“Referral marketing is a structured and systematic process to maximize word-of-mouth potential,” according to Wikipedia. “Referral marketing does this by encouraging, informing, promoting and rewarding customers and contacts to think and talk as much as possible about their supplier, their company, product and service, and the value and benefit the supplier brings to them and people they know. Referral marketing takes word-of-mouth from the spontaneous situation to one where maximum referrals are generated.”

A study conducted by the Goethe University Frankfurt and the University of Pennsylvania on referral programs and client value found that referred clients were more profitable and more loyal than normal clients. Referred clients had a higher contribution margin, a higher retention rate, and were more valuable in both the short and long run. But none of us in the legal services arena needed a study to tell us about the value of referral marketing. Referrals are the most cost-effective and most productive marketing that can be done by an attorney.

But to exploit the promise of referral marketing, you must be organized and diligent in managing your referral network.

WHO IS YOUR REFERRAL NETWORK?

Depending upon your practice, your network of referrers can range from existing and past clients, alumni of the firm, law school buddies and other attorneys in the firm to bankers, accountants, consultants and other professional business service providers. It can also include people you know through your church, the gym, poker buddies, children’s play groups and any other group of people with whom you have periodic contact. The fact is that, while some people are in a better position to refer others to your legal services, you cannot anticipate where your next case or matter is going to arise. We live in a hyperconnected world. Thanks to LinkedIn and other Internet phenomena, you are likely less than four degrees removed from any of your prized target client contacts. Adopting a referral philosophy of business development means that everyone you run into, and all those they know, should be cultivated for potential referrals, whether online or offline.

So, how do you do this?

MAP, MANAGE AND MOTIVATE

The first step is to map your existing network of contacts. Take some time to write down all those people that you know in the various activities and travels of your life. This includes professional and personal contacts. Record where they work, their title and contact information. If possible, note relationships and associations of each (secretaries, bosses, consultants, bankers, accountants, etc.) of which you are aware. Also note if they have special subject area knowledge or access to unique resources.

Once you have this list compiled, study it for the relationships that may lead to important introductions. Also look for relationships that you want to learn more about and the resources your contacts may have available for you to leverage. What you will find is a list of contacts that represent a rich environment for networking and connecting people together. This is the essence of rainmaking.

MANAGE YOUR NETWORK OF REFERRALS

Your brain does not have unlimited memory space. An organized referral process will pay the greatest dividends in new clients if it is written down and the information in the list consistently updated and maintained. Get organized by loading all your contacts and their information into a database. A specialized client relationship management system works best, but you can start by simply using Excel or Word.

Be sure, however, to include fields to capture the important information you need for client relationship management, such as other company personnel (secretary, boss, etc.), family and personal interests information, special dates and a narrative field to record the main topics of each conversation. A system integrated with your calendar system, which can pin a reminder to follow up on a future date, is preferable and will save you time and improve the ease of executing your referral program.

I advise classifying those contacts into one of three tiers of referrers: high potential, moderate potential and low potential. The tiers will guide you in prioritizing the amount of time and investment to develop the relationship, as well as guide your referral development strategy. You’ll have to make the call based on your practice, but generally high-potential referrers are clients and other attorneys who have direct experience with your work, and who trust and respect you as a legal practitioner.

Moderate-potential referrers include other professionals such as bankers, accountants, consultants and the like who may not use your services but are respected and have knowledge of your reputation. A referral or endorsement from these persons is fueled by the weight of their own reputation.

Low-potential referrers are all those others that you captured in mapping your referral network, but who do not rise to the moderate level. This last group is still important, as they may know someone who needs your service. And a thorough mapping exercise should have teased out some of the relationships and given you some ideas of which contacts you want to pursue for introductions.

MOTIVATING OTHERS TO REFER

Now that you have your network mapped out and stored in a manageable database, it’s time to motivate others to refer you work. There are two ways to encourage referrals: directly, by asking for them, and indirectly, by creating an environment that encourages referrals. You should develop a strategy that helps you facilitate both direct and indirect referrals.

Direct referral strategies. Direct referrals are developed from those contacts with whom you have the most comfort and agreement that you will share referral opportunities. These include partners in your firm, networking group participants, long-standing client contacts and the like. Indirect referral strategies are those put in place to encourage referrals but without specifically asking for them.

Compelling others to put their own reputations at risk in order to help you is not an easy task. There’s little reward and reputational risk. So the key to direct referrals is to make it as easy as possible for others to refer clients to you. To do this, they must clearly understand the solutions you provide. The solution should be narrowly focused, clear and memorable. No one wants to guess how you can help others.

Write a “bullet referral script.” Make it short, clear, compelling and memorable. The goal is to end up with a sentence or two that makes it clear the type of clients you can help and the solutions you provide. In developing your referral script, write out the aspects of your practice that you believe set yourself apart, the types of clients that would benefit from your services and the value of the solution you provide. Then edit it down until you arrive at a very concise and memorable description of what you do. While this may sound like an “elevator speech,” the difference is that the bullet referral script is written specifically for an audience of people who have substantial knowledge of your industry and service. Whereas an elevator speech is a broadcast of your skills to an unqualified audience, the bullet referral script is a focused script for a specific audience and specific use.

One trick to narrow the focus of your bullet referral script is to write it as if it were being tweeted. That means that you have to write a pithy and memorable description of your practice in 140 characters or less. For example, I’m very good at looking at the marketing of a law practice and focusing on the activities that produce the greatest results, often saving my clients money while improving their marketing effectiveness. A tweet-ready referral script for my practice might read like this: “A fraction of the action gets traction. Eric is best at distilling down the marketing strategies that produce the best results.”

This script is memorable (a rhyme like “a fraction of the action gets traction” is easily recalled and is interesting and thought-provoking). It identifies the types of clients who could use my services (those spending too much on marketing or who are unclear as to which marketing strategies are producing the best results). It also implies the value of the solution (improved effectiveness and efficiency). And it distinguishes my practice through the imagery of a chemist distilling the most potent marketing concoction.

Use your bullet script to educate your high-potential referral contacts who understand the game of referrals and are open to being educated about your practice. Meet with them for lunch or during social or professional events, and work your bullet script into the conversation. You can also add it to the back of your business card, letterhead or client communications for future reference.

When working with clients, plant the seed early on in the honeymoon phase of the relationship—when things are going well—and explain that you would appreciate referrals if the client is comfortable making them down the road. You can do this simply by saying to your client, “As we work together over time, it is my intention that you will find me a valuable resource and exceptional business partner. I hope you’ll be comfortable enough with me to share my name and your experience with others who would benefit from my services.”

Indirect referral strategies. Encouraging referrals indirectly is often more comfortable for many attorneys, though often less effective. There are some things that you can do to assure a higher level of success in generating these referrals. Three, in particular, are worthy of note.

The first is the subject of several articles in this issue and centers on the power of giving your time, knowledge and experience to help others. What I have found over my more than 25 years in business development is that great rainmakers give little pieces of themselves, often to complete strangers. They do favors, share their knowledge and experience, make introductions, reach out to their network for advice for someone else and help people accomplish small things professionally and in their personal lives. They do more than “work” their network for referrals; they actively seek out ways to do “favors” for others, a process I refer to as “favorking.”

What sets the top rainmakers apart is that the best of them do this favorking without the expectation of reciprocity. They do not expect to be paid back or that there’s a return favor in the jar with their name on it. They don’t even hint at reciprocity. They actively look for ways to help others: small, subtle, thoughtful ways to make someone’s life a little easier. They have a unique perspective and a deep genuine belief that helping others is its own reward. And it shows. They are brokers of the services of their peers and networks, and by giving away their knowledge, contacts, time and thoughtfulness, they are perceived as being a tremendous resource. And that reputation fuels their success as rainmakers.

A second way to encourage referrals without directly asking for them is to use the “net promoter survey.” This single-question survey not only implies the importance of making referrals but reveals how your clients feel about the work you do for them. The one question is this: On a scale of one to five, how likely are you to refer me to your closest friends and peers? It is best followed by an open narrative field in which the client can elaborate if necessary. Some companies pepper this question throughout their client communications materials and at every client touch point.

Lastly, give referrals in order to receive. Be proactive in referring the work of your colleagues and clients. Great rainmakers know whom to call on to get things done for others. That means they must be brokers of the services of others. And, to be a broker, you have to know a few key facts about your colleague’s practice or business. Focus on five to 10 attorney practices that you want to have in your arsenal to cross-market. For each one, know the specialty area of their practice, their two or three main clients, a couple of recent matters or cases, and one or two ways that they have created value for their clients. You should also do this for the top clients and professional service providers in your network.

Whether using direct or indirect methods to encourage referrals—and you should be using both—smart law firms are embracing formalized referral marketing programs and building referral-oriented cultures in their firm.