Pareto And Referrals
Lloyd Richards CeMAP CeRER
Vouched For Top Rated Adviser: 2019,2020,2021,2022,2023,2024
What is Pareto Principle?
The Pareto principle, also known as the 80/20 rule, is?a theory maintaining that 80% of the output from a given situation or system is determined by 20% of the input. The principle doesn't stipulate that all situations will demonstrate that precise ratio – it refers to a typical distribution.
In a recent poll asking mortgage advisers where they got their leads from the Pareto Principle seemed to be at work:
72% came from existing clients referring others
11% came from existing clients returning
17% came from affiliations with Estate Agents.
At first glance, this looks pretty good. Over 80% of business coming from either existing clients or the referrals made by those same existing clients. However, look a little deeper and you see that only 11% of business is coming from returning clients. Where on earth are these clients going?
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Referrals are great, but retention is key. I think it's safe to say that if an existing client chooses to do their next mortgage transaction with another broker or direct with a lender, then they are not going to be introducing your services to anyone in a hurry.
If that's the case then this high percentage of referrals ( 72% ) is coming from the small percentage of existing clients returning ( 11% )
To ensure even more quality referrals, we must be providing an exceptional service to our existing clients. It is in the area of retention that so much of our time and effort must be placed, as this is where we will reap the most rewards.
Yes, other marketing areas have their place. Social Media, Leaflet Drops, Affiliations etc... but time and again it is proven that the vast majority of introduced business comes from the very people that you are doing business with.
So, switch on your referral brain and revisit your existing clients. Touch base at least 4 times a year. Add value with articles and relevant topical information. Communicate to them that you are never too busy to look after their friends and colleagues. Follow up with those areas that may have been missed first time around ( protection policies, will writing etc... )
Switch On Your Referral Brain