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SAVVY
SELLING - MARCH
3, 2006
How to
Increase Your Customer Base
By Michelle Nichols
EXECUTIVE
OVERVIEW
Successful sales programs require
strong referral systems AND
continuous marketing. Learn
how and why.
Learning to maximize
sales referrals is critical
to boosting your business, but
it shouldn't replace marketing
to new prospects
Recently, a saleswoman handed
me her business card with a
symbol on it that said her business
was 100% based on referrals.
I thought this was a great idea
until I realized there's a dark
side to a pure referral-based
business.
Now, let's not overlook how
great referrals are. First of
all, prospective customers who
are referred from your fans
are probably going to be nice
people. Since birds of a feather
flock together, assuming you
sell to customers who are pleasant,
they're likely to refer others
of their ilk. Who wouldn't like
to spend all day selling and
writing orders with delightful
customers?
GETTING PERSONAL. Referrals
are also often presold. When
Customer Bob refers you to his
friend, Jane, he has probably
already told Jane some wonderful
things about you and your wares.
A sincere testimonial like that
gets Jane half-sold before she
has even spoken with you. If
she isn't qualified, she may
refer you to someone else in
her network. If Jane is a qualified
prospect, you will close her
sale faster.
Referred customers are also
more loyal to their vendors
than nonreferred clients, because
there's a friendship factor
among them. If Javier, Ming,
and Samuel are all personal
friends with each other and
customers of yours, too, they're
more likely to keep buying from
you, because buying from someone
else may weaken the bonds of
their personal friendships.
This woman's card trumpeted
to the world that she was 100%
referral-based, and affected
me on a subconscious level.
Without saying a word, she set
the expectation that people
should refer clients to her.
It stimulated me to go through
my mental Rolodex to see if
I knew anyone I could refer
to her. It also branded her
as worthy of referrals.
Yes, there are many benefits
to having a referral-based business,
but there is one catch: You
may eventually work through
all your customers' strong connections,
like a garden that has had all
its nutrients depleted, or a
hand of cards that has been
played out.
CUSTOMER COSTS. This is why
salespeople and companies with
long-term success never stop
marketing. Those salespeople
who keep setting and breaking
sales records year after year
don't ask, "How long do
I have to market until I can
just sit back and grow my business
from 100% referrals?" Rather,
they have learned the importance
of continually adding new customers
who are not related to their
present client base.
The reason is simple: From
these new, nonreferred customers,
you can then start to generate
referrals from new spheres of
influence, new "flocks,"
if you will. It's similar to
opening a new branch office
in a distant land. Suddenly,
a whole set of new relationships
and possibilities emerges that
you would never have discovered
if your business remained 100%
referral-based.
There is a drawback to marketing
for new customers vs. getting
referrals from existing customers:
The cost per new customer is
much higher when you have to
market to attract them. Although
marketing is exciting, your
bottom line will take a big
hit if you choose to ignore
referrals and focus exclusively
on marketing.
REFERRAL REWARDS. Obviously,
a mix of new customers from
referrals and marketing efforts
will yield the most sales at
the least cost and maximize
your profits. The best percentage
for your mix will change over
time.
When you started selling, you
probably spent the vast majority
of your time marketing for new
customers. As your list of happy
customers started to grow, and
you started to receive and ask
for referrals, the mix started
to change. After several years,
you will probably maximize your
results with a mix of around
75% of new customers from referrals
and 25% from marketing.
Since referrals will always
be the best source of business,
you may want to set up a formal
referral program. These are
popular with many Realtors and
other salespeople, but they
could be modified to apply to
almost any industry. Just make
sure you reward your referrers
consistently and generously.
You can even buy and sell referrals
online from sources like InnerSell.com.
Genie Fuller, founder of Houston-based
Winning Referrals, says you
can't just wait for your customers
to refer others to you. So she
teaches professionals three
"referral rituals":
reminding your customers of
what you have accomplished for
them, recapping two or three
"meaningful nuggets"
that differentiate your services
from the competition, and helping
them identify your target customers.
BE DIRECT. When I heard Genie
speak years ago, she recommended
that salespeople help their
customers think of someone specific
to refer. Instead of asking
your customers, "Do you
know anyone you could refer
to me?" she suggested that
you phrase your question more
specifically -- for example,
"Do you know anyone at
your workplace who drives a
Lexus?"
I laughed when she reminded
us that sometimes those customers
will say, "I don't know
anyone at work like that, but
I serve on a charity board with
two people who drive a Lexus."
The point, of course, is that
you're still getting the type
of referral you wanted. In so
doing, you also avoided that
awkward, dreaded Bermuda Triangle
of, "Gee, if I know anyone
to refer to you, I'll let you
know."
There's no perfect path to
increasing your sales, but asking
for referrals and teaching your
faithful customers to refer
you will increase your client
base. Add to that a solid, targeted
marketing program, and you will
maximize your sales. Happy selling!
Michelle Nichols is a
professional sales speaker and
consultant based in Reno, Nevada.
She welcomes your questions
and comments. You can visit
her web site at www.savvyselling.com
or contact her at michelle.nichols@savvyselling.com.
Her toll-free number is (877)
352-9684.
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