There’s a good reminder from a recent blog by Jodi Glickman on the importance of “closing the loop”. Ms. Glickman is a speaker, author, and blogger for Harvard Business Review. In a recent post, href="http://blogs.hbr.org/glickman/2011/01/the-biggest-mistake-ppl-make-af.html">“The Biggest Mistake People Make After Receiving a Favor”, she describes the importance of the last step in the asking-for-a-favor process…closing the loop.
“The right way to close the loop is simple: no matter the outcome, no matter if the news is good or bad, be sure to follow up and share what happened. Don't leave someone hanging after they help you out, wondering about the outcome. It's rude, it looks bad, and it actually has the potential to create negative consequences.”
We see this, on occasion, with financial professionals who ask for referrals from their clients, friends and acquaintances. (Actually, we have observed that “asking for referrals” is not the best way to get referrals…but that’s a topic for another time.)
For financial professionals who receive referrals, it is fundamental that one “closes the loop” and share what happened with the referring source. As Ms. Glickman points out, it’s discourteous and incredibly bad form if one doesn’t follow this protocol, but there is another vitally important reason to do this.
Closing the loop demonstrates that you have follow-through skills. Most importantly, following up builds trust.
In the referral dynamic, the referral source has taken some personal risk by opening a small piece of their network to a financial professional when they provide a referral. Regardless of the eventual outcome of the referral, financial professionals build trust with referring sources by simply letting them know that the contact has been made. Indeed, studies have shown that one of the main reasons that referral sources stop providing referrals is for this very reason; they get left in the dark as to what actually happened, and whatever trust they had in the financial professional in the first place…quickly dissipates.
Speaking of the referral process, our proprietary research indicates that financial professionals have some gaps of their own. In a recent survey of top-performing financial advisors, 90% admitted that they do not have a clearly-defined referral strategy, and 87% indicated that they do not track where their referrals come from.
Summing this up, for most successful financial advisors, referrals are the #1 growth driver for new business. The likelihood of receiving referrals is greatly enhanced by having a process, which includes seemingly innocuous steps like...closing the loop.
On another completely different note, Happy March 10th! It was on this day in 2000…that the NASDAQ hit an intra-day high of 5132.52.
Seems like just yesterday…not!