Graham McGregor is a marketing adviser.
OPINION: Here are three referral strategies you could use in your business to boost your sales.
The milkman referral strategy that increased sales by 500 per cent and made a milkman a minor celebrity in his area.
The crazy dentist referral strategy that allows a dentist to work three days a week and earn twice the income of most dentists.
The accountant’s referral strategy that produces high quality new accounting clients every single month.
* Stop being an invisible business
* What is the gap your product or service solves?
* The lost sales solution: How to stop losing repeat and referral sales
Let’s look at each referral strategy.
The milkman referral strategy
Many decades ago, I heard about an interesting milkman in my city.
Here’s some background:
For a long time you could only buy milk from either the milkman or the local dairy.
Then supermarkets were given approval to sell milk and the sales of milk and milk related products for many milkmen plummeted as many people decided to buy their milk when shopping for their groceries.
However, there was one milkman who took an interesting approach.
He bought a milk round just after the supermarkets gained their approval to sell milk.
He knocked on the door of every home in his milk round and personally introduced himself.
He said to each person he met something like this:
‘Hello I’m John your new milkman. Here is a list of all the products I sell and how much they cost. You can buy milk tokens from your local dairy. Now, while I’m here can I ask you something? If you do order milk, cream or yoghurt etc where would you like me to deliver this? Would you like it delivered to your letterbox, or would you prefer to have it delivered to your back door or front door? There is no extra charge, and it is all part of the service.”
Now if you lived up or down a long drive then having your milk delivered right to your door was very convenient. Whatever you wanted he wrote down in a notebook, and he took down your phone number at the same time.
A lot of customers really liked this and began telling their neighbours and friends about this new milkman.
About a month later the new milkman had a problem with his milk truck that meant he would be delayed delivering his milk for about three to four hours.
So what did he do?
He got his family involved, and they borrowed three neighbours’ phones, and he used his home phone as well to ring up every single customer he had. (This was in the days before cell phones and the internet.)
They told each customer that they had a problem with the truck, so the milk would be delivered about three or four hours later than normal. His customers were amazed that the milkman took the time to do this and told a lot of their friends what he had done. The end result was the milkman’s milk sales increased by 500 per cent within six months of taking over the milk round.
He was still selling the identical product (milk, cream, yoghurt etc) at the same price that you could actually buy more conveniently from your local supermarket.
However, what he did differently was a little bit of unexpected added value. This added value was enough to get a lot of people recommending his services to many of their friends, and it increased his sales by 500 per cent.
How do you apply this strategy to your business?
It’s simple. You just give some unexpected added value to all your clients.
It could be as easy as sending them a letter and enclose an inexpensive scratch and win lottery ticket with each letter. In the letter say something like this …
“Hi John, I just wanted to say thank you for being a customer. I really appreciate your business. Warm regards, [your name]
PS: You will notice I’ve enclosed a scratch and win lottery ticket with this letter. This ticket gives you the chance to win up to $10,000 in a few seconds. Now I hope you win big (and if you do, I’m definitely free for lunch ☺). If you are chatting to any of your friends or colleagues this month who you think might be interested in what we offer just send them our way and I promise to take very good care of them.”
Imagine if you sent a letter like this to 100 of your customers by good old-fashioned snail mail. It might cost you around $250 to do this. Maybe $1.50 for postage and $1 for a scratch and win lottery ticket. Do you think some of these customers might mention your business to some of their friends or colleagues?
An appliance shop uses this strategy very well. About two weeks after you buy a major appliance they courier out to each customer a beautiful plant. It comes with a note that thanks them for their business. This appliance shop is not the cheapest in town and this added value strategy costs them about $10 for each customer. And it produces thousands of dollars of referral business every month as customers tell their friends about their unexpected added value.
How will you use this strategy in your business?
The crazy dentist referral strategy
Paddi Lund is a dentist based in Queensland Australia. He took an unusual approach to being a dentist.
He made his phone number confidential and removed all the signage that identified his business as being a dentist. And he only allowed people that had been referred by existing patients to become new patients at his dental clinic. In other words he was now a referral only dentist.
Paddi did something very interesting with every new patient he took on. In his first meeting with them Paddi explained how he worked and what he did. He then said, I only allow people to become patients if they have been referred by an existing patient. So after you have used my services I will ask you if you could introduce two people you know who might be interested in what I offer. Is that OK with you?
Do you know what most patients tell Paddi in answer to this question?
They ask if they can refer more than two people!
How do you apply this strategy to your business?
You don’t have to make your phone number confidential and remove all your signs.
All you do in the first meeting with new clients is explain your referral approach.
You say something like ‘John I prefer to work mainly by referral in my business. That way people who have enjoyed being a customer can introduce people they know who might also appreciate what we offer. After we have worked together for the first time I’d like to ask you if you could refer a couple of people you know to my business. Is that OK with you?’
Most people will say yes to this approach, and you now have permission to ask for referrals from many of your existing clients.
The accountant’s referral strategy
I met an accountant many years ago while selling seminars. The accountant had a small conference room that he hired out in the middle of the city, and I found that this conference room was ideal for people who worked in the middle of town.
I got chatting to this accountant, and he shared his strategy to get new accounting clients by referral.
He had a very simple offer that he explained to all his clients and contacts.
If anyone would refer someone to his accounting practice, he would sit down with the person that was referred and explain what he could do for them. After the meeting he would give the person he spoke to, plus the person who referred them, a double movie pass valid for one year with his compliments. He gave this double movie pass to both people (the person who was referred, plus the person who referred them.) It did not matter if the person became a client or not. Each person still got a double movie pass.
If the person who was referred did become a client, the person who referred them also received a $200 Westfield Shopping Voucher which could be used in hundreds of local shops in major shopping malls.
The accountant discovered that around 35 per cent of the people he was referred to became paying clients, and usually spent at least $2000 a year on accounting fees and advice for many years. His cost for a double movie pass to two people was about $60. He got roughly one referral in three to become a client. So with the $200 shopping voucher plus $180 in double movie passes to six people it cost him $380 for one new client.
This was very profitable for him to do, and he gained dozens of new clients each year with this approach.
Which of these three referral strategies could you test in your own business?
Graham McGregor is a marketing advisor. You can get his free marketing guide ‘The Plan B Sales Solution’ at www.simplemarketinganswers.com
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