What referral strategy does your business currently have in place? Is there one? If there is, is it working? Is it proactive?
If you do have a proactive referral strategy in place that is working, then congratulations you are a minority, the reality is, that most businesses only enjoy referrals they don’t actively seek them.
It is not begging, it does not imply that your company needs more sales fast, contacts won’t feel you are pushy if it is done properly.
Look at it a different way, lets say you had your house painted a year ago, the price was great, the finish was excellent and you are left feeling that this is the best experience you have had with a tradesman.
Now if a friend, colleague or family member asked if you knew a painter that you could recommend, would you?
Of course you would and this is how passive referrals work.
If your painter when he finished asked you a few well thought questions in regards to your satisfaction and at the end of this he asked you for 5 names of people that he could contact, would you give them?
Potentially this tradesman could save these people money and heartache, how is this a bad thing?
This is a simplistic overview, but imagine the potential value of you acting in a controlled way, surveying your clients with a couple of well thought out questions in regards to the product they just purchased from you or the service that you are providing.
The information you receive is gold for future improvements and the opportunity to gain referrals is now upon you, this must then lead to a process that sticks.
Download our Free The value of Referrals pdf
A process that sticks?
This is your referral strategy, not relying on a future passive opportunity and not just saying well Mr or Mrs client I am happy that you are happy if at any stage in the future I can help you or someone you know please remember us, This is still passive.
You need a real strategy, its pre-planned it’s a system and you can measure its success, best of all it is the most cost effective form of client acquisition and chances are your competitors don’t have one.
Its time to change your mindset, It’s time to implement a referral strategy and start enjoying the world of proactive referrals. Don’t do what you, your competitors and fellow business people have always done get proactive. Start turning today’s sales into tomorrows sales opportunities.
Analysing the Lifetime Value of a Customer
1. What is your annual turnover?
$1,000,000.00
2. Approx how many active clients do you have? Active meaning that they buy at least once a year or have bought within the last 12 months
2000
3. What is the average annual sale per customer? Divide Item 1 by Item 2
$500.00
4. Approx how many years do you retain your customers? Statistics suggest that around 20% of customers are lost each year, meaning that customers will stay on average 5 years.
5 years
5. Thus, the lifetime value of your customer is? Multiply Item 3 by Item 4
$2500.00
6. How many referrals do you think you could get per customer? Studies show: High = 3 per customer, Average = 1 per customer, Low = 1 for every 5 customers
1 per customer
7. Possible number of referrals: Multiply Item 2 by Item 6
2000 referrals
8. What percentage of referrals do you feel you could convert? Use the following as a guide: High above 40%, Average 10 to 30%, Low below 10%
30%
9. Potential new customers as a result, multiply Item 7 by the percentage ascertained at Item 8
600 new clients
10. How much on average will this add to your turnover? Multiply Item 9 by Item 3
$300,000
11. Over the lifetime of these new customers, how much will the referral process generate for you? Multiply Item 9 by the lifetime value as ascertained at item 5
$1,500,000
12. How much revenue does each referral name generate? Divide Item 11 by Item 7
$750.00
Can your business afford to not be seeking referrals?
