Two birds, one stone

Professional services have woken up to the true value of client relationship management (CRM) in recent years. More importantly they've realised that CRM is about relationships and old-fashioned human interaction rather than software.

However, in a world where clients could well be one-off purchasers, is a well-timed email update or birthday card ever going to create more than a trickle of referrals to family and friends? My question is: with all this focus on the client, who's taking care of your referrers?

Private client work is still heavily driven by warm introductions and recommendations from other professionals making referrers your single most productive source of new business. Yet the majority of fee earners still rely on what's in their heads to manage referrers and nothing more scientific than instinct to measure the return from each relationship.

This is why I strongly advocate a change of tack. Heavily subsidise your CRM with a generous dose of RRM (referrer relationship management).

It's the idea of more measurement that often puts people off structured referral management. With new business it's easy: you get a call, get a job and everyone sees the result. With referrers it works the opposite way. You don't notice they've gone (most likely to one of your competitors) until the flow of work you took for granted stops.

I'd be more challenging when it comes to not taking active care of referrers. If your firm was to stop all its advertising and sponsorship tomorrow, you'd notice a minimal difference to the level of new enquiries your firm generates. However, if you were to stop all contact with your key referrers, it would have severe repercussions on your pipeline almost immediately.

And from a profit perspective, surely losing the expensive activities that deliver little, and investing a bit more in the inexpensive activities that produce work will have a positive impact on your business?

To be honest, I've lost count of the fee earners who have told me they can't market because they can't target. That said, they still invest frighteningly little to maintain, maximise and expand their referrer network.

Red flag

This is a dangerous strategy. The immediate effect of avoiding/ignoring/sidestepping that investment is you'll miss out on work here and there. The real red flag is your competitors covet your relationships with those referrers that genuinely generate work as much as they covet the relationships you have with your clients. In fact, it's arguably more so because the referrers are more likely to deliver regular work.

If you're not making regular contact, trying to pass work back and generally making the relationship worthwhile, you run the risk of creating distance that your competitors will fill quickly and hungrily.

So what should you do? No more than put in a little time and effort.

Having a coffee here or making a phone call there are all activities that can be fitted around billable work. But they're investments that will pay back in spades. In fact, many savvy fee earners now kill two birds with one stone, asking which events contacts are attending, meeting them there and using the opportunity to form new connections and expand their network.

What we're really talking about is managing your referrer network in a more systemised way, making sure you see everyone, ensuring you know who generates work, and making sure you are passing work back to the people who send work to you.

Access to this information will flag up where there's a disconnect between the levels of work being exchanged and point out where you need to have a grown-up conversation or even find alternatives. This may not sound appetising, but why spend the little time you have with contacts that don't deliver when you could spend more time with those who do?

The next step is segmentation. Balance the time you have available to manage your referrers according to return. Those who deliver the most should get the most time and expense, the second group slightly less, and those who you know but don't produce work even less. In fact, contact at that level could be electronic and automated to save even more time.

Douglas McPherson is director at Size 10 1/2 Boots

He writes a regular blog about marketing for Private Client Adviser