Why relying on referrals is NOT the best way to grow your small accountancy practice

Typically when it comes to growing your accountancy firm, most small firms rely on referrals and winning more business from existing clients for their lead generation. However, there is a problem when it comes to exclusively relying on referrals to grow your small accountancy firm. This blog post explains why.

This blog post is a transcription of part of my webinar with Practice Ignition on scaling your practice. Click here to listen (or read the audio transcript) to the whole recording of the webinar

When you look at the channels to market for accountants, they’re typically...

• Work from existing clients, i.e. your existing client is coming to you and saying, ‘Please can I take an additional service?’ or ‘... more of a certain service’.
• Referrals from existing clients, which is where your existing client says, ‘I think you should talk to... Alex from Soaring Falcon because they’re brilliant’, and I know Alex is on the line, just a little bit of a shout out for you Alex!
• The next key channel to market is about your referrals from introducers; the bank managers, lawyers, and it might be your business coaches, IFAs, those are the top three channels.
• Word of mouth business, referrals from network.
• Social media, SEO, cold calling, PR, direct mail.
• A lot of my clients have had a huge amount of success by having a consistent social media presence, which has driven up their visibility, and general word of mouth business.

It’s all about the referrals

The route to market for accountants is heavily skewed towards winning new business from existing clients and referrals. This isn’t a problem, I can think of many industries who would love to have a client base that is so loyal, and has what you have; an on-going monthly revenue that comes in every month.

However, relying on referrals coming in often makes it very difficult to scale your practice at the rate you want to. You find it’s either too much work, or never enough coming through the door. Often referrals are heavily weighted to the main work winners in the practice, which for most of you is going to be you, this is a problem if the main work winners are expected to be chargeable as they can’t do both; you can either be chargeable, or you can go out and win work, you can’t do both, even if you go to the model which you may start doing if you’re above 500k where you start to have either inhouse marketing support, or outsource marketing support, it’s also difficult for a dedicated sales & marketing team to progress a referral without the fee earner involvement.

‘One of the problems with referrals is often you can’t control the quality of the referral as it may offend the referrer’. You feel you’re duty-bound to take on that referral, which is a problem, it’s problem that a lot of practices don’t know what to do to systemise winning more referrals.

Because so many accountancy practices have become used to organic growth, without having to go out and formally market, they often fall into these traps. They don’t know what to do to influence the volume and quality of leads coming to you, because when you know that it’s going to come in, you don’t need to do that. Very often if you want to then change the rate, you don’t have the confidence to do that, you’re not confident what work you’re going to win going forward, and so the resource planning doesn’t happen or is widely inaccurate.

In summary: Growing your accountancy firm is much easier if you are not relying on referrals as your main source of leads to new clients.