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August 1991

How to work with referral sources. (Management of an Accounting Practice) (column)

by Cooper, Ron E.

    Abstract- CPAs should maintain a healthy relationship with potential referral sources as they provide an avenue towards new business contacts. One key point to be remembered is that a potential source should feel that any clients referred would benefit as much from the referral as the CPA concerned. Once this positive impression is established, several techniques could be employed to follow-up a referral opportunity. Included among these are appropriate introductions and the maintenance of a favourable dialogue with sources.

Benefitting From Business


Just as there are different methods and unique ways to approach each of our engagements, there are various techniques that can be employed when working with potential referral sources. Our business is a people business, and each person must be treated as an individual.

I am certain you know one or two businesspeople, who, if the opportunity came up today, you would not give a referral to. Even though they tell you how much they value you as a referral source, you just don't feel they are qualified to do the job. We have all questioned the ability of others at one time or another. Oftentimes, we tend to judge the quality of work by our impressions of people rather than by their professional abilities.

What about you? Do you have potential referral sources that realistically aren't going to give you the opportunity, even if you stay in contact, buy them lunch, or treat them to an occasional night out? Tough question, but think about it; are you sure that, given the opportunity, all of your so called "sources" would mkae it a point to include you? Have you been kidding yourself about your relationships with your referral contacts? Perhaps it's time to take a closer look at how you should handle your business relationships.

A small national retailer uses the catchy phrase: "An educated consumer is our best customer" to sell its products. Why not apply the same logic to referral sources and begin by better educating them, thus allowing them to become better business providers for you?

Lession #1: Who Benefits? To become a good referral source, the referring person must feel that the party to whom you have been referred will benefit at least as much as you, perhaps even more. This does not mean the referral source needs to be educated about the specifics of your services. In the broadest of terms, it means the referring person must feel your interests lie in benefiting the client more than padding your own pocketbook with newly generated fees.

Lesson #2: Getting Into the Picture. In many cases you may need to teach the referring person how to get you involved. Many potential referral sources simply don't know how to introduce you into the picture unless someone asks them directly, "Do you know a good CPA firm we could use?" This is where Lesson #1 comes in handy along with a frequent contact scheme. Combining the two begins to produce the possibility of new opportunities for everyone involved.

Lesson #3: Properly Providing the Introduction. Don't be presumptuous. Once a referral source understands the logic behind Lessons #1 and #2, you may need to go one step further. Explain to them exactly what to do when an opportunity does come up. How many times have you heard, "I was talking with a company the other day and they brought up a problem I knew you could handle, so I mentioned your name. I gave them your number and asked them to give you a call"? Great intentions! But how long can you afford to wait for the phone to ring? Make sure your referral source knows the best way to handle this situation. Before the opportunity arises, advise them to suggest you call the company to review the problem and to discuss some ideas. By doing so, you can contact the company on your terms. As a result of being in control, you are valued as the expert. What a great way to establish your first meeting!

Lesson #4: Don't Badger Good Referral Sources. Don't over do it. Potential referral sources do not loke to be oversold on your abilities. Be polite and be sure they understand that you already have a lot of good business but could always use more; don't badger them. You do not need to solicit business from a good referral sources. Instead, talk in terms of how your firm has helped companies recently, highlighting the benefits you were able to provide and the favorable outcome for the client. If you want to solicit business, knock on doors, don't bother precious referral sources.

Lesson #5: Thanking Referral Sources. What's in it for the referral source? You've received a referral: do you need to reciprocate? Is a "thank you" note or "thank you" lunch sufficient? One suggestion is to never put yourself in a position to become uncomfortably obligated to return the favor of a referral. Use your judgment. Often, a gift is appropriate and sometimes a simple "thank you" is sufficient. It must be understood that the reason you received the referral in the first place is because you and your firm are qualified to provide the services required and that the referral source is confident in your abilities. Keep in mind, the referral source wants to look good as well.

Lesson #6: Keep Them Informed. Once a referral source provides you with a referral, keep them up to date. In most cases, there is no need to discuss details, but informing them you have been in contact and a meeting has been scheduled is certainly appropriate and makes good business sense. Most referral sources not only want to look good, but they want to know they are thought of as being helpful. They want to feel they are helping both you and your potential new client. More frequent contact during the first stages of the introduction is critical for first time referrals, as they may not be completely convinced they have made the right recommendation. You can put them at ease by explaining how much your potential new client means to you and that you will provide the very best services available.

By Ron E. Cooper, Marketing Consultant to professional service firms and Marketing Director for The International Group of Accounting Firms

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