Referrals form a significant part of the insurance business and its revenue. In fact, in most cases, prospects reach out to a particular company or advisor based on others’ recommendations.  

There are two types of referrals, active and passive, and they both have the potential to positively impact the growth trajectory of a business. As a financial advisor, when you ask your prospects or clients for referrals, that’s the active form. In contrast, passive referrals come directly to the financial advisor without prompting because of a client’s recommendation and high level of satisfaction with your service and products.  

Although many advisors are not so comfortable with active referrals, it is a great and effective way to market themselves and gain prospects. There is no harm in asking people for referrals. However, if you do your job well, which includes offering assistance and guidance to customers throughout the insurance buying process and beyond, you will continue getting passive referrals, as happy customers will always have your name in their minds. There are high chances that they will refer you to their network for the kind of impeccable service you provide.  

Establishing your position 

In this context, Ravi Agarwal, a five-year MDRT member, shared, “Both active and passive referrals come with their own unique benefits. As an advisor, your responsibility goes beyond selling insurance. You must continue to support your clients in every possible manner. This practice will strengthen their trust in you, and they will eventually start referring your services to their friends and relatives. You must strive to establish your position as a leader who can solve any problem. You must be your client’s go-to buddy for all their insurance needs and queries.” 

A financial advisor must also focus on their marketing skills apart from service delivery. “While serving clients and being there for them when they need you is of utmost importance, it is also essential to market your services well. If they are aware of your offerings, they will surely give it a try, and once satisfied, they will become your advocates doing word of mouth for you. This will not only boost your revenue in the long run but will also help you turn regular customers into loyal clients”, said Sunil Agarwal, a two-year MDRT member.  

Striking the balance  

Some advisors may find it difficult to ask their clients for referrals, in fear of losing them but Ramzina Ali, an eight-year MDRT member, strongly believes otherwise. “I feel active referrals are one of the most effective ways to gather new clients and boost your client portfolio. Similarly, passive referrals underline how well you serve your clients and thus retain them while also attracting prospects without asking them directly. However, to succeed in this line, you must practice both methods.” 

She further added, “When it comes to making the most of referrals, one must design a well-thought referral program that syncs with client needs and preferences. I personally design customer referral templates in the form of profilers or questionnaires to evaluate the client needs, goals, risk appetite, net worth and regular cash flow, and based on these insights, recommend and advise suitable solutions.  

However, it’s not as easy as it sounds as there are a lot of things that need to be taken care of. “To ensure that a referral program is effective, we must do in-depth research on how referrals are coming to our business and from which sources, identify various channels to host such programs, setup tracking mechanisms and follow-up methods, notify clients through newsletters, blogs and product updates, and finally thank the referrer. It doesn’t end here. One must continue experimenting with the latest innovations and unique approaches to improve these programs to reach their full potential,” Ali adds.  

Contact: MDRTeditorial@teamlewis.com