In an earlier blog I talked about the #1 low cost / no cost business growth strategy for increasing your number of new customers. And it was of course customer referrals. Are you missing out on customer referrals?
Currently 86% of my business comes from customer referrals. Was it always the case? No, of course not but I’ve focused on building a referral only business. Could you do the same? What percentage of your business comes through customer referrals today? What could it be in the future with an increased focus in this area?
A referral-only business in action
I want to introduce you to Dr. Paddi Lund, an Australian dentist who works 21 hours a week and earns $400,000 (Aus.) per year. In contrast, his colleagues work 60 hours per week and earn $60,000 (Aus.). His secret? He decided to think “outside the box”, to be radically different from his competitors. He locked his office door!
Dr. Lund started to ask for customer referrals from his patients. As referrals climbed, he started a transition to an all-referral practice. Before accepting a new patient, the new patient must refer two people of similar quality, and in return Dr. Lund delivers an outstanding level of service.
New patients are not shocked by this request. In fact, the most common question is, “Am I limited to referring only two people?”. A sign on Dr. Lund’s locked door says something along the lines “Thank you for calling. We’re inside. We can’t help you unless you’ve been a client of ours or been referred by a client of ours.” Dr. Lund’s patients feel they are a privileged, exclusive group of high quality people who receive the best possible care.
Could this be the break through you’re looking for in order to hit double or even triple digit growth this year?
Think differently about customer referrals
Now wouldn’t it be fantastic if in the final quarter of this year or the first quarter next year you acquired a brand new sales force for your business? Now I’m not just talking about one or two new people, I’m talking about hundreds or even thousands of new sales people all out there in the market place spreading the word, selling you and your business.
An entire army of raving fans who have all bought into you and your business and the difference you make to your customers.
A pipe dream or a reality?
Well actually it could be a reality, your reality.
You see, you’ve spent a great deal of time, effort and money in attracting and building the loyalty from your existing customers. Customers who have bought your products or services, who’ve bought your business brand and as long as you continue to deliver on your promise they’ll remain loyal to you forever.
These loyal customers are your ‘ideal customer profile’. They STAY! SAY! And PAY!
Who do you think these ‘ideal customers’ shake and move with both professionally and personally?
Other like-minded individuals who are similar to the customer profile you want to attract to your business.
Yes, and by simply asking those customers to refer people like them to you, you can create a torrent of low cost or even no cost customer referrals through the front door of your business.
A Systemised referral process
Your existing customers are passionate about what you do and how you do it, they’re loyal. They talk about you and your business with enthusiasm, and understand your products and services probably better than some of your own people because they’re actually using them!
WOW! Aren’t these the traits you’d look for in recruiting a new sales person? Yes, but instead of having to go and recruit them, you’ve already got them, right under your nose.
Turn your customers into your sales force and turn on your tap to new business acquisition.
Now I’m not just talking about ‘referral capture’ here on an ad hoc basis. I’m talking about a systematised referral process.
Imagine ABC Unlimited has 500 Customers. Taking the 80/20 rule, the top 20% are the ‘ideal customer profile’ so we focus our efforts on our top 100 customers. They are your new sales force.
If we pick up, on average, just one customer referral from each of those customers that would give us 100 prospects. Now I don’t know what your conversion rates but what I do know is that referral business converts at a higher rate than any other form of lead generation activity.
For this example, and to keep it simple, I’m going to work on a conversion of 20% which equates to 20 new customers from your new sales force.
Now if we systematised the process across all existing customers , this would generate 400 new prospects and 80 new clients.
How much would this be worth to your business?
Become referral conscious
I’ve not factored in any additional customer referrals from the referred customer or new customers you’ve acquired separately. I’ve just focused on securing a referral from your existing customer base. Once you start the customer referral process it’s amazing how the referrals just keep flowing in, I call this the domino effect.
It’s all about becoming ‘referral conscious’ and making it part of your everyday business habits.
Run your number of customers and conversion rates through the formula I’ve used and calculate precisely what impact this strategy would have on the growth of your business. If you don’t have a systemised customer referral process in place you are missing out on a simple, inexpensive way to grow your business.