Creating engaged clients is a proven way to boost your referrals, says Julie Littlechild, CEO of Advisor Impact Inc. in Toronto.

“Advisors who build deeper relationships with their clients are able to leverage those relationships to drive referrals,” Littlechild says. “It’s an effective way to drive growth.”

According to this year’s Economics of Loyalty survey report, released late last month by Advisor Impact and the Investment Industry Association of Canada, more than one-third of clients who are “very satisfied” with their advisor have provided a referral.

Littlechild offers the following advice on how you can tap into this “organic growth opportunity”:

> Build solid relationships
Because engaged clients are statistically proven to be more likely to provide referrals, you should focus your efforts on building solid relationships with the clients you have.
This strategy is more effective, Littlechild says, than simply asking for referrals.

> When you get a referral, act on it
Too often, clients will provide an advisor with a referral but, for whatever reason, the advisor fails to contact the prospect.

That illustrates the difference, Littlechild says, between a referral “made” and a referral “met.”

If one of your clients has mentioned that he or she has referred you to a friend, be sure to follow up as soon as possible. Contact the person and make arrangements for a meeting.

> Develop a client-feedback program
Soliciting client feedback is an important way to demonstrate commitment and to engaged clients in an ongoing conversation about their financial futures. An added benefit of that conversation, Littlechild says, is that it can help you identify referral opportunities.

Soliciting feedback from your engaged clients on their experiences with you helps you to identify what you are doing well and which components of your service have moved them to refer you to others.

> Tell stories
Many advisors still communicate their value in technical terms that focus on how they manage wealth, Littlechild says.

Most clients, however, see the value in working with an advisor based on the impact they can have on their lives and their financial futures.

“Clients think more about the results of what an advisor does,” Littlechild says, “rather than the process of how they do it.”

So, you need to speak the same language as your clients in order to develop deeper relationships. A good way to communicate your value with your clients is to craft some engaging stories that will help your clients understand the value you bring to the table.

Stories are also a good way to make use of what you’ve learned from your client-feedback program.

Says Littlechild: “The more advisors can do to help clients understand what constitutes a need for advice, the better.”

This is the third instalment in an occasional series on how client engagement can benefit your practice. Next: How to develop a client feedback program.