How to be compensated fairly – in referrals

Let’s assume that all of us who read this article are capitalists, because you probably wouldn’t have gone into sales if you didn’t believe in a free market exchange of value to make a living.

So if we agree that we are all capitalists, it is fair to assume that we like to be paid for our time.  It is fair to believe that when we receive something of value, we should pay for it (there are no free lunches), and that if we create value for another person, we deserve fair and reasonable compensation for our efforts. This is exactly why you deserve more introductions from your clients.

If you sell a client a life insurance policy and then something happens that results in their family receiving a large tax-free check, you obviously created a huge amount of value. But there are numerous other ways you create value - even if your clients don’t buy anything. Some ways we create value for our clients without receiving monetary compensation include:

1. Advising them to contribute to their workplace retirement plan and receive matching employer dollars.
2. Encouraging them to compile a will and other legal documents.
3. Making sure their ex-spouse is no longer their beneficiary on their retirement plan.
4. Introducing them to the accountant or babysitter or anyone else who helps them.
5. Helping them to create a budget.
6. Helping them strategize on paying down debt.
7. Being an accountability partner for them as they train for a 5k race or they remain sober.
8. Encouraging them to have discussions with their spouse that they normally wouldn’t.
9. Assisting them in planning for college.
10. Acting as a sounding board for their business.
11. Being there through the rough patches such a divorce or death of a parent.

These are all real-world examples of how I have helped my clients recently. You can probably think of numerous times you have done something similar.

Now, did my clients write a check to me for any of these? No. Did they receive value (economic, emotional, psychological or other)? Absolutely. So as a good capitalist, I deserve to be paid for adding value. My clients agree and pay me handsomely with introductions because I have trained them to do so.

At the start of our professional relationships, I tell clients, “If I create value for you, then you will introduce me to other people who can benefit from sitting down and talking with me.” And they agree, because that is how I always work, and I have confidence in stating the deal. After they agree to the terms, I proceed with our discussions and add tremendous value to clients. I have no problem creating hundreds of thousands of dollars of value as long as I get compensated with quality introductions.

The key is to remind clients of the deal at the end of your meeting and ask for your compensation.  I literally say, “Was this helpful today?” Clients always reply yes. But I go deeper by asking “What was the most valuable thing to you?”  They then verbalize specific points of value to them, thus cementing that I delivered my end of the bargain.

We had a contract where I would give them value, and they agreed that I did so and as such I have earned my pay. Then they pay me for the value I created with introductions. No, I do not hand them an invoice that says “Amount due: 7 Introductions” because that would be weird. But I do hold them to our agreement. I present my bill by saying “Good, as we agreed roughly an hour ago when we started talking, if I created value for you then you would introduce me to other people who could benefit from sitting down and talking with me.” Then I give them a list (a good capitalist conducts their market research or due diligence) of around a dozen names of people they know. It is that simple.

This works for a few reasons. The first reason is because I absolutely know that I will create value in that meeting, because I always create value for clients. It’s because I am a capitalist and that is what I do: I create value and get paid for it. I focus on creating value, on helping the clients in every single interaction I have with them. This is why clients from two decades ago still call me and say, “Hey, go talk to so-and-so. You can help them, and they are expecting your call.” Because I have a reputation for creating value.

The second reason is the consistency of my message. Every time I work with a client, I ask them what was helpful or valuable in our discussion, and I ask for introductions as compensation. If they called my office, my staff would help them, would ask if they had helped them, and then remind them that we worked strictly on an introduction basis. The clients were trained to provide introductions and would show up for reviews with typed lists of introductions for us. Because they knew the deal. Consistency is key.

Most important, though: I absolutely believed that I was paid with introductions. Yes, a $10,000 premium is always nice. But I knew that the fuel of my business was referrals and the five introductions I needed each day just to keep the lights on and the machine running was critical.  Can’t have a manufacturing business without the raw resources to process, and my raw resources were favorable introductions. I would prefer a half-dozen awesome introductions to a $10,000 check because there is more potential in the introductions. Understanding the economic value of each name is important to solidify your belief in being paid this way and conveying it.

So be a capitalist. Create a verbal contract with your clients that states if you create value, then you will be paid via introductions to people that they know who you could potentially help. Then add value and be paid with referrals, and repeat cycle. That is how you build an introduction-based business.

© Entire contents copyright 2024 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

Joe Templin, MCEC, CEC, CLU, ChFC, CAP, is the author of Every Day Excellence and creator of the Financial Services Daily Drip-Every Day Excellence training email, https://www.salesactivitymanagement.com/everyday-excellence/. He is NAIFA New York State membership chair. He may be contacted at [email protected].