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Increasing Business BIGTIME with a Successful Referral System
What I've discovered from most of my small business clients is that most would prefer to build their business through referrals rather than through direct mail, advertising in newspapers, radio, TV. However, most leave the referrals to a somewhat chaotic, unplanned approach. When they have a repeatable system of going after referrals their business growth suddenly explodes.
Let's look at something. Most of my clients find I emphasize the importance of having a measurable, repeatable, "system," a step-by-step plan that can be duplicated over and over and know EXACTLY how many new customers, or repeat customers, we will get every time we do it the same way. And, we also know, that if we tweak the system slightly how much improvement we got from the last time. In other words, we are in control and know what to expect. We even know exactly how many customers we'll grow from week to week.
On one hand we know how many new clients walk through the door when we market through direct mail, or when we advertise in the newspaper. And on the other we should know how many people we'll get from asking for referrals. And I've found that my sales close ratio is even higher when I have a referral, sometimes almost 2 times higher, so having a "system" for getting referrals rather than leaving it to chance is one of the greatest things you can do for your business.
Here is a way for you to develop a system of highly effective referrals.
First, ask yourself,
How much are you willing to pay to acquire a customer?
How much CAN you pay?
How much is a customer worth on one purchase?
How much is a customer worth to you over an entire year?
What is the lifetime value of a customer to you (in other words, knowing that a customer will likely come back for 3 or 4 years, how much total revenue he will generate, and how much profit he will generate allows you to understand how much you can pay to acquire new clients and still make a profit. In most cases they are worth more than the one-time purchase.)
To answer the first question, if they haven't answered this question before, and most haven't, I usually start my clients at somewhere around 15% of their gross profit for the product they are selling, but that isn't cast in stone.
How much CAN you pay is a very critical question. Even though 15% of gross profit is a good start, since this is only 15% of my profit margin I COULD go a lot higher. And, under some circumstances I will. But, of course this is still considering only the one-time purchase. You are likely to find that you actually could spend more to acquire a customer that is likely to come back weekly or monthly for the next 3-4 years. So, you might be willing to pay more to acquire a customer than that customer would generate in his next purchase. That all depends on your system of generating repeat customers and how reliable that is. Do you have such a system?
Don't forget, you will have to track the results so that your referral partners are properly compensated. You'll find that once they've seen some results they'll probably refer even more.
These two figures set the lower and upper limits for any marketing system whether it is direct mail or the referral system that follows.
System #1, target your existing customers-Send a postcard to all of your existing clients, telling them,
"We appreciate you and your business. To thank you we are offering 10% [you decide on the percentage here that works for you] off of your next visit for referrals you make to us when that referral becomes a new client. You could actually have our services for FREE for referring 10 people that buy from us."
NOTE: I will occasionally go up to 25% or even 50% with a special thank you-and the referrals go through the roof!!
Why would I be willing to spend THAT much to acquire a customer? Because I expect that customer to become a repeat customer and buy a considerable amount over time.
You can also change the offer to be cash. "We'll pay you $__ [fill in the blank] for every new customer you generate for us."
System #2-Target the neighborhood, or businesses in the chamber, etc.
"A special offer to our friends at [the chamber, on our block, etc.] [make them the same offer as above]
System #3--Put the referral cards out on your counter where every customer can pick up more to refer more.
System #4--Send the referral cards to the local business owners, encouraging them to pass them out to every employee as an added benefit for their employees.
Let's look at some of the thought patterns that have held many of us back:
I've had customers tell me they can't afford to pay that much for a new customer. They are in the self-limiting mode of "don't spend money" rather than how much money can I generate for every dollar I spend. The thought patterns typical in the "don't spend money" mode go like this:
"If I do this I just might end up spending thousands of dollars this month alone. I can't do that. I don't have the money."Or, "If someone sends me 10 customers I'll end up giving away my services for free. I can't afford to do that!"
The positive mode results in,
"What happens if someone sends me 10 clients? I'll end up with 10 times more money than I have now.""For every $1 I spend I'll generate $9 more. It isn't really costing my anything. It generates money. Put in a little, get out a lot. It's a cash machine-wow!"
One is placing limits on us rather than trying to find how big we can grow for every dollar spent. The first will seal your coffin. The 2nd helps you think like the successful companies and grow rapidly.
Alan Boyer, President/CEO of The Leader's Perspective, LLC is considered one of the world's leading breakthrough specialists. He has worked with some of the worlds largest companies, on projects in the multi-billion dollar area, and with single proprietor companies that typically double in a few weeks.
With over 35 years of business, quality, and process experience, he has catapulted businesses lightyears ahead in weeks. Some have doubled and some have jumped 10 times. He claims the key to that is:
Helping the business owners/employees develop the business skills
Helping them overcome the limitations and attitudes that they built between their ears (the self imposed limitations, I can't, this won't work for me, I'm different)
By helping them find the breakthroughs in their business and thinking
He helps companies worldwide reach further than they EVER thought possible?.FASTER
Corporate Espionage in Franchising
Franchising Trade Journals do not do well, because today with all the industry regulations only about 1800 active franchise actually exist in the US. Down sharply over the past five years. Why? Over-regulation. Now you have a Bank Cooperative, which owns a company that collect data, FranData of Uniform Franchise Offering Circulars, which are the industries required disclosure documents to new franchise buyers. The company sells it to attorneys and to competitors of which many probably are financed through that bank. My God can this be real. Then they work with industry Trade Journals to do Top 50 franchises lists, but to be qualified to be reviewed they of course wish to see your UFOC; Uniform Franchise Offering Circular.
Cross Polination of Innovations in the Cleaning Industry
According to the latest edition of Pool and Spa news; the costs of maintaining a pool, maintenance service averages about $30.00 to $150 per month depending on competition, size of pool and area you live in. This seems similar to maintenance costs associated with cleaning of the family cars if you hire out a mobile detailing service or mobile car wash. For this reason we have been studying their industry for parallels and ways to incorporate some of their methodology, software for scheduling and other anomalies associated with that industry for ideas to incorporate into ours.
Is Now the Right Time to Become An Entrepreneur?
A number of economic changes are magnifying the role of small business and creating the impetus for entrepreneurship.
How Much Risk is Necessary to Grow Your Business?
A business owner is thoroughly responsible for their own financial survival and possibly the financial survival of their employees. Business owners, for the most part, seem to be "risk takers", who really don't easily "go with the flow". They are inventive and somewhat confident, as just having their own business does mandate that they possess these qualities.
The Visionary Entrepreneur
Any success you have in life must begin with a vision. A vision is the ability to see what others cannot see. It is being able to have a picture in your mind of exactly the result you intend to produce. The visionary entrepreneur is able to see exactly what his or her business is going to look like in every detail when it is finished.
How Home-Based Business Entrepreneurs Think
Too many people are trying to start their home businesses with an ordinary employee's way of thinking. This has become a common reason why not long after sitting down and giving it a fair look into even the most lucrative business opportunity they bump into, they put it away and decide not to take any chances.
Self-Esteem and the Entrepreneur
Isn't it funny how people think that being self-employed is so cool? They think that you get to take lots of vacation time and spend all of the profits. What they don't realize is that you put in outrageous amounts of blood, sweat, and tears to get there. They don't know that you have to take the blame for every single thing that goes wrong. They don't know how many times you fell flat on your face before making it work. They think that you simply come up with a cute little idea over dinner one night and within a couple of months you're flying high living the rich man's life. The reality of the situation is very different. Statistics consistently show that most successful entrepreneurs failed a handful of times before finally finding that winning formula. It's during the failure years that you earn all of those future vacations and big fat salaries. Delayed gratification takes on a whole new level, doesn't it?
Oil Change Guys History; Part II
Franchise companies are not born they are made and when studying the history of franchise companies, it is amazing how similar they really are. To continue this story we are in the height of the Dot Com Bubble with money flowing in Silicon Valley and personal services and labor is at a premium indeed;
Rx for Falling Corporate Profits
Once again the squeeze is on as renewed inflation worries slow the economy's growth and many companies resort to believing that cost cutting is the best means to scramble back to profitability in an uncertain economy. The problem with this classic approach is that it sends the clear message to your brightest and best talent that no matter how well they perform, today there is no job security. Not only does such a move have a serious impact on morale, but as the economy improves we will find ourselves once again in a very tight labor market. It will be next to impossible to replace laid-off workers and worse yet, your current work force, especially those brightest and best, may well decide that it is time to move on to greener and possibly more secure pastures before the next downturn hits. Is there a better approach than cutting off your nose today and spite your face tomorrow? Absolutely!
Applying The Daffodil Theory into Business Practice
At times all of us need a bit of inspiration to add to our day. When I first read this
article, I had started my own home based business and was in a bit of a slump. This
inspirational story was exactly what helped spring me into action and keep on
Determine Your Niche & Be Successful
What's a niche?
What Makes an Entrepreneur?
Rupert Steiner in his book 'My First Break' attempted to define the secret of becoming an entrepreneur and following interviews with over one hundred entrepreneurs, Steiner concluded that there was not one defined path. He has, however, drawn out observations of an entrepreneur's personality traits. They have a tendency to be rebels, outsiders, original thinkers, risk takers and break new ground. Entrepreneurs are always on the lookout for new business opportunities and have the guts it needs to start up a business. They have total commitment to what they are doing, which verges on obsession behaviour.
Starting a Company on a Shoe-String Budget
A lot of people never start businesses because they believe they don't have enough money to do so. Unfortunately, these same people don't realize that many of the world's most successful companies were started on a shoe-string budget by an entrepreneur with limited resources. Below is a list of tips to help you save money when you're first starting a company: Manage your finances in MS Excel, not Quickbooks.
Manage your contacts in MS Outlook, not ACT.
Get free legal and accounting advice from law/business students or lawyers/accountants who are willing to do pro-bono (free) work.
Look for and join organizations that support youth entrepreneurs and small business owners.
Hire unpaid interns and make their job exciting.
Partner with somebody instead of paying them.
Use credit cards.
Get free, professional advice from SCORE, Teachers, and Professors.
Get investments from family and friends.
Find organizations who incubate startup companies or companies who might have office space that might be willing to let an aspiring entrepreneur use it. Perhaps, your school will let you use their copy machines and phone lines.
Swap services with a company instead of paying them.
Learn how to do graphic design and web design yourself. If you have these two skills, the startup costs of every business you have in the future will be dramatically reduced.
10 Tips for Would-be Entrepreneurs
Every evening as the sun sets beyond the mangroves that line the shore along the western bank of Lake Myakka, Florida, herds of wild deer and wild black pigs come down to the water's edge to drink and slake their thirst.
Build Your Own Board Of Experts
The most successful entrepreneurs rely on their advisory boards to help spot new opportunities and potential pitfalls.
Mobile Car Washing Long Term Opportunities in the Market
The long-term outlook for the Mobile Car Washing industry is positive. It is ripe for savvy company to develop regionally or nationally to dominate the market. Currently in the mobile car wash industry there is no well-known companies as is the case with other service businesses such as Domino's Pizza, Midas Muffler, Thrifty Rent-A-Car, and Jiffy Lube. These companies will be able to develop revenues and market share sufficient to sustain franchisees as local leaders in their fields. The Mobile Car Washing Industry awaits a company, which can standardize the industry and allow for consumers to know what to expect.
Financing Your Business
Anyone who is serious about making some money is already very well aware of the fact that it takes some type of investment to make this happen. I've read a lot of copy that suggests one can build a business for free, if they are willing to spend an extra amount of time to compensate for their lack of financial backing.
The Entrepreneurial Difference
Who would ever have imagined that going door-to-door in my neighborhood selling figs from a bright orange shopping cart would have been my entrepreneurial beginnings? I surely did not. But, now that I look back and also look around me at other business owners, I see clearly that so many of the traits common to entrepreneurs are present at a very early age.
Be Where the Pucks Going To Be
The "Great One" said it best
Competing With The Big Dogs
You run a small consultancy. You're well qualified, experienced and dedicated. Yet you can't get a meeting with the corporate decision-maker.