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Pumping up referrals

by Staff Reporter15 minute read

How do Australia’s most prolific brokers build winning referral partnerships and just how much should they contribute to your bottom line? The Adviser’s Belinda Luc investigates

 
Most brokers would agree that referrals generate the bulk of their business. But for those who are looking to increase their volumes, where should they focus their attentions when it comes to ramping up their referral partners?

referrals

To reveal how Australia’s most successful brokers approach and maintain referral partnerships, The Adviser recently surveyed the 2009 Elite Business Writers – 50 of the highest volume writers in the business.

With a hefty average of $55 million worth of business written each year, these top performers have successfully built strong partnerships with a cross section of professionals, with referred business accounting for around 27 per cent from this channel.

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When asked what they look for in a referral partner, the top loan writers surveyed were clear: a referral partner is more than a mere service channel whose role it is to provide the broker with client leads. Rather, an effective referral partnership should not only enhance a broker's business prospects but also their reputation in the industry.

PICK YOUR PARTNER WISELY

Kieran Jefferies, director of KJ & Partners, says there are two kinds of business referral partners – ‘time critical’ and ‘opportunistic referrers’.

He says brokers need to know how to balance the two referral types to suit their current business needs and workload.

For example, time critical referrers, such as real estate agents, require an immediate response – which means brokers who deal with them need to be able to react quickly.

“Time critical referrers account for approximately 95 per cent of my business referral base,” says Mr Jefferies, adding that the appeal of this type of referral partner is the constant stream of leads.

Real estate agents are a key referral partner for KJ & Partners, and an attractive one. Mr Jefferies says they are incredibly easy to collaborate with, which ultimately helps him settle loans quickly and without fuss.

But while Mr Jefferies views real estate agents as the “perfect referral partner”, the fact they work to tight deadlines and therefore need loans to be turned around quickly may not suit some brokers.

He advises brokers who are already struggling under heavy workloads to instead seek out ‘opportunistic referrers’ – who, as the name suggests, refer business when the opportunity arises.

BUILD THE RANKS

Of the top brokers surveyed, the number of referral partnerships ranged from three to a staggering 56. However 62 per cent of the Elite Business Writers have built a successful business working with less than 10 referral partners.

This would strongly indicate that when it comes to referral partnerships it would certainly seem that less is in fact more.

While there is clearly no golden rule to the number of referral partners Mr Jefferies says quality brokers would have a “minimum of three”.

Referral numbers aside, the question begs: what volume of leads should a broker's partners be referring? Mr Jefferies suggests that if a broker can get one lead a month from each of their referral partners, they're doing pretty well.

According to Mr Jeffries eight to 10 referrals from his 14 professional referral partnerships would be what he considered a good return each month.

“That should generate enough leads to help sustain your business,” he says.

MIX IT UP

Of the business writers surveyed, their referral partners came from a range of different professions, suggesting it pays to diversify your referral sources.

Every single loan writer said they had a referral partnership with a real estate agent, while 73 per cent said they had a partnership with a financial planner and 66 per cent said they collaborated with accountants.

In fact, the least popular referral partners were insurance advisers, superannuation advisers, specialist brokers and lenders, and other broker colleagues.

Finding a good referral partner isn’t easy. In fact, it's hard work.

Mr Jefferies, who found his key referral real estate agency partner through a combination of researching the property section of the local paper and by cold-calling, says brokers need to be proactive.

“Some brokers expect their referrals to be handed to them on a silver platter,” he says.

“But what many fail to realise is that they really have to put the effort in and work for it – nothing worth having comes easily.”

Advanced Finance Solutions (AFS) director and Elite Business Writer Anita Marshall found her key referral partner – an investment group that builds wealth through real estate – at a business expo.

“We both had a stand at the expo, side by side. After getting talking, we realised that we had the same target market and could benefit from working together to expand our respective client bases. So we came to a mutual referral arrangement,” Ms Marshall says.

Advanced Finance Solutions' key referrer has been a trusted business referral partner of the business for an impressive four years.

Ms Marshall says collaborating with the referral partner over the years has sustained their relationship – and that a good, quality referral relationship is about give and take.

She says AFS advertises the referral partner’s business in its monthly newsletter, and keeps them informed of the progress of the referred client’s matter at all stages during the loan transaction. When the loan settles, the referrer also receives a gift of appreciation.

On the flipside, the referral partner holds seminars throughout the year, at which AFS staff speak. “It’s a great opportunity to meet potential clients and also they get a chance to meet us,” she says.

EXPAND YOUR HORIZONS

When sourcing effective referral partners, brokers should consider not only their business needs, but also the needs of their referral peers.

Over the past number of years, The Adviser has spoken to a number of professionals outside of the mortgage broking industry, such as accountants, financial planners, real estate agents, licensed conveyancers and insurance advisers.

These professionals have told The Adviser that the key to igniting a long-lasting referral relationship lies in what a mortgage broker can bring to the table.

There’s little point in the partnership if the business benefits are just a one-way street. Therefore, a mutual appreciation and understanding of each other’s business and values – together with a written agreement detailing each person’s rights and responsibilities – is paramount.

This means that sometimes a quick phone sales pitch or drop-in isn’t enough. Brokers who want a long lasting strong referral partnership should have nutted out all the parameters previously and be prepared to enter into a formal agreement with their referral partner.

As one business adviser said: “Anyone who is solely there to ‘clinch the deal’ but not necessarily provide a package that’s in the best interests of the client, is of no interest to us.”

Brokers also need to be able to demonstrate that they have a technical understanding of the client’s needs and the types of products available on the market. Brokers who are unfamiliar with their product will create headaches, confusion and disappointment all around, resulting in a negative referral relationship.

There’s also the issue of trust that needs to be established for the relationship to be a long-lasting one. Brokers may find that their referral partner initially gives them the ‘scraps’ so to speak. This is, difficult loan applications and difficult clients, including those who have been perhaps refused credit in the past or have a poor credit history.

But brokers who are serious about building the trust in their referral relationship should treat these clients as any other, and invest the necessary time and energy to get these important deals done.

Brokers who demonstrate a conscientious persistence to satisfy their client’s needs are bound to gain a whole new level of respect and trust from their new referral partner.

And while associated business is important in a referral relationship, referral partners are hesitant to cover the same ground as mortgage brokers. If this is the case, referral partners may not consider using a mortgage broker at all. The whole idea is to build each person’s business, not cause an overlap resulting in a loss of business.

As obvious as it may sound, it’s important for brokers to have a good rapport with their referral partners. This not only makes the relationship easy for both parties to manage over the long term, but the good connection, trust and mutual respect between each referral partner will be reflected upon the client.

BENEFITS FOR YOUR PARTNER

So how does a referral relationship benefit your partner? For some, it’s about the level of expertise a mortgage broker can bring to a business, while for others it’s about achieving a higher success rate.

Brokers also serve the benefit of helping to keep their referral partner informed of the latest and best products that will suit their clients’ needs. In effect, a broker referral relationship helps other businesses create a kind of ‘one-stop -shop’, that results in a more convenient service proposition for their clients.

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