need proof that you’re trustworthy, efficient and knowledgeable. And who better to convince them than your current clients?

The impact of referrals by the numbers

There are several reasons why an aggressive referral strategy will supercharge your accounting practice. The proof is in the numbers. Here are some examples:

• A potential client is four times more likely to convert after a friend recommends your firm than a potential client without a referral.

• People view social media referrals as seven times more trustworthy than traditional ads.

• Referral leads convert 30% more than leads generated via other marketing efforts, and have a 16% higher lifetime value.

With four out of five consumers actively seeking word-of-mouth recommendations before making a purchase, the impact is clear.

The benefits of client referrals for your accounting firm

Yes, attracting new, qualified leads to convert to clients is the primary goal of referral marketing. But, that isn’t the only benefit of establishing a robust referral strategy for your accounting firm.

Client longevity

Clients who convert from a referral are 37% more likely to stay with your firm long-term. Not only does this increase revenue, but it decreases new client acquisition costs. It’s a profit margin boost. This way, you can allocate more of your budget to increasing client satisfaction, rather than sales and marketing.

Advantageous ROI

Client referral marketing is far more cost effective than some sales strategies. Your client acquisition cost (CAC) is lower than that of non-referred clients by as much as $23.12. Rather than repeated spending on advertising and marketing efforts, you’re leveraging the good will and loyalty of satisfied existing clients. Some of the expenses you can expect from this method include loyalty program bonuses and referral incentives. 

It’s important to note that your ROI is typically enhanced due to the high-value clients you gain through referrals. So it doesn’t just cost less to acquire new clients through referrals—these clients are usually very loyal and pay for more services.

Enhanced reputation and increased brand awareness

Referral strategies help you expand your market reach and diversify your client base. You might find yourself reaching audiences you hadn’t considered before, which may even help you to identify a market niche.

You can use information from these audiences to provide more personalized client experiences.

For example, if you’ve recently tapped into a client network of nurses, you’ll understand organizing client calls during the day isn’t compatible with their shift work commitments. As a result, you can tailor the way you communicate with them to suit you both. Clients will benefit from more suitable experiences, and your firm will benefit from a reputation boost.

How referral strategies overcome other marketing challenges for accountants

You can leverage your referral strategy to make it the hero of your overall marketing strategy.

Let your happy clients do the talking and set you apart from your competitors.

1. Stand out from the competition

With so much competition, you probably think you need to ratchet up your advertising efforts to attract clients. But consumers are already inundated with ads, commercials, and other marketing tactics. They don’t want more of the same. So, these efforts can sometimes fall on deaf ears. 

Referrals are a welcome alternative. Remember: people find referrals on social media seven times more trustworthy than traditional advertising.

2. Dissuade prospects from the DIY mentality

Tech innovations have convinced many people that their DIY skills are sufficient—even in a complex field like accounting. Fortunately, the real-world experiences of a trusted colleague or business contact may persuade them otherwise. Authentic testimonials from your satisfied clients deliver genuine conviction. 

3. Audience knowledge and your firm’s unique attributes

It’s important that potential clients actually know how your services will benefit them. They need to understand what you will do for them and why you’re the best firm for the job. Referral marketing assigns much of that initial task to your happy clients.

First, build trust as your starting point

It’s all about trust. If your current clients trust you to handle their finances and provide value, then you’re already half of the way to creating your referral strategy.

From there, you can consider the marketing referral strategies best suited to growing your accounting firm.