michael
THE 5 MINUTE FRACTIONAL CFO

096: 4 Steps to Building a Great Referral Network

Sep 15, 2024

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096: 4 Steps to Building a Great Referral Network

Sep 15, 2024

 

Today, I'm going to teach you my four-step process for leveraging the power of referral partners to get more leads in your Fractional CFO firm.

If you build healthy relationships with the right people, referral partners can be an excellent resource for finding more qualified leads for your firm. The best part? Referrals like these are typically already warm (or hot!), which increases your chances of closing even more.

The problem is that most people treat referral partners transactionally instead of relationally, which results in zero referrals and a lot of wasted time.

10 nurtured referral partners are far better than 100 connections you never follow up with.

The value proposition of investing in great referral partners can be immense. When done correctly, referral partners are a great source of:

• Warm leads
• Speaking opportunities
• Industry insights and trends
• New friends to go golfing with  

Here's my four-step process to find and nurture referral partners. Let's dive in.

Step 1: Research

The first step in developing your referral partner network is research. I begin by considering the type of clients I typically want to serve (also known as my Ideal Client Avatar or niche).

I then brainstorm others who serve the same types of clients. Here's a list to help get you started:

• Coaches
• Consultants
• Thought leaders
• Industry veterans
• Marketing agencies
• Business attorneys
• Wealth managers
• Tax preparers
• Bookkeepers 

Collect as many companies and names as possible.

 If you're not sure where to start, let Google and ChatGPT become your friends. Let's say your niche is marketing agencies. Maybe you want to connect with bookkeepers who serve those same agencies. 

Head over to Google and search "bookkeepers for marketing agencies."

Or go to ChatGPT and ask it to list 50 bookkeepers that serve marketing agencies.

In my research, ChatGPT does a much better job than Google when searching for thought leaders and coaches in a given industry.

LinkedIn Sales Navigator has also proven to be very useful for research as well.

If you're not the niching type, all isn't lost. You can still have tremendous success by just connecting with business attorneys, bookkeepers, CPAs, or business coaches. 

 

Step 2: Outreach

Now that you've prepared your list, it's time to reach out to them.

LinkedIn is hands-down my top tool for this step. I find those individuals on LinkedIn and send them a connection request.

There are two ways you can go about this:

You can send them a personalized note with your connection request or not.

In my experience (and your mileage may vary here), the acceptance rate on connection requests is almost the same whether or not I send a personalized message. I typically see a 25-35% acceptance regardless of which method I choose.  

When I'm working hard to build my referral network, my goal is to send out 100-150 connection requests per week. 

Be careful, though! If you try to send too many requests on any given day, it may upset the LinkedIn algorithm gods (which means they may suspend you from sending more connection requests for a time). To mitigate this risk, I usually cap connection requests at 25-50 per day. 

Step 3: Connection

Once someone accepts your LinkedIn connection request, you can temporarily enjoy the benefits of the quick dopamine hit - but now it's time to get to work.

I start by sending them a DM thanking them for connecting and asking a simple question about who they work with. 

It might look something like this:

Hey Mike!

Thanks for connecting.

I noticed that you work with a lot of marketing agencies?

-MK

In my experience, up to around 50% will respond to a DM like this. 

Once they respond, I become interested in them and their business. Over the next few DMs, I will ask questions to learn more about them, who and how they serve, and what challenges or issues they're seeing.  

My goal is to quickly reach a point where it feels natural to ask them if they'd be opposed to hopping on a Zoom call so we can learn more about each other and see if there are any ways we might be able to serve our common audience/clients.

Make no mistake: the primary goal of this step is to move the conversation out of the DMs and onto Zoom.

Once you're on the Zoom call, continue the practice of just being interested not just in their audience, but in them as a human being!

I get interested in things like:

How they do biz dev
What they do for fun
What their values are
Diet Coke or Diet Pepsi
How they got into business
What challenges they're facing
How long they've been in business
What they enjoy doing with their family
What challenges their clients are facing 

(Make sure you take notes. The things they tell you will become useful in Step 4.)

There will inevitably come a point in the conversation when they ask YOU similar questions in return.

Note: Be sure to include the types of clients you work with and the types of problems you help them solve! Your potential referral partner needs this information if you want them to actually refer anyone to you! In fact, I like to ask, "Who comes to mind that might benefit from that kind of help?".

In my experience, these conversations organically go in one of two directions: you're either energized and have found some potential ways to work together... or the conversation was a dud.

Both of these outcomes are OK.

Schedule a next call with the good ones and walk away from the duds.

 

Step 4: Nurture

There's nothing worse than making a great connection with a potential referral partner - and then doing absolutely nothing with it!

Truthfully, this step is where most people fail. All of the time and effort you invested in steps 1-3 are for naught if you don't nurture the referral partner relationships.

Fact: I don't usually get any referrals until somewhere between the 4th and 8th connection with a given referral partner. Referrals are based on relationships, and relationships take time. 

OK. Nurturing is important, but what IS nurturing?

I think of it as the process of me proactively reaching out and genuinely being interested in what's going on with their lives and their businesses. 

You can reach out via email, DM, text, or video message—whatever works best for you. 

I've found it most effective to ask questions about the things they shared with me on the connection call.

How's that client doing?
How did your daughter's graduation go?
What's working well for you in business right now?
Did you end up running that 10k you were training for?
What happened with that talk you were going to give?  

One question that invariably comes up is, "How often should I reach out to referral partners?"

The answer is that it depends. If you have a referral partner who is actively teeing you up business, I'd suggest you reach out at least monthly. For others, you might just reach out once a quarter or a few times a year. 

I also think it's important to get face time with your best referral partners. For the really good ones, you might want tohave a monthly 30-minute Zoom meeting to catch up. 

The key is to be genuinely interested in the other person and to stay front of mind with them so they think of you when opportunities arise!

Summary

Referral partners are still one of the best sources of new leads for my firm. In fact, three of the last four new clients I've signed came from referral partners.

Remember, people aren't usually willing to make a referral until trust is established - and trust takes time. So you have to put in the work if you want this strategy to pay off.

Whenever you are ready here's how I can help you.

One of the biggest lessons I've learned in business is that the companies at the bottom are competing while the companies at the top are collaborating

That's why I've invested in so many masterminds over the years and that's why I host my own Fractional CFO masterminds today! 

I'm hosting the next Fractional CFO One-Day Mastermind on October 22, 2024 in Dallas, TX. Join me and 10 other firms as we solve problems together, brainstorm, and challenge one another. 

We are limiting the mastermind to a max of 10 firms and 6 spots are already taken.

📌 Click HERE to learn more! 📌

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