[New Loan Officer Series] How to Get Referrals
We’ve talked about how important referrals are and how thinking like a spider can help you tap into a variety of groups for consistent, fresh referrals. Thinking like a spider is your main concept for setting up your referral network, but what about actually asking for referrals? That’s what we’ll cover in this post.
Why So Much Focus on Referrals?
Referrals are the bread and butter for most loan officers’ businesses, and the better built your “web” or network, the more referral sources you have. We also know referrals and recommendations work across nearly every business whether it’s B2B or B2C.
- 82% of Americans seek recommendations and referrals from their family and friends when considering a purchase. That number increases to 92% for 18- to 34-year-olds. (Source)
- 87% of B2B buyers had a favorable impression of a salesperson who was introduced to them through someone in their professional network (Source)
- Referred customers have a 16% higher lifetime value than non-referred customers (Source)
- Referral leads convert 30% better than leads generated from any other marketing channel (Source)
With all that information in hand, let’s talk about effective strategies and tactics to asking for referrals.
Timing Is Everything
The mistake many salespeople across all industries tend to make with asking for referrals – namely, they ask too late after the transaction is complete. The key to timing your request for a referral is to ask whenever you’re delivering good news to your customer.
As a loan officer, there are a few key times when asking for a referral is highly appropriate, especially when delivered with good news. Those times are during the origination process, at the closing table, and right after the transaction is complete. You can remember these key times with the acronym D-C-A.
Asking During the Origination Process
There are many times throughout the origination process when a borrower could get good news. Maybe they’re getting a particularly good rate, or the appraisal comes back at more than the contract price. Use your discretion when deciding if those good news moments are an appropriate time to ask that customer for a referral.
Here are a couple of examples of how you could frame your ask during the origination process:
“Great news – I just locked your rate at X% which is really low. If you know anyone else looking to buy a home while rates are so good, let me know.”
“We just got the appraisal back and the numbers are looking really good. Let me know if you know of anyone who’s looking to move to this neighborhood since the home values seem strong.”
Asking at the Closing Table
Following along with the idea of asking when you have good news, getting to the closing table is good news and a happy event. Your borrowers will be signing all their final documents and getting the keys to their new home. Given the transaction went well, asking for a referral once all the paperwork is done is another opportune moment.
Here’s an example of how you might ask for a referral: “Amazing! You just got the keys to your house! Do you think in the next three months, you could refer two people to me who might be looking to purchase or refinance their home?”
Asking After Post-Closing
Not too long after closing, maybe around the time your borrowers are moving into their new home, ask for a referral if you haven’t already. Timing it this way means your borrowers are still excited about the newness of their home but still have the transaction and their experience with you fresh on their mind.
Here’s how you can phrase your request post-closing: “Congratulations on your new home – I hope the move went well! I’m so glad you were happy with the process and service we provided. Referrals are extremely important in this business, and I was wondering if you could refer two people to me over the next three months who are looking to buy a home or refi?”
Get Specific with Your Request
Remember back in the section on setting SMART goals where we talked about getting specific? Well, getting specific with your referral requests not only helps you, it helps your borrowers. Too often, loan officers fall into the trap of making their referral requests too vague which ends up being more of a burden on your borrowers, and one they’re more likely to forget.
Here’s an example of the vague request we’re talking about: “Congratulations on your new home. And I am really glad that you were happy with the process and service we provided. Referrals are extremely important in this business, and I was wondering, if you ever know someone who is looking to buy a home or refi, could you please keep me in mind?”
Perhaps you noticed in the above examples where we highlighted “refer two people over the next three months.” This is what we mean by getting specific – it’s time-bound and has a certain number associated with it. These data points make the request feel more attainable to your borrower.
Also, by asking for a specific number of referrals in a specified time frame, it increases the likelihood of getting those referrals. If you only ask one customer for two referrals in the next three months and then you ask those customers for two referrals, you can see how quickly it adds up per the chart below.
One Last Idea
Sometimes you can get referrals by not asking for referrals but getting introductions. Quite often, a person has a housewarming party soon after buying a new home. If you volunteer to bartend for the party, you will likely have the chance to meet all your borrowers’ friends and family face to face. This makes the referral process that much more personalized. And, for an extra flourish, you could have cocktail napkins customized with your company’s name and cocktail information.
Check Your Company’s Referral Policy
Every company has a policy about referrals. Make sure any efforts you extend to get referrals are in compliance with such policy and the law. You can seek advice directly from your company’s legal/compliance department or your manager/company mentor.
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