Referrer Management Strategies – Rationale and Challenges

At the MBL  online workshop “Developing more work from referrers and intermediaries” just before Christmas all delegates were from law firms (specialisms included employment, employee share ownership, media litigation, commercial litigation and family law and one firm was offshore), and most were in client service delivery roles. The delegate poll results are shown below. I’ve summarised some of the main “back to basics” themes emerging from discussions: Referrer Management Strategies – Rationale and Challenges.

Marketing and Business Development (M&BD) for professional service firms – including lawyers – is challenging at the best of times. Even more so when a firm is relatively small and has limited financial and expertise resources to support robust M&BD strategies. While there are many proven and successful digital marketing strategies and communications strategies when it comes to reaching clients directly – the strategies for forging and developing relationships with third party referrers and intermediaries can be more challenging.

Rationale – Key reasons to develop referrer management strategies 

There are many reasons why referrer management strategies are important for the marketing and business development of professional service firms.

  • Observe the Pareto principle
    • Research indicates that most firms generate 80% of their fees and profits from 20% of their clients. Therefore, a significant proportion of M&BD resources should be devoted to nurturing existing relationships rather than chasing new relationships. Keep and grow those relationships you already have.
  • Be efficient
    • Research shows that it takes less resources to generate more business from existing relationships than it does to create new ones. You are more likely to be successful growing existing relationships (and more quickly) than creating new ones. Leverage existing relationships for greater efficiency. 
  • Be effective
    • There are some services that are wholly reliant on third party referrals as it is not easy or feasible to reach the end user clients. Most areas of litigation and many transactional activities (e.g. mergers and acquisitions) would fall into this category. For some services, referrer management is the only effective strategy. 
  • Bring focus
    • Most professional service firms will have their fee-earners undertake a wide variety of M&BD activities – including networking, sharing content and organising events. To ensure this activity is co-ordinated and focused a referrer management strategy and plan will help focus and co-ordinate efforts and spread the load across a team. 
  • Achieve a steady flow of work
    • Cultivating strong referrer relationships generates a steady flow of the right sort of work, instructions and clients and can protect against the “feast or famine” scenarios that can occur with campaigns targeting end users
  • Identify targeting criteria
    • Analysis and monitoring will allow you to identify your most reliable and productive referrers and develop targeting criteria and programmes to reach more of the right sort of referrers
  • Reduce risk
    • You can reduce risk where, for example, you are reliant on one or two individuals at referrer organisations by developing strategies to increase your awareness, touchpoints and relationships with important referrer organisations.
  • Avoid being pigeon-holed
    • A strong referrer management strategy may raise awareness of the other services you provide so that existing referrers know when to refer other clients. This can protect against your firm being pigeon-holed for particular types of clients or work. 
  • Provide a service (outbound referrals as a Trusted Advisor)
    • It’s not just about inbound referrals either. When managing conflicts or supporting clients in need of services beyond your firm’s capabilities, it is part of the service to your clients as a Trusted Advisor to be able to recommend reliable and appropriate organisations to them for outbound referrals

Challenges – Key obstacles in developing referrer management strategies 

There are many reasons why a firm doesn’t devote sufficient time and attention to its referrer management strategies. Here are some of the most common challenges. 

  • Education
    • Many fee-earners may not be aware of the source of their work. And they may not be aware of how reliant some practice groups are on a steady flow of the right sort of referrals. Similarly, many fee-earners may not be aware of their role (whether in a passive way as being a good Ambassador for all the firm’s services or a more active way in terms of taking responsibility for specific relationships) in referrer management. This means that firms need to invest in internal communications and training programmes to help educate fee-earners and support staff on the importance of referral management as an integral part of M&BD activities
  • Engagement
    • Even when fee-earners are aware of the importance of referrer management strategies, it can be hard to engage them and keep them engaged in referrer management programmes. Especially if there is a lack of clarity on the firm’s M&BD in general and individuals’ responsibilities specifically. Firms which have a learning and development and training programmes for M&BD skills will enjoy more engagement.
  • Lack of time
    • Most fee-earners will be busy trying to serve the needs of their clients and managing the many supervision, compliance, billing and other responsibilities so finding time for M&BD in general or referrer management specifically will be difficult. Similarly, many M&BD teams will be busy managing a wide variety of campaigns, events and activities and lack the time to take a strategic and structured approach to referrer management.
  • Eat what you kill model – no incentive
    • Many firms will measure performance based on billable hours. So many firms will fail to provide recognition and/or reward for time invested in developing referrer relationships.
  • Structured as silos
    • Many firms operate in practice group silos. So their fee-earners may be unaware of how referrers may be relevant to other teams. This may mean missed opportunities for reciprocity and wider relationships. Similarly, many fee-earners work alone with their own lists of referrers for both inbound and outbound referrals which can be inefficient and lead to a lack of co-ordination on critical referrer organisations.
  • Lack of data/data management
    • Many firms feel that they have inadequate systems for managing and tracking information about referral sources and referrer relationships. Then there is the issue of the time it takes everyone to keep referrer and referral up to date and compliant. During workshop exercises, many people are embarrassed by how little they know about even major referrers for their firm
  • Lack of systems and automation
    • There are similar technology issues with inadequate automation to ensure regular updates, alerts and invitations are sent to the right people in the referrer strategy and campaigns
  • Lack of content
    • A related issue is the time constraints on M&BD departments and fee-earners who need to prepare a regular source of relevant content to distribute through events, web sites, blogs, emails and social media to stay on the radar and front of mind for referrers
  • Increased competition and limited differentiation
    • Regardless of the economic conditions, most firms are experiencing increased competition and it remains a constant challenge to differentiate your firm and yourself from others. Strong relationships remain a key strategy to rise above the competition and remain memorable and irreplaceable.
  • Long lead time for pay off
    • Referrer management strategies are based on relationships. These can take time to find, initiate and nurture. Yet the pay back – in terms of new and repeat referrals – can take time to materialise. So you need to be confident that your efforts are appropriate and patient for the results to appear.

There are other reasons for focusing resources on referrer management strategies – and many other challenges. Please share your thoughts.

Delegate poll results

Delegates find it helpful to see a record of the poll results for comparison purposes

Your role

75%      Delivering services to clients (fee-earning)

25%      Marketing, business development and selling

100% were in the legal sector

Which topic is of most interest?

40%      Strategy and planning

60%      Working with external referrers

Targeting approach?

100% Aimed at specific organisations/individuals

Amount of work generated by internal and external referrals?

80%      20%-50%

20%      50%-80%

CRM systems used: Hubspot, Clio, LawWare, Integrated with finance system

Our systems and information for referral management are:

20%      Average

80%      Inadequate

Main reasons cross-selling doesn’t work well:

40%      No incentive

40%      Everyone too busy

40%      We are in silos

60%      Something else (including single service practice, fail to follow through)

Most effective relationship building activities during Covid?

25%      Emails and newsletters

25%      Telephone calls

Use of social media in referrer relationship management?

100%    Connecting after meeting

100%    Liking and sharing their content

80%      Sharing our content

60%      Research

40%      Monitoring accounts

How do you feel about selling?

25%      Very uncomfortable

25%      Neither uncomfortable or comfortable

50%      Comfortable

How much time do you spend selling?

100%    0-10% of my time

How well do you understand the psychology of business relationships?

25%      Not at all well

75%      Not well

What is your personality type?

Adapting to dog, cat and bear personalities – Better business relationships (

33%      Dog

67%      Cat

Do you have a Key Account Management (KAM) programme at your firm?

Key Account Management (KAM) programme (

75%        No

25%        Yes, but it isn’t working very well

Delegate key takeaways and actions

  • Get focused
  • Prepare a plan
  • Understand where our current work comes from
  • Identify our key referrers
  • Understand (research) our key referrers
  • Consider referrer needs and targets so we can reciprocate in some way
  • Capture and tier current referrers
  • Agree actions to expand our current relationships
  • Establish internal teams to manage relationships with referrers
  • Communicate more internally about our engagement with referrers

Related posts on referrer management strategies

Referrer Management workshop (June 2022) ( June 2022 (The Wild West, Cher and Covid)

Cross-selling and referrer management – Expectations, Data and Focus ( March 2022

Three referrer management themes – Plans, Relationships ( July 2021

Referrer Management and Cross-Selling Insights (March 2021) ( March 2021

Influencer marketing in professional services ( January 2021

Highlights from a referrer management workshop (2020) ( December 2020

Six themes on cross-selling and referrer management workshop highlights ( September 2020

pragmatic steps to improved referrer management 2019 ( December 2019

Structured programmes for Referrer Relationships – workshop ( July 2019

Relationship and referrer management ( December 2017 (Piggyback, ghosting, ridealongs, swapsies and orange crates)

Referrer management – Planning basics and social media ( March 2016 (role of social media)

referrer management in professional service firms ( December 2015 (When you can’t reciprocate)

Referrer management – Referrals management ( March 2013 (6Rs approach)