The power of word of mouth has never been stronger. Prospects are relying on the personal referrals and testimonials of people they know to help them make buying decisions. The Public Pulse reports that more often than not, Americans say they rely most on their friends for information on a variety of issues.

These range from what movies to see to how to choose a new car and how to buy financial products. Fewer prospects, meanwhile, depend on various editorial and advertising sources for information. What this illustrates is that people rely on word of mouth because it is based on their existing relationships and the credibility of the person passing the word along. It increases their sense of comfort with the decisions they make. For these reasons, the recommendations of others are helpful to everyone who is involved in selection and purchasing decisions.

Studies in some industries show that 80 percent of all buying decisions are based on just such a recommendation from others. The simple fact is that a positive mention of your name brings an increased level of confidence and convenience to your prospects, thereby giving you greater access to them.

Of course, all word of mouth needs to be positive. Any negative word of mouth will do considerable damage to your relationship marketing and prospecting efforts. A friend of mine has a wry comment on this concept of word of mouth.

He says, "Although a lot of people talk at length about how good they are, their word of mouth is killing them." Regardless of how you may perceive yourself as a financial advisor, it’s the perception of the buyer and the prospect that ultimately determines your success within a market.

From my own experience over the years, I have discovered that three referrals typically result in one nearly immediate sale. More sales will usually result over a period of time. The more referrals you acquire, the easier it is to become well known and build the quality relationships necessary to earn the right to present your products and services. Here are several tactics you can use to acquire referrals effectively:

Tactic #1: Recognize that everyone benefits from referrals. People often give referrals because it is a way for them to help their friends, colleagues, and others to acquire the quality goods and services that you offer. As an example, there’s a young man who has built a successful residential lawn care business in Atlanta. Asking him how he built this business, he said, "Through word of mouth. I have pride in my work, so people stop and ask my customers who does their lawns. My customers then refer them to me because they like to help each other out so they have more time to play golf together."

Tactic #2: Let people know why you need referrals. It’s very important for your customers, centers of influence, and prospects to realize that your goal is to reach and work with more people like them. It makes it easier for them to refer you to people they know. Tell them that you want to continue to specialize, that you enjoy working with them, and that their personal referrals will give you an opportunity to serve other people in their industry, social group, occupation, interest group, etc. This lets them know that your motives are to serve and sell other individuals in your niche in the same professional way that you’ve serviced them. It will also make it easier for you to ask because you are focused more on them and less on yourself.

Tactic #3: Create a referral talk. You should have a well-honed referral-gathering presentation for use with every customer, center of influence, and prospect. This will increase your comfort, confidence, and competence. It also makes it easy for them to understand what your needs and motives are. Practice your referral talk with your family, friends, and colleagues. Sharpen your talk so that it sounds natural and comes forth easily. As an example, you could say, "If you feel that I’ve been helpful and professional, I would like you to tell people that you are my client. This will allow me to help those people just as I helped you."

Tactic #4: Make it easy for referrals to be delivered. Use a membership list or directory of the people in your targeted niche market. It’s not always easy for someone to think up some names of people they know in your niche without help. I found that it’s much easier to prompt and stimulate the individual to give you referrals by giving them the names of 10 or 15 people in the market that you are going to be calling on. The way to use this list is simply to show them the list and say, "These are individuals in your industry that I will be calling on. Which ones know you on a first-name basis?" Usually, they will select several names from the list. Then ask, "Who have I left off this list?" This way you will acquire the names of several more people right on the spot. By using membership lists from your niche market clubs, associations, special interest groups, and other targeted networks, you are sure to work deeper into your market. If a membership list is not available, you could use prospect lists you compiled from your market research.

Tactic #5: To get quality referrals, ask clients to verbalize how they feel you helped them. It’s occasionally difficult for customers to think of a referral because they’ve never really thought out loud about how you’ve helped them. An effective way to solve that problem is to ask questions such as, "How do you feel my services have helped you?" Ask open-ended questions germane to your products and services. Be sure to ask in a way that stimulates your customers to think about your value to them, then ask for their referrals.

Tactic #6: Always ask for referrals even if your prospects don’t buy now. Sometimes prospects will tell you they’re not ready to buy now. That being the case, ask for referrals from them even though they haven’t bought yet. Let them know that the reason you’re asking is to be able to build a quality relationship with more people like them.

Tactic #7: Ask for referrals and testimonials consistently and constantly. There is much confusion as to when and how often you should ask for a referral. Some presume that you ask once, either at the beginning of the sale or the conclusion of the transaction. In reality, you should ask for referrals several times. By asking more than once, you create a cumulative effect and greater results. Here are several places to ask for referrals and testimonials:

• Ask at the very first appointment, whether it’s with a prospect, a previous customer, or a center of influence. People do not have to buy something to refer you or pass on positive word of mouth. They simply need to feel confident about you and your product or service. Ask early and set the stage.

• Ask at the time of the sale. Ask for referrals before you get all the paperwork completed. Otherwise, people are rushed, wanting to move along to the next issue in their lives. So, bring forth your referral talk again while you’re completing the paperwork.

• Ask for referrals at the time you deliver the financial instrument. People are usually euphoric at that time and it is an excellent time to leverage yourself into your niche.

• Ask for referrals when you send a thank-you note for the business. Of course, if you’ve already gained referrals during the sales process or at the time of delivery, you wouldn’t normally ask again immediately in the thank-you letter but it doesn’t hurt and often helps you as it shows your desire to serve others like them.

• Ask for referrals and testimonials in your follow-up service calls. Calling to follow up and find out how your product is working or them or how their needs have changed is an ideal time to ask for referrals.