Better Prospecting: How To Obtain Quality Third-Party Referrals

 This article was originally published in Life Insurance Selling magazine on 3/1/2010 by KIM MAGDALEIN

After almost 40 years of prospecting, I have found that it is an art form. Prospecting should set up the sales prospects so that the process goes smoothly from step to step. For years now, I have discovered that getting help from a third party is an excellent way to prospect.

Back in the 1970s, I sold printing plates to printing companies. I could either call upon the printing companies individually or devise a plan that would help me get in the door. My plates were actually sold through dealers, so I partnered with the dealers to open the door for me. When they discovered a problem with a competitor’s product, they called me and I was there in less than six hours. The prospects were always amazed that I would drop in just as they needed a problem solved.

When I entered the insurance business in 1985, I had to develop new ways of getting help from third-party influences. The key is to find a good reason for a third party to help. Remember the two motivators: Greed and fear of loss. On the greed angle, what could I do to make my referrals money?

If you want an attorney to give you referrals, or any other professional, then you should devise a plan for them to gain value for the effort. In our business, most states don’t have a problem with paying for referral prospects as long as the payment is not tied to an outcome like a sale. It also can’t be tied to a commission, but it can be just a reward for the lead whether or not it becomes a sale. It is determined as advertising as long as it is just a prospect to follow up with.

I have found that attorneys will give you referrals if you offer something first. In Florida, attorneys can be licensed, so we give the attorney 50% of the commission for each referral. Some of you may be choking on the 50% thing, but they will bring you excellent prospects on a consistent basis when they are well-paid. If you can’t get your referral source licensed, there is an effective alternative: Help them market themselves. You can pay for seminars that promote their practice. You can then participate in the seminars, as a consultant to their firm. This will allow you to sit in on the meetings they have with prospective law clients. This will also work with CPAs. This is a more complex approach, but pays big dividends. I have an attorney who continues to supply great prospects due to this approach. If this is of any value, call me and I’ll help with the details. This program is somewhat complex, but worth the effort.

Any program that is targeting professionals will take time and requires an investment, so it should be considered with careful thought.

Keep in mind there are no silver bullets when building a successful prospecting effort. You will invest money or time or both. I prefer investing money because it is a renewable resource, and time can’t be redeemed.

All methods should be considered as to their return on investment. I look for at least a 10:1 return on invested capital for any system used. If I can’t get $10 back for every $1 invested in a prospecting program, I won’t consider it. Also, it is absolutely imperative to understand that no prospecting method works well right away. You will have a learning curve that takes time and expense. The effectiveness of a prospecting method improves with time and practice.

Don’t forget to keep the prospects flowing. That will take care of the wonderful lifestyle this business can supply.

More prospecting columns by Kim Magdalein.

Kim L. Magdalein is a producer and owner of PresentYourPractice.com. He entered the industry in 1985, and went into private practice in 2001 serving the Jacksonville, Fla., retirement community. He has personally presented hundreds of seminars and created a thriving practice. He created Present Your Practice in 2004 to serve producers with seminar productions and methods for optimizing seminar attendance with qualified prospects. He can be reached at (800)909-9894.