Real Tax Business Success: Tax Marketing Lesson 39: Word of Mouth Clients

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Stimulating Word of Mouth and Referrals:

Strategic Marketing Techniques

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Definition of a Referral: Clients that do business with you as a result of the satisfaction of your current or previous clients. They can be first, second, third or more generation.

(They may come from someone who told someone, who told someone … etc.)

Purpose of Referrals: To increase your business without the cost of marketing or advertising. (Or increase client acquisition at a much lower cost than normal external advertising means.)

With this said, let me point out there is no better new client that will come into your tax business than one referred by a happy client. The referred client comes into your office with less price resistance, less skepticism and overall is a more receptive client. (By the way, if you do a good job, they tend to refer even more of THEIR friends, co-workers etc.)

Now the “EAR” formula is a simple way for you to use referrals to increase your ongoing tax business.

E.A.R. stands for EARN, ASK and REWARD. (Every tax business should be doing “some” part of the “EAR” formula as a natural extension of their normal business practices.)

If you are good at what you do (and you should be) you will naturally “earn” more business because your clients WILL talk positively about you. By taking care of your clients you will EARN THE RIGHT TO MOVE TO THE NEXT PART OF THE FORMULA.

Yes, if you are GOOD (hopefully you’re GREAT at preparing taxes and making your clients feel taken care of), then you should have NO problem “ASKING” for referrals!

I don’t know why so many people get “hung up” on this point. It may be a self esteem issue or just a low self confidence problem, but you’re going to have to get over this “bump in the road” real quick!

Not being confident in your abilities to DO “WHAT YOU DO” FOR A LIVING needs to be resolved. That’s something I can’t help you with. (You’re gonna have to knock that one out yourself!)

And finally the “R” stands for RECOGNIZE or REWARD. If you have gone this far to EARN your client’s approval and you’ve be bold enough to ASK for referrals, then you should finish the race by REWARDING your clients for doing what you asked them to do in the first place!

(Some tax business owners just don’t like rewarding or recognizing their clients for referring their friends, neighbors etc. I think there must be some pride or greed issues going on deep down, but that’s for them to deal with.)

Here’s a quick story that illustrates how your clients will respond to being rewarded for their “good behavior.” (I got this from a guy in a “Marketing Mastermind Group”.)

A guy rows his little boat out to the middle of a lake for a relaxing day of fishing. Up over the side of the boat comes a huge green snake with a half swallowed frog sticking out of his mouth. Feeling for the frog, the fisherman whacks the snake with the oar; the snake spits out the frog; and the frog’s life is spared — and that makes the guy feel good. But he also knows he has just deprived the snake of his mid-day meal — and that makes him feel bad. Having no food for him, he gives the snake a swig out of his bottle of bourbon, and the snake swims away happy. Two minutes later the snake swims back with two frogs in his mouth.

You’d be surprised what your clients will do when you offer them a little reward or recognition!


How to use the “EAR Formula” specifically to increase your sales

Let’s start off with EARN first.

How can you be so good at offering tax services that you “earn” word of mouth business? (This may be one of your “ultimate secret marketing” weapons.)

The answer is simple but hard to “really” implement on a consistent basis. The simple answer is EXCELLENCE. That’s right, your office should “ooze” with the smell of excellent service! I can walk into one of our tax offices during the peak of tax season and see this “excellence” taking place. It makes my heart feel good. All the time and effort and work that went into developing a system that runs like a top.

Employees are smiling, enjoying the “fast pace” of all the business. Clients are getting taken care of fast and efficiently. (You can just look at them and tell they are happy.) The phone is being answered properly and new clients are being “sold” with every other ring. It’s an excellent environment to be in.

Does it always run that smoothly? (I wish.) If you can get an “environment of excellence” 85% to 90% of the time you’re way ahead of the game! We’re all human and we all make mistakes. And you know what, life “just happens” sometimes and there’s not a lot we can do about it. An employee doesn’t show up for a shift, you get two “problem” clients in a row and your “attitude” is temporarily bruised and at the same time a computer breaks down.

Again, that’s life! Roll with it and chalk it up to the 10% or 15% you just can’t control.

Now what are some of the best times to ASK for referrals? (We ask before, during and after the tax return has been prepared.) Why so many times? (Well, why not?)

Our clients get TWO letters in the beginning of tax season (whether they have come in already or not.) They are both mainly “referral pitches” asking existing clients to tell their friends about us.

When clients came in our lobby during tax season we had brochures and fliers promoting our “Refer-A-Friend” plan. When a tax preparer took a client back and sat down with them to prepare their return on the computer, an “inquiry” or “soft sell” is made talking about the referral program. When the client’s return was completed, he or she is given a brochure or flier (with referral slips to give to their friends) as they are leaving. When they come back to pick up their refund check or to get the copies of their completed return, we gave them more referral slips and “talk up” the reward benefits.

(We even give Free Gifts to our clients as a “good will” gesture to help stimulate more WOM. More about that in a minute.)

Finally, we’ll send letters thanking clients for their business and ASKING for referrals AGAIN! If they have already referred someone, we give them their reward and thank them some more.


This is called a referral “funnel”, and it’s critical.

Speaking of REWARDS, we say thank you with CASH! People love getting cash sent to them in the mail! $5 bucks, a $20 bill … because no one ever does it! It’s a great way to spread even more “positive talk” about your tax business.

If clients keep referring more people, once they get to a certain level we give them even more “bonus” money! You can be as creative as you want!

The point is recognize and reward “behavior” that adds more money to your pocket!

I like to think of our referral plan as a way of hiring thousands of salespeople to go out and “sell” other people on using our tax services. If they “make a sale” they get something like a commission check. (But in our case, it’s actually just a thank you letter and cash. It works well enough.)


This sounds pretty easy, right? So why do so many tax business owners NOT have effective referral promotions? Well, it all boils down to two main reasons: PRIORITY and ACCOUNTABILITY.

You see, “knowing” and “doing” are two different balls of wax!

It has been my experience that everyone in the tax business KNOWS referrals or WOM business is one of the main sources for new clients during any given tax season. (Every tax business owner gets them.)


They know if they do a good job people will talk well about them. They know if they ask their clients for some referrals, they get some extra people coming to their office. And finally, they know if they give some extra incentive, more people will be willing tell their friends about their tax business.

“KNOWING” is not the problem! Setting an example as the owner of the business (following the EAR Formula yourself) and making sure your staff is “crystal clear” on the fact that getting referrals in your office WILL be a mandatory part of their job description!

But how do you implement it properly? I mean, how do you make this whole thing happen like it’s supposed to?

An ACCOUNTABILITY system is the sure fire way to make implementation “stick.”


Another way would be to set a goal to mail a certain number of letters per week to your clients (or even to your friends or neighbors that are not clients) and ask them to send new clients your way.

You could make this a contest for everyone in your office. They can mail a certain number of people per week that they know (with the business paying for the mailing of course.) You get everything up on a board in the back of your office or in a break room with some kind of chart tracking “how everyone is doing.”

This helps make it fun, it gets other people more excited because they will be naturally competitive about it, but most of all you get to hold EVERYONE accountable at the same time.

You can have multiple contests. Track the number of contacts each employee has with a client compared to the number of referral slips they have handed out. You can track a different number of referral slips given to other people in or outside your office.

(We actually had one employee get so excited about handing out referral coupons that she just walked around a shopping center handing out referral slips to people WHO WERE NOT EVEN OUR CLIENTS.) She won the contest in her office and it was because she had almost 15 other people in that town walking around giving our referral slips to THEIR friends, and they weren’t even in our client base! (Of course we sent them the cash in the mail. I don’t care WHO refers someone, as long as we get new paying clients!)

Offer steak dinners at the end of each month of the tax season for most new client referrals coming from your employees’ hard work. Hey, offer them more cash if they want it just like you’re giving your clients.

Track whatever way you want. (Just make sure it is a priority and you are holding the whole program accountable.)

The main thing to remember is:

Nike. (Just do it.)

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Chauncey Hutter Jr.

Tax Marketing Expert

Chauncey Hutter, Jr, is a best-selling author and leading marketing consultant and success coach to the tax industry. Mr. Hutter grew his father’s $50,000 per year tax preparation business to a multi-million dollar empire with 24 locations, 400+ employees and over 27,000 tax clients all coming from his marketing campaigns.

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