Gaining new customers is one of the most expensive and time-consuming activities in growing your business. Some business owners are taking out loans and taking on serious financial stress to get new customers on their list.
Acquiring a new customer is an expensive and time-consuming process. It takes a while to build credibility and trust with people, and this work continues long after they make their first transaction.
On average, a prospect will have from nine to fifteen interactions with you or your marketing system before they buy; that’s a significant investment of your work and time.
Ask yourself what it would be like if your existing customers could do a large part of your marketing for you, sound too good to be true?
urn on the initial investment (including any sign-up discount you might give them) will lead to many future years of sales.
An Untapped Source of Value in Your Business
Once a new customer is on board, you can build on that relationship and keep them for many years. The return on the initial investment will lead to many future years of sale.
This is where a lot of business owners leave money lying on the table, in fact, many just focus on making the first sale and then hope the client will come back, not bothering to follow up or keep in touch.
That loyal customer and the relationship that you have built up is a valuable asset that you can cultivate and use. Don’t forget that as a smaller business owner, you need to get the maximum return on your marketing investment so smarter is better when every advertising dollar counts.
Each one of your customers you have built a trusting relationship with can shortcut the time to grow your customer base. In a world where trust is a scarce commodity, the prospect conversion rate skyrockets where the introduction is via referral.
Multiply Your Marketing Investment Returns
Where the conversion rate from leads to sales for new customers averages 30% to 40%, the conversion rate for referrals is up at around 80% and the number of lead responses can multiply by three times or more.
Let’s see a simple example of how a marketing referrals strategy pays off, the following table shows a comparison of two strategies;
- A marketing campaign that targets new customers
- A marketing campaign that invests in a referral program
That’s a big increase in return on your marketing dollars, can you see how a strategic shift to marketing to referrals makes to generate greater customer lifetime value?
A lot of business owners understand this intuitively but are too busy, fail to do the numbers or understand the connection. It often makes sense to use a combination of both strategies.
Five Ways to Generate Referral Business
So here are five ways you can get in touch with your “referral” customers and start tapping into the value that lies within your loyal customers.
- Bring a Friend Free – Offer a free first visit for each new person they bring along or offer a group discount if they all buy at once.
- Gifts – Free movie tickets, restaurant tickets, bath towels and make sure it’s decent quality. You can do this before and after each referral.
- Web site – Ask for a link back to your business or sales site and give them a commission on each sale.
- Get The Timing Right – Wait until you get a compliment from your customer, this is the best time to ask for referrals.
- It’s OK To Say No – Let your customer know it’s alright to say no to your request, this takes the obligation off them and increases the chance they will agree.
Can you see how building a loyal customer base can give you a platform to boost sales growth and slash your marketing costs? Imagine your profitability in six years just by implementing this strategy alone.
If you have any questions then please use the comments below, how can you implement some of these ideas ion your business today?
© Copyright 2019 Reboot Business Strategies Pty Ltd.
P.S. There are literally dozens of ways to generate new referral business, these are some of our favorites. For these and other ways to give your business a quick reboot call us on 1300 424 222 or visit www.rebootbusinessadvice.com and get a free guide to a complete makeover in the key areas of your business.