Written by Jeffrey R. Armstrong – President/Owner of Armstrong Capital
Your favorite Master Note Buyer – Straightforward, Honest, Fair…
Referral sources can be a consistent source of leads if you learn to cultivate them properly. When developing your own network of referral sources, whether it is attorneys, accountants, real estate agents, financial planners or whomever you are focusing on it may take some time. They may not initially understand what you can do for them or for their clients.
A potential referral source may not know you from Adam when you first approach them so you must continually keep your name in front of them on a regular basis with business cards, letters, postcards, faxes, flyers, e-mail and even occasional phone calls – whatever it takes so that they hear from you at least once every month or two, if not more. It may take awhile for your referral source to recognize that one of their clients could use or is in need of your services. Even if they refer a potential lead to you there is no guarantee that the lead will turn into a closed transaction and a check for you. A referral source may be able to refer only one lead per year to you or possibly one lead per day. You have no way of knowing until you begin to cultivate your referral base.
Going into my twentieth year in business I have had the opportunity to develop and build my referral network over a long period of time. Every year I close a nice percentage of my transactions from leads that I received from my referral sources. One of the ways that has worked tremendously for me over the years is a simple hand written thank you card or letter with several business cards or brochures sent with it. On every transaction that I close I will send one of these thank you cards to every potential referral source that was involved in the transaction. If we used a title company I will send one to my contact person there. If there was an attorney involved I will send one to them as well. Other potential referral sources would be Real Estate Agents, Mortgage Brokers, Appraisers, escrow companies, servicing agents, closing companies, other financial institutions, etc. Whoever assisted in some way, however minor it may have been, will receive a thank you card or letter. And don’t forget to send one to the most important person of all, the seller of the note or income stream! This single method alone has added many referral sources to my referral base over the years.
How does such a simple gesture work so well? These contacts now KNOW that I can get a transaction done and that I can do what I say I can do because we have already done a transaction that they, or their clients, were involved in. It starts to build my credibility and a comfort level with me knowing now that if they refer one of their hard-earned clients to me it will not have a negative reflection on them. They now become confident that if they refer one of their clients to me they know that I will take care of the properly. I, of course, will keep in touch with them as often as I can and I will try to use their services in the future if I have a transaction that they can help me with as well.
Another simple way that I have received referrals is by simply inserting my business card in every piece of outgoing mail. I will put my business card in with my check for my mortgage payment, gas bill, water and power bills, insurance bills, etc. Every single bill, letter or correspondence that I mail out always has my business card in it. You never know who might be receiving payments on some form of income stream or if they have a need for cash. This is a very easy way to start getting your name out there and generate calls.
I am often asked what I give to my referral sources when I do close a transaction that they have referred to me. I usually do not pay cash except to real estate agents and business brokers because they are always hungry for cash. A referral fee of 1% of the balance of the note or 10% of my commission is what I would give to them. Preferably, I like to send them a gift or surprise of some kind. Maybe tickets to the game (baseball, basketball, football, etc.), tickets to a show or movie, Harry and David gift baskets, American Express Gift Checks, Gift Certificates or (my favorite) a muffin basket! What…a muffin basket! That may sound strange but there is a logical reason behind it. When the muffin basket arrives at your referral sources place of business, don’t you think that there are other people in the office? Of course!There are other attorney’s, paralegal’s, accountant’s, CPA’s, real estate agent’s…whatever. Each person that passes by and grabs a muffin is going to ask where the muffins came from and then, by word of mouth, I have just tapped into the entire office of potential referral sources!
Work on building your referral network and developing your own referral base to generate a consistent source of leads. And don’t forget, the next time you close a deal and the lead was generated through a referral source remember to send them a muffin basket! You may generate more business than you think!
Remember, success demands action! Keep on marketing, it’s going to work! TWITA! (That’s What I’m Talking About!)