Last week: Take a critical look at your website. Or have a friend take a hard look at it for you. When 81% of buyers of professional services say they evaluate experts, in part, by looking at their websites, you don’t want something that is just “good enough.”
This week: The holy grail of our practices is a stream of referrals. But it doesn’t have to be an endless stream, just a manageable one. Calculate how many you need.
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If it’s true that you are the average of your 5 closest friends, what deliberate steps are you doing to improve your circle?
Hey! Rod Burkert here.
And welcome to my Practice Development Corner.
Today, I want to discuss how to calculate the number – literally, the number – of referral sources you need to sustain your BV practice.
If you never really thought about this before, it will be worth the watch, so let’s keep this rolling.
As most of us know, the holy grail of our professional practices is a stream of referrals.
But it doesn’t have to be an endless stream, just a manageable one.
As you might suspect, it turns out it’s a numbers game.
And like most things we do, there’s a mathematical formula for it. Here it is:
Start with the annual dollar revenue you need.
Divide that by your expected average fee per engagement.
Divide that by the number of referrals your average referral source can likely get you.
Divide that by the “win rate” you have on your referrals.
That equals the number of referral sources you need.
If you need $300,000 of revenue … have a $10,000 average fee per engagement … get 3 referrals per year from your average source … and a 75% win rate … you need about 13 different referral sources to reach your revenue goal.
And if I may add, 13 would be the number THAT YOU ENJOY BEING WITH ENOUGH TO CULTIVATE AND NURTURE.
If you didn’t get all the formula components, look in the comments section of this video.
If you want to reduce the number of referral sources you need, it’s easy to see which levers to adjust: average fee per engagement … number of referrals per year per source … and your win rate.
Now how do you get those referral sources?
Well, that’s an ongoing subject for my future videos and newsletters.
But here’s a tidbit.
Hinge Marketing reports that almost 82% of firms get referrals from people who have never worked with them before … mainly as a result of word-of-mouth attributable to an expert’s speaking and writing efforts.
That’s it for this episode.
What is your experience with referrals? Do you ask for them? When in the engagement process do you ask? Are you getting referrals?
Let me know by taking just a few seconds to like, comment on, or share this video.
Thanks for watching!
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