When was the last time you had a mind-blowing customer experience? Maybe your mechanic left you in awe by giving you a free tire rotation for being a loyal customer. Or perhaps your roofer went above and beyond the call of duty by showing up at your house after a storm to ensure there was no damage. Sadly, most of us have to think hard about such an experience. For the most part, great service is hard to come by. But if you are lucky enough to recall that time your real estate agent “wowed” you, can you recall how you felt? If you are like most of us, you wanted to tell someone about it. You wanted to refer.
Positive word-of-mouth influence (WOMI) is essential to a financial advisor’s success – we all know it. Year after year, our research indicates that WOMI is the primary way in which financial advisors bring in new clients. Our focus groups of affluent investors second this notion. They tell us that they select their advisor(s) based on the recommendation of a friend, family member, colleague, or trusted professional.
Thus, having a strategy to increase WOMI is important. But, before you can craft a successful WOMI campaign, you have to understand the psychology behind it. There are three reasons why we recommend products or services:
1. We give recommendations to make ourselves look good. In his book Contagious, Jonah Berger describes the concept of social currency. Just as we use money to buy products or services, we use social currency to make positive impressions in our social network. We like to be seen as someone who is knowledgeable, privileged, and connected. When we give a glowing recommendation, we build social currency.
2. We give recommendations to earn equity with the provider. By referring our network to our service provider we assume we will receive even better service the next time (or maybe a discount). We want the service provider to be successful and see us as an integral part of their success.
3. We give recommendations to help others. We see a need, know a good provider, and give a referral. With great service so hard to come by, it feels good to help our friends, family, and colleagues find the right goods and services.
Sure, there may be other reasons we refer, but these are the main ones. When you understand the underlying motive behind WOMI, you see that a large reason we conduct in such behavior is do to our own selfishness. Sure, the noblest of intentions occur from time to time. But more often than not, we give referrals and spread positive WOMI because it makes us look good.
In knowing why people give recommendations, we can determine what to do or stop doing to increase the likelihood of building this social currency and spreading WOMI. Here are two tips:
1. Stop Asking for Referrals!
If we give referrals to earn social currency (make ourselves look good), being forced to give referrals stifles the process. When our hand is forced, the game changes. Our research states that 83 percent of affluent investors have a negative reaction to being asked for a referral. You feel awkward asking and they feel awkward being asked. Imagine you have a great mechanic that you recommend and after your next oil change he asked you for the names of your friends, family members, or colleagues who might benefit from his services. Do you still feel the same way about your mechanic?
2. Help Your Clients Look Good
Give your clients something to talk about – give them social currency to cash in. Get out of the box. This isn’t about generating the highest returns on a client’s portfolio, it’s about service that’s personal, intimate events that create buzz, surprise and delight touches that ‘wow’ clients and referral alliance partners.
A Buzz Worthy Event
Amidst all the gun control noise, Tom (an avid hunter in Alabama and advisor we coach) held an intimate client event he called a “Buddy Shoot.” He invited six clients and each was told to bring a friend. He hired a former FBI agent/sharpshooter for the morning of the shoot to help everyone improve his or her aim. Tom created social currency by giving his clients and their friends something to brag about after the event – he created buzz. The attendees went home, bragged to their friends about the event, gave their friends tips on shooting (which made them feel smart), and Tom was indirectly inserted into conversations. To date, Tom attributes four new clients as a direct result of this “Buddy Shoot.” The attendees are still talking about the event to this day.
Spreading WOMI is essential to the growth of your business. But you have to go about it the right way. Don’t force the natural process of WOMI; it can have the opposite effect.
Stephen Boswell and Kevin Nichols are thought-leaders and coaches with The Oechsli Institute, a firm that does ongoing research and coaching for nearly every major financial services firm in the US. To take the first step towards coaching, complete the pre-coaching business profile for a complimentary consultation.