The essential elements of a referral strategy that actually works

One form of marketing trumps all others for accounting firms: word-of-mouth.

There’s no surer way to bring in more business to your accounting firm than a referral from an existing client. 

Referral business is low cost, builds unmatched trust in your brand and team, and often requires minimal effort.

Plus, the likelihood of new clients being great clients (i.e. profitable and enjoyable to work with) is high when they’re referred by your existing great clients.

So why do so few accounting businesses have a referral strategy?

Here are the essential elements you need for a successful referral strategy for your accounting practice.

This method is proven to work and puts no pressure on your current clients—a thought that deters many from seeking referrals. 

Ultimately, it creates a harmonious cycle: bring in new clients who organically create other clients, who organically create more clients. And on it goes.

First things first: create capacity

There’s no point in creating a referral machine when you don’t actually have the capacity to manage additional business. You need to set your firm up to handle referrals.

According to Jamie Johns, CEO and Founder of Sky Accountants, around 80% of accounting firms in the Wize Mentoring program don’t have the capacity or time to take on new leads. 

Your capacity is like a glass of water. If it’s already full, you just can’t keep filling it. It will overflow, and your firm will be overwhelmed.
Jamie Johns, Sky Accountants

And the solution is to correctly plan your firm’s capacity. By doing so, you can understand if you need more staff to handle additional business, and if so, how many. Or maybe you don’t need more resources at all—you just need to restructure or redeploy your current team.

Recommended reading: The A-Team Playbook

The last thing you want to do is overwhelm your team because you haven’t assessed your firm’s current capability to serve referral business. They will suffer unnecessarily, and ultimately, their productivity will decline and your firm’s culture will take a hit.

Focus on your client relationships

At the core of a solid referral strategy is your ability to build strong client relationships. If you don’t have that, then your clients won’t refer anyone to your accounting firm.

A simple way to build trusting, long-term relationships is by understanding what your clients value, and delivering that value.

Jamie explains that this value begins with explaining your client’s finances to them in a way they can understand.

Generally, clients don’t understand their financial statements or their tax returns. What they really value is your ability to make the complex simple.
Jamie Johns, Sky Accountants

And as your practice grows, it’s important you don’t lose sight of this.

Shift gears to meet their level

Being able to shift gears to deliver information to your clients in a way that they can understand is key to building trust. And it’s your responsibility to find their level and match it.

For example, if your client is in the construction trade, their communication style is likely to be very different to a touring musician or medical professional. So you need to adjust your communication style accordingly.

Build the emotional bank account, and then watch the referrals come in.
Ed Chan, Wize Mentoring

Recommended reading: Eliminate client complaints, even when mistakes are made, with a strong emotional bank account

Deliver consistently

Remember: you want like-minded clients to refer like-minded prospects, so focus your energies on getting referral traffic from your best clients. 

But at the same time, the client you deliver the least amount of work for might have the biggest network—so it’s important to deliver high-quality and consistent work, consistently.

Hire the right people with the best communication skills

There are basic fundamentals to remember when building strong client relationships, particularly regarding communication: don’t talk over them, and don’t alienate them by using jargon.

But this doesn’t come naturally to everyone. That’s why it’s important to hire the right people to fill your client-facing positions.

These staff members can be referred to as ‘Finders’—your best communicators with excellent interpersonal skills who have the ability to simplify complex tax issues.

Recommended reading: How finders, minders & grinders fit in a modern practice

Create opportunities to demonstrate your value

It’s not enough that you understand what your clients value—you need to showcase it.

Understand your value

Other than clear communication, there may be other reasons your clients value your service.

Ask yourself:

  • What is it about your firm that your clients love? 

  • What will they tell others about?

If you’re unsure, ask your current clients for feedback.

Find ways to demonstrate what your clients love

When you understand what your clients value, you need to find ways to deliver that value. By doing this, you strengthen your relationships and delight them along the way, which all leads to referral business.

For example, before finalizing major work, the team at Sky Accountants makes sure they book a client meeting first to explain the what, why and how.

We don’t just send the work out. We take clients through the journey about how we arrived at the end result. We take the time to explain it to them. This is something our clients really value.
Jamie Johns, Sky Accountants

Create a referral strategy process and train your staff on it

Similar to not having the capacity, if you don’t have (and communicate with your team) a formalized process for handling referral traffic, your referral strategy will never become the well-oiled machine you want it to be.

Your team needs to understand the entire process, including:

How should you ask clients for referrals? Should you at all?

According to Jamie, it’s not so much what you do, but how you do it.

For example, at the end of a client meeting, you might say to your client, “Okay, do you have any referrals for me?” This is an uncomfortable position to put your client in and isn’t the most effective way of generating referral business.

Instead, at the end of the meeting, ask them for feedback. And, as Jamie does, let them know that if they received value from this meeting, perhaps they might know others who might be interested in receiving the same value.

This is an indirect way of asking for a referral—you’re planting the seed.
Jamie Johns, Sky Accountants

Should you offer an incentive to generate referral business?

Firstly, it’s important that your referral strategy is standardized, documented, and clearly communicated to your staff. This way, your team knows exactly what to do when you receive referred enquiries. 

Without this consistency, there will be barriers to converting them, including inconsistent discounts and/ or delayed service while your team members check with you if they can offer said discounts.

For Sky Accountants, the next step is to offer a free one-hour consultation with any business owner.

Loss-leaders like this are those tasks and services that you can provide to prospects either for free or heavily discounted. The idea is that they’re likely to sign your proposal if you can prove to them you can provide value from the get-go.

Loss-leaders can be any common function of your accounting practice. For example, startups and existing business owners are often looking to restructure their business and/ or change entities. This is something you might consider providing for free to showcase your value and secure their long-term business.

Other loss-leader functions might include:

  • Transfer their books onto the cloud

  • Recommend and transfer their books from one accounting software to another

  • Provide a basic financial health-check

Over the years, Sky Accountants have completed these common functions at cost price. You might not make any money from them, but what you’re really interested in is the resulting recurring income.

Find and track the KPIs that matter

You can’t improve something, like a referral strategy, if you can’t measure it. So it’s important to understand the metrics you’ll use to define referral success for your firm.

“When you track KPIs as a firm owner,” explains Jamie, “it allows you to be in control without being controlling.”

“You don’t want to micromanage people—you want to microtrain them in your carefully created processes and then monitor their progress.”

Conversion rates

The first KPI to track is your conversion rate: from all the referral leads you receive, how many are you actually converting to paying clients?

This will directly address your firm’s ability to deliver on your ultimate goal of turning referred prospects into paying clients. It can also uncover areas of your strategy that may need work.

If, for example, you’re only converting 20-30% and you have one team member dealing with this conversion, then you know you’re likely going to need to further train them. 

Or if you have one person converting at 25% and another at 85%, you need to understand the reason for the discrepancy—and then adjust accordingly.

New fees vs. fees lost

What fees are you winning and what are you losing? 

If you’re winning referrals at the same pace (or slower) than you’re losing existing clients, then you have a whole other issue on your hands.


Finally, your Net Promoter Score (NPS) is a huge indication of referral success. 

Measuring your firm’s client satisfaction using NPS helps you understand how your firm is stacking up against the single most important question regarding your referral strategy:

“On a scale of 1-10, how likely are your current clients to refer your firm to a family member or friend?”

If your firm consistently scores a 9 or 10, your clients are loyal and enthusiastic about referring your accounting business to their network. This is a clear sign your referral strategy is working.

On the other hand, if your firm is consistently scoring 0-6 to this question, your clients are unhappy and likely to churn (and potentially damage your brand by sharing their bad experiences). You need to prioritize enhancing customer service at your firm.

For those firms scoring 7-8, your clients are indifferent to your services. Take the time to understand what they value, and deliver that to them.

Start on your referral strategy today

Here are the steps you can take today to get your referral strategy firing:

1. Assess the capacity of your client managers

You simply can’t grow your firm if you don’t have the capacity to do so.
Jamie Johns, Sky Accountants

2. Prioritize your client relationships

Ensure you’re delighting them, informing them and matching their level of understanding and comprehension. 

3. Find out what your clients love about your firm and what they’re likely to tell others about.

Ask for feedback—good and bad.

4. Formalize your communication policy with your clients

Inconsistent and ad hoc communication will not reliably generate referrals. Formalize and document the processes your firm should be taking when generating, securing and managing referral traffic.

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