How Your Referral Arrangement Is Hurting Your Consulting Business
Updated on May 1, 2023
What are you getting in return for test-prep referrals? And what exactly are you giving up by referring students to test-prep specialists? You may not have thought much about it. Many college admissions consultants don't. It's time to reconsider throwing away money on lopsided referral arrangements.
“Do you offer SAT® or ACT® prep?”
It's a simple question with a simple answer. You either do, or you don't. You either enroll clients in a test-prep course, deliver score improvements, and generate future leads—or you don't. You either fuel your sales engine—or you don't.
If you do, then you've harnessed one of the most powerful leads generators in all of for-profit education. If you don't, then you're literally shooing valuable test-prep leads out the door.
The Cost of Doing Nothing
In the past, there may have been good reasons to refer out test-prep tutoring rather than bringing it in-house. The costs and potential disruption associated with launching a new wing of your business should not be taken too lightly.
Furthermore, it's generally wise to focus on your core competencies and let others chase the money at the periphery of the market. But does the same advice apply when the periphery of your market is the multi-billion dollar Test-Prep market? Certainly, it warrants further investigation.
The good news is that you can quickly and easily bring test prep in-house. There are affordable tools for tutors that can make it easy to add test prep to your professional offerings. What’s more, adopting a custom-branded, white-label test-prep system can actually drive substantial growth in your core business.
Ignore Your Clients' Demands at Your Own Peril
For some tutors and college counselors, the prospect of adopting a test-prep curriculum just seems too daunting to tackle. In these cases, prospective clients are forced to seek out the services of professional test-prep tutors.
To mitigate the loss, tutors and college counselors often strike deals with local test-prep providers. On the surface, these referral exchanges seem like a solid way to boost both companies by building awareness and growing the potential client bases.
In actuality, the provider who delivers the most comprehensive service enjoys a tremendous advantage in any high-end service industries, where discriminating customers happily pay a premium for convenience. All else being equal, a college admissions consultant with a one-stop shop, soup-to-nuts approach to college admissions will attract customers from specialists in both test prep and independent college counseling.
Vacuums and Specialists: Hated by Nature
1. Aristotle postulated that Horro vacui—"nature abhors a vacuum."
2. Gary Larson confused a lot of people who weren't familiar with Aristotle's postulation.
3. We at Clear Choice humbly postulate that Horro eidikós— "Nature abhors a specialist." (For the record, I Googled "Nature abhors a specialist" because I felt like I'd heard it somewhere. Happily, it appears to be a fresh concept, at least with regard to the point I make below.)
All of this is to say that in nature, the stubborn specialists are the first to go extinct when conditions change. The more stubborn, the greater their vulnerability to changing conditions. Such is the fate of the stubborn specialists in high-end markets as well. From this perspective, the impulse to set up a referral arrangement makes perfect sense. It allows you to generate some revenue outside of your domain while remaining within the safety of your specialty. Unfortunately, that's not the whole story.
Even under the best circumstances, a referral arrangement can only stop the bleeding... temporarily. This is to say that your business will still be hemorrhaging leads. Worse, each lead you send away must properly be understood as not only one lead, but rather a chain of future leads that likely would have resulted from your providing the initial student with an exceptional test-prep experience. Not good. And that's the best-case scenario.
Under less than ideal circumstances, your referral arrangement may actually exacerbate the problem by making you feel good about driving a "chain of future leads" out the door.
Growing to Meet Demand
The reality is, most clients are looking for a total package solution rather than having to crowd their schedules with multiple college-prep professionals. When you announce that you cannot meet all of a customer's needs, it is very likely you won’t even get a piece of their business.
It may sound paradoxical, but your goal should be to specialize in providing comprehensive college admissions consulting. And that comprehensive consulting should include everything from applications to essays to financial aid to—you guessed it—test prep. Furthermore, test-prep tutoring is far more scalable than college admissions consulting.
What's Next?
Have you got questions about bringing test prep in-house? You're in luck! We have not only started working on a series of blog posts to show you how, but we've also decided to launch an Ask Me Anything Webinar Series.
This webinar series is intended to answer a few frequently asked questions from college consultants, independent tutors, and test-prep professionals. Contact us today to get your name on the guest list.
