There are three sources of sales for any business: 1) New Business; 2) Repeat Business; 3) Referral Business.
Most owners of small and mid-size businesses (SMBs) focus their marketing efforts on #1 and pretty much leave numbers 2 and 3 to their own devices - possibly ignoring the opportunity to triple their sales.
The two factors driving this situation are ignorance and fear: Very few SMBs know how to drive repeat and referral business and most are afraid to ask for a follow-on purchase or referral.
I know of one owner of a multimillion-dollar direct-response marketing company, who was afraid to communicate with his customers after the first sale because he was sure that they would never do business with him again after their initial purchase experience.
As a result, his company, with a database of hundreds of thousands of customers - including their email and shipping addresses - did no follow-up offers of complimentary products or services, undoubtedly leaving millions of dollars of annual sales on the table.
His concern was that, by opening a new communication with the customer, he was giving them an opportunity to complain, and he didn’t want the customer service hassles. My response was that most people were almost certainly happy with what they had purchased, and, even if they weren’t, they wouldn’t admit to themselves (most people use rationalization to reinforce their decision-making process).
Even the small number who might take the opportunity to complain would give him a chance to improve his offering and delivery process, thereby eliminating the need to worry.
Oftentimes, SMB owners find it difficult to ask for referrals. Many feel like they’re begging and that they are putting their customers on the spot, potentially making them feel sufficiently uncomfortable to not buy again themselves.
Just like any successful new business development program, a systematic approach is required when focusing on repeat and referral business. Here are a three pointers:
1) Capture customer information at the point of sale. Make sure you know everything about who is buying from you, what they are buying, how much they are buying and how often. You also want to gather as much of their contact information as possible including shipping address, email address and telephone number. I first started doing this with a point-of-sale system in the late 1980s, so I know you can do it today.
2) Actively market to your customers. There is no stronger indicator of a person’s future buying behavior than their past buying behavior. Don’t send your customers the same marketing communications you are sending to your prospects. Offer them special deals, send them different mailers, produce customer appreciation events, create frequent buyer discounts and premiums. Most of all, communicate with them frequently to let them know how much you appreciate their business and how you’re showing your appreciation.
3) Actively ask for referrals - but not face-to-face. Because so few of us are able to personally ask for a referral without making everyone in the conversation feel like they just stepped into as Southwest Airlines commercial (Want To Get Away?), do yourself and your customers a favor by asking for referrals passively: on your business card; in your email signature block; on packaging, invoices and stationery; and through a systematic series of cards like the ones demonstrated in The Referral Movie (use access code 6752). These methods are inexpensive, yet pervasive and powerful.
One more great source of referral business is BNI: Business Network International. As a member of BNI, the group you meet with becomes a powerful sales force in your community, always looking for opportunities to refer business your way. Commitment is a big success factor for anyone considering joining BNI, but the amount of referral business you can generate through the organization can be flat-out amazing.
For more information on BNI and another referral resource I use, listen to this podcast.
