Building Word-of-Mouth Referrals

Research shows that about 80% of buying decisions, from cars to legal services, are made on recommendation from someone else. It’s that elusive ‘word of mouth’ that everyone says is the best way to promote a law practice, but few know how to generate.

The place to start is with your referral sources.

Do you know who referred your firm’s top 25 clients to you? Does it matter? If your firm is doing well, you may not think so. But successful firms look ahead: if your biggest source of referrals has just been taken over by an international conglomerate with an all-powerful in-house counsel outside of Canada, that demands action. Either get yourself on the GC’s radar or get busy making yourselves known to other referral sources. Prudent firms will do both.

From the above example, you might think that only big firms need to track referral sources. In fact, it’s how they got to be big firms, by nurturing relationships with those in a position to refer work to them.

Referral Sources

First, let’s take a look at who are likely to be your largest sources of referrals. It mainly depends on the type of practice you’re in. The more ‘retail’ practices, like Family Law, Personal Injury, Wills & Estates, and Residential Real Estate can expect their next client to come from almost anywhere: existing or former clients, relatives, friends, or neighbours could be high on the list. Business lawyers, on the other hand, are more likely to receive referrals from their clients’ other professional advisers, such as insurers, lenders, financial planners, accountants, investment bankers, venture capitalists, real estate professionals, health care professionals, or HR professionals.

Most lawyers will receive a significant number of referrals from other lawyers. If a firm is conflicted out from acting for a client, or their client needs expertise that they don’t have in-house, they look elsewhere. The more organized firms keep a database of lawyers and firms with whom they have referral relationships. More frequently, emails go out to the whole firm: “Does anyone know of an immigration lawyer based in…?” Recommendations tend to be classmates, those on the other side in deals or disputes, or those who have referred work to that firm.

If you track your referrals, you may be surprised at how much of your work is coming from other lawyers. Maybe it’s time to put the legal community into your marketing plan—and to think of ways to reciprocate.

Tracking Referrals

In a previous column, I noted that many firms don’t track referrals (“Nurturing Referral Relationships: Write Your Thank-you Notes!”). At minimum, not tracking referrals means that you’re working from outdated assumptions. At maximum, you’re missing prime opportunities to generate more ‘word of mouth’.

In fact, one of the most valuable lessons from tracking referrals is to find out who doesn’t refer work to you. When you analyze your referral sources, you might find a sector missing. For example, if you practice Wills & Estates and find you’re not getting much work from financial planners or accountants, guess where your marketing efforts should be focussed?

It’s sobering to discover that you’re getting more referrals from competing law firms than from your own. That can stem, of course, from internal politics that are nothing to do with marketing. Or, silos being what they are at law firms, your colleagues may simply have no idea what you do or how successful you are at it. Like charity, business development begins at home: start marketing to your colleagues. One of the most successful marketing initiatives I’ve tried is the weekly internal email that’s a roundup of happenings at the firm: deals done, cases won, books published, honours received, etc. It gives rise to all kinds of conversations around the water cooler: “I didn’t know you did that,” “I have a client who needs that,” and “Your client might need…” are the most frequent. Secret for success: keep it short, sweet, frequent, and firm-wide.

There are many ways of tracking referrals, from expensive CRM systems to simply asking the question, “How did you hear of us?” One of the best administrative tools in marketing is the file-opening procedure: it should include how the client came to you. Then in your regular reporting, you should list and analyze your referral sources.

Whose job is it to do all this? If you’re a sole practitioner, you know the answer. If your firm has both a finance department and a marketing department, make sure that recording client origin is part of the regularly reported client statistics—and that those statistics are shared with the marketing department.

Asking for Referrals

This is where the rubber hits the road. Most lawyers are uncomfortable asking for referrals and so they don’t. However, an Altman Weil survey shows that the predominant reason for clients not referring work to their law firm is that they weren’t asked.

On requests for proposals, it’s routine for large companies to ask how much work bidding law firms expect to refer to them and have referred to them in the past. Some ask how much bidding law firms intend to buy from them. Banks track referrals from law firms and refer work to those firms in direct proportion to the number of referrals they have received. Again, sobering. However, my point is that asking for referrals is a common business practice, so get over your discomfort and find graceful ways to ask.

When you’ve just won a case or done a deal for a grateful client, let the person who referred the client know that you were able to resolve the matter to the client’s satisfaction (without breaking confidentiality, of course). Sign off with something like: “Thank you for referring this matter to us. We are happy to have achieved a beneficial resolution for your client. Please consider us again in the future if we can be of service any of your other clients.” And don’t forget to reciprocate: referrals are a two-way process!

That brings up a thorny point: what happens when there’s a balance of trade deficit, so to speak? Depending on your practice and size of firm, you likely won’t be able to refer as much work back to your biggest referral sources as they refer to you. That’s when you must put thought into how else you can add value to the relationship.

Treat your referral sources as you would clients. Find out what they need, know what they’re aiming for in their business development, introduce them to people who can help them, give them recommendations on LinkedIn, invite them to do a guest post on your blog or speak at your next industry seminar, help them to look good to their clients and management.

And finally, speak well of your referral sources. Simple, but often forgotten. One of the best rewards after an actual referral is to compliment the referring source, along the lines of: “And you heard of us through your insurance broker, ABC Canada Ltd.? Oh, you’re in very good hands there. We’ve worked with them for a long time.”

That’s a compliment to you both.

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