If most of our business arises from repeat and referral clients, logically, we should spend most of our marketing efforts on repeat and referral clients!
After you absorb that inspiringly obvious statement, take a few minutes to consider whether give priority to earning (and then measuring) your referral/repeat client success?
Sure, a referred client may be nearly free (in marketing dollars), but if your paid advertising generates a client who will refer and repeat, then your return on investment will be highly satisfactory.
But if you don’t max out your referral/repeat marketing processes and systems — and continue to improve them — then you are also wasting exponentially greater sums on your other marketing initiatives. And if you are failing to earn referrals through your business practices, quality, and trust, then you either will be on an endless treadmill or worse, the road to business failure.
See for example, these observations by Bernie Heer:
One of the things I learned from listening to Paul J. Meyer’s talks about “the endless chain of referrals” (link added by MB) was that the cost to acquire a good new customer is irrelevant as long as you then build a chain of referrals from that customer.
This is a pathway to riches as a business owner – if you create endless referral chains, you can outspend everybody else to acquire good customers to start new chains.
In the contracting industries, there are three approaches to referrals chains –
Direct referrals – Everybody understands this approach, but most don’t actively develop a referral culture in their business, or adhere to a process to be certain that each client provides at least one. (Hint – get your referrals early in relationship, not later.)
Direct Endorsements – Example: Mr. and Mrs. Jones LOVE your work and are delighted with you. YOU write and SEND a letter from THEM to their neighbors, members of their church, the group of people who also belong to the symphony, the members of Mr. Jones’ tennis club, and so on. This is a tragically underused strategy. In fact, in my long years of advising contractors about marketing, the only one I’ve EVER heard of using it is… me.
Implied Endorsement – Example: Mr. and Mrs. Jones LOVE your work and are delighted with you, but are not 100% comfortable sending a personal letter to their group of neighbors and acquaintances. In this case, the letter goes to the same people as the direct endorsement, but the letter is from you and, ideally, includes a testimonial from the Joneses. Even a letter to the Joneses’ neighbors without a testimonial – the 12 house strategy – can be effective, but it’s much more effective with a testimonial.
The key to avoiding broken chains is to do more than one thing to get to the next link in the chain. In addition to these strategies, you must stay in contact with your prior clients with a paper-and-ink newsletter. In fact, when you get the lists of people from the Joneses, put those people on your newsletter list.
Include all of these people in your mailings, emails, offers, and promotions.
Bernie is right — remember referrals and repeat clients are vital to your business — if you don’t have them, you are certainly doing something very wrong, and if you don’t consistently think about how to enhance and develop your referral chain, you are throwing marketing dollars away and denying your true business potential.
You can reach Mark Buckshon by email at email@example.com or make a comment on this posting.