New Research Points the Way to More Referrals: Grow and Retain Your Referral Base
Today’s valuation firms rely heavily on referrals to produce new leads and revenues. According to a new study
by NACVA and Hinge Marketing, most firms could be getting far more referrals if they made a few changes to their marketing.
In our study of 354 NACVA members, prospective members, and other individuals associated with the industry, we wanted to discover which marketing strategies and tactics are the biggest drivers of referrals.
Previous research has shown referrals come in two basic flavors:
But we wanted to understand what forces were promoting and hindering referrals in the valuation industry.
Eight Key Factors
Our new research uncovered eight key factors that influence referrals:
When we compared these factors, we found that Visible Expertise was the clear winner:
Visible Expertise Matters
This finding suggests that reputation-based referrals—generated through Visible Expertise—are the single most important factor determining how many referrals a firm receives. Most firms, then, would benefit from activities that promote thought leadership.
The Value of Making Relationships
The next two items, professional and social relationship, together add up to a larger share of the total, but they are very different from each other. Professional relationships are founded on direct experience with the firm, while social relationships are influenced more by reputation, personality, and loyalty.
Quid Pro Quo
Next comes reciprocity. Here we dug a little deeper and made an interesting discovery: firms that make
more referrals tend to receive
more referrals. Most likely, this is because a firm that benefits from a referral feels the need to repay the favor. According to the data, making referrals generates a positive return on investment. In fact, the firms that made the most referrals received an additional 18 percent referrals in return.
The last four items—networking, asking for referrals, social responsibility, and sponsorship—add up to only nine percent of the total. Many firms still rely on these techniques alone to deliver awareness and stimulate referrals. But clearly these four factors are not the only major drivers of new business.
What Kills Referrals?
We also asked participants to identify factors that worked against
referrals. Overall, their responses support the findings we discuss at the beginning of this article—but they emphasize the importance of Visible Expertise even more. More than half of participants
said that a lack of thought leadership and other activities that promote a firm’s visibility would hobble a firm’s ability to generate referrals.
So how do you use these findings to get more referrals for your business? While the data does not answer all of our questions, we believe that new market dynamics, powered in large part by the Internet, are changing the way people and companies find valuation firms. While relationships—both professional and social—remain powerful forces in generating referrals, a firm’s Visible Expertise is the most important single factor.
The good news is, Visible Expertise is completely within every firm’s control. By speaking and writing frequently on topics of interest to your target audience, you can raise your industry profile and extend your reach into new markets. As more people recognize and trust your expertise, the more referrals you will receive.
To learn more about these insights, as well as many others, download the free report
Learn more about Hinge’s NACVA-exclusive services here
The Hinge Marketing resources are part of the Practice Support Headquarters
website. Practice Support Headquarters (PSH) is a place where members of NACVA can find answers and solutions to their questions and challenges. The PSH portal points to well-refined programs and services we have offered for many years. What is special about this portal is that it’s designed to help you narrow in on solutions quickly, as we have organized the navigation of this site, along with our program and service solutions, based on general areas of need.