There are three sure-fire ways to increase your profits in 2003.
1. Raise prices and charge more.
2. Make more sales.
3. Reduce your costs.
Sounds simple doesn’t it? We’ve certainly seen a lot of cost-cutting going on in the current economy, and a soft economy seems like the worst time to raise prices. So, companies are scrambling to find ways to increase profits AND keep their most valued and loyal clients. This doesn’t happen easily when there’s a whole lot of cost-cutting going on. However, there is a solution to this dilemma. It’s the ONLY strategy that incorporates and integrates all three of these profit-generating ideas. It is committing to building a “proactive referral-driven business.”
In 2002, we tracked and measured the activities and results of a varied group of landscape sales professionals over a 40-week period. What we confirmed was:
1. 80 percent of repeat business bid was successfully closed.
2. 79 percent of referral business bid was successfully closed.
3. 19 percent of “yellow page” cold call business bid was successfully closed.
We already knew a few things about referred business, such as:
A. On average, the sales cycle time is shorter.
B. There are virtually no out-of-pocket expenses.
C. They all but eliminate competition and price issues.
D. The best referrals came from repeat business clients.
The most surprising and startling information came from the numbers that measured the activities related to asking for and getting referrals. On average, each sales professional proactively asked for referrals once every 5.2 days; that is, less than once a week. This was a significant inconsistency with the statements of the companies and professionals who claimed: “This is how I get most of my business.” It begged the question, “How do you develop a culture with a collective commitment to grow the company by a proactive referral-driven strategy?”
Culture is loosely defined as the collective values, attitudes and actions of a group of people. I use the acronym S.E.R.V.E. to outline how to build this culture. Being of service is the foundation of a proactive referral-driven business.
S. SELECT the right customers to build the future of your business. Study your “extremely satisfied customer” list – the customers who are repeat buyers, who use more than one of your services and most importantly the ones who consistently give you referrals and freely champion your company. Once you know who these people are, do three things:
1. Ask how you can clone these people. Create a profile (a “perfect client” description) and you will know better where to find them.
2. Ask how you can serve these people and take your relationship to a deeper level. If you are going to spend money trying to generate new business, spend a lot of it with your best clients because they will give you a far greater return on investment.
3. Ask your best clients for referrals first. They’ll already be associated with “like-minded” people – people you already know you can work successfully with.
E. EMPLOY the right people – people who share your relationship values. A proactive referral-driven business is based on building long-term, profitable relationships. People buy from people. Hire sales professionals who know that the real profits come from additional sales made to the client and the continuous stream of referrals they provide.
This same long-term view is shared by support and production people. Every customer touched can facilitate a referral, a new lead and eventually a new customer.
R. REWARD. Heed the management adage: “That which gets rewarded gets repeated.” Referred business historically costs significantly less than any other marketing method. Create ways to reinvest resources with your sales professionals and clients. This can range from hard dollars to symbolic gestures of appreciation. Give sales professionals a bonus or perhaps a higher commission percentage for referred business they generate and close. Take a new client and the person who referred him or her out to lunch to affirm both relationships. Whether you use a company-wide reward program or take it on a case-by-case basis, the message you are sending is that giving referrals is highly valued and important.
V. VALUE what you are bringing to every client: your education, experience, enthusiasm and most importantly your commitment to be their landscape professional for life. When your clients understand that this is not about making a sale, but is about being of service, they will have a deeper appreciation for your competence, creativity and commitment. Not only will they line up to be served by you, they will line others up to be served by you.
E. EDUCATE your clients about your business philosophy of referrals. Prospects prefer doing business with people who share their values. Tell your prospects that you will ask them for referrals and how that is a benefit to them. Show them how to easily and comfortably give you referrals. When people trust and like you, they will want to help you succeed – but you must make it easy for them to do so.
The easiest way to start a referral-driven culture is to bring awareness and attention to referral-generating activity. Remember, “that which gets measured, gets managed.” In the next three weeks track how many times all sales professionals proactively ask for a referral. It is a basic and fundamental success habit. In the following articles I will talk about the keys to opening up a floodgate of referral habits and systems.
Clifton Pieters’ latest book for landscape professionals titled "SHOW ME THE PROFITS: Closing More High Margin Sales With Powerful Referral Selling Secrets" is available through the Lawn & Landscape site. Pieters can be contacted through his Web site and by phone at 503/492-0548.