Issue link: https://read.dmtmag.com/i/391492
OCTOBER 2014 14 THE JOURNAL Referral Sales – The 'Holy Grail' of Lifetime Customer Value BY SCOTT STROUD MARKETING CONSULTANT Referrals. Word-of Mouth-advertising. This is the foundation that every successful business is built upon. And it's never been more vital than now. After all, social media is just the latest rendition of referral marketing. If you can do just two things – a) get consis- tent referral sales and b) manage your overhead and costs effectively – your business is virtually assured of success. Why? To earn referral sales, everything else in your business must be focused on satisfying your buy- ers – your sales conversions, pricing, service, everything! You must have high rapport and trust for your buyer to risk their reputation by recom- mending you. And if you have that, you should be seeing a minimum of 30 - 40% of your overall sales coming from referrals. If you have that reputation and emotional cap- ital with your buyers or residents, and are NOT seeing strong referrals, then you're bleeding prof- its that you should be putting into your pocket. Referrals are your very best sales, your ideal residents. Here's why: 1. Referral sales require virtually no invest- ment in marketing or advertising; 2. Referrals are more likely to convert into a sale than any other lead; 3. Happy customers tend to refer people sim- ilar to themselves; 4. Happy residents refer people they want as their neighbors; 5. Referrals come in with more realistic ex- pectations; fewer problems. Building a Referral Strategy Increasing the percentage of referral sales your business sees requires three things: 1. Measure and record your current referrals as a percentage of overall sales 2. Set specific goals as to where you want your referrals to be 3. Create your strategy, processes and pro- gram to reach your referral goals. 1. Determine and record your current refer- ral sales as: Total Sales: ____÷ Referral Sales: ___ = _____ Example: "Total Sales: 10 ÷ Referral Sales: 2 = . 2 or 20%" 2. Set new referral goals: Increase referrals from ______% to _______% of total sales. Example: "Increase referrals from 20% to 40% of total sales." 3. Create and outline your strategy to reach those goals: Example: Goal: Increase referrals from 20% to 40% of total sales. Process: Customer Loyalty/Referral Program Budget: $80 per customer per year $80 x 50 = $4,000/yr. Steps: 1. Customer Satisfaction Survey 2. Address Key Issues 3. Ensure satisfied customers 4. Define scope of loyalty services a. Happy move-in anniversary gift b. Seasonal gift/promotions c. Community improvement programs d. Annual complementary inspection 5. Define scope of program a. Incentives b. Referral offer c. Time frame 6. Launch program 7. Evaluate and adjust Let's look at these steps in detail: 1. Customer Satisfaction Survey. Most of us feel like we know the general satisfaction of our customers and so we hesitate to 'open a can of worms' by actually asking their opinion of our services. Don't fall into that trap. The great majority of your customers will truly appreciate that you're interested in their opinion, and their comments will be more positive than you proba- bly expect. And while some might use this as a 'gripe session', overall you'll get both testimoni- als you can use, as well as helpful, constructive ideas that may help you to improve in ways that you might not have anticipated. 2. Address Key Issues. Even if they are small, listening to and responding to issues that your residents and buyers point out can elevate your status and go a long way to helping happy customers give you their wholehearted endorse- ment and referral. In fact, I encourage you to go out of your way to look for things you can do to show that you care and are listening to your customers. 3. Ensure Satisfied Customers. You may never be able to please everyone, but you can re- spond to every suggestion or complaint person- ally and rationally. And even if you can't offer the solution that someone asks for, you can show you care and do what you can. Doing so will in- spire your residents to be more reasonable them- selves, and build a stronger rapport. 4. Define the Scope of your Loyalty Services. Setting aside a portion of your marketing budget for customer appreciation might be the best mar- keting you can do. You don't have to go over- board, but everyone likes to be remembered and shown appreciation. Keep this simple and fo- cused on delighting your customer with some- thing unexpected, and set a realistic budget. 5. Define the Scope of Your Program. How will you structure your referral program? What are the terms, and what must your customer do to receive the benefits. If you tell them how to refer someone to you – and make it easy to do so – you'll find more of your customers are happy to do so.