Establishing a referral relationship is important but how can you articulate the value you will bring to other professionals who may be referring their clients to you? SRS Coaching and Consulting’s Rachel Staggs builds on her last column, which looked at how to market a value proposition to clients, by unpacking how that proposition can also be demonstrated to referral partners...
How do you prove to your referral partners that you are always adding value to them and their clients? Some of you may feel that you don’t need to do this because the relationship is ‘casual,’ while others may feel that’s an excellent question given the current times. With more change coming our way, I firmly believe that any professional relationship that is in place, whether it’s casual or strategic one, needs to be considering the topic of value.
Many advice businesses have been working on their value propositions to their clients, but not so much with their referral partnerships. Given the recent licensing changes for accountants, I want to address some of the dynamics and concepts in crafting a sound value proposition. Value can be a tricky topic to talk about and to develop which is why many advice businesses sweep it under the carpet hoping it’s not that important when in today’s environment it is.
Value is one of those things that is in the eye of the beholder. We each place slightly different importance or weight on things. In essence, a value proposition to a referral partnership is an offer to their clients and their business in which they (the business and client) get more than they give up (merit or utility), as perceived by them, and in comparison to alternatives, including doing nothing or doing it themselves. A value proposition is a clear and succinct statement that outlines to potential clients and referral partners your unique value-creating features.
Understanding of value
At the end of the day, the real foundation of developing a unique value proposition rests on identifying and understanding what a referral partnership values, which can be both stated and implied. For example, stakeholders can talk about integrity, honesty, and meeting client expectations all they want, but if their actions conflict with their rhetoric, you should look to what they do as an accurate representation of their values.
As any good business person will do, the essence of the value identification process is to understand what is relevant to each referral partnership. Not every referral business has the same views; you need to set the time aside to ask what it is that they will value from the relationship and then re-visit this question at least twice a year. If you don’t understand what they value how can you deliver it?
The types of areas I would suggest you uncover with your referral businesses are: timing, risk, revenue, reporting, systems, marketing opportunities, strategic direction, to name a few. By understanding their thoughts and views, it allows you to create the right value for that relationship.
When you are describing value, there are typically two parts: qualitative and quantitative. A finance person may primarily describe value using a Return on Investment (ROI) or Total Cost of Ownership (TCO) framework, whereas a client may describe value as having peace of mind (more emotional than financial). Advisers and Accountants often use the ‘willingness to pay’ statement as a way of quantifying what someone would be willing to pay to have ‘peace of mind’ for example.
Once you understand how a referral business describes value, you will be able to craft your language in a way that aligns with their terms, and differentiates you from other alternatives. This practice of becoming fluent in a referral businesses language is very effective when you want to be seen as part of the group and on the inside.
The Psychology behind it.
A value proposition, whether for a client, employee or referral partner is a form of persuasion, on a social psychological level. We are more easily persuaded and influenced by those who are familiar and similar to us, therefore using the same language or metrics is one way to establish that rapport and differentiating yourself from others.
Practical questions to help you.
- Looking at the value chain (ie: client journey) and how can your business add value?
- What are your company’s core competencies and how do you differentiate yourself from the competition? It might be your reporting, systems, clients, networks; it might even be you!
- What capabilities (internal and external—partners, alliances, joint ventures) can you bring to add to your value promise?
- Why should a referral business accept your particular operational offer (e.g., more convenient, lower risk, etc.)?
- How do you link your value proposition to your existing client’s needs and pains?
- How do you substantiate your ability to deliver on your value promise (e.g., track record, references, continued education, etc.)?
- How can you increase the return or decrease the risk, or both, in creating and delivering higher levels of value?
At the end of the day taking both a strategic and operational approach to proving your value will get you there. The value proposition concept is a valuable tool to use with each referral partnership – casual or strategic. It forces you to look both internally and externally in crafting a statement that is actionable by you and your business while being credible and compelling to your targeted businesses. Once you work through this process you will have a clear strategy that you can refer to which will prove the value you add to the business and the client.
In her regular Practice Marketing column, Rachel Staggs provides insights to help advisers market their business to potential (and existing) clients.
Rachel Staggs is the founder and Managing Director of SRS Coaching & Consulting, a specialist financial services consulting firm.