When my parents owned and operated Clear Lake Lodge, I learned a lot about business. As a resort hotel (before the Internet age), we relied on people to book their vacations months ahead. We received very little short-term business, except when the campers got tired of the rain. Generating revenues required lots of thinking.
The thinking belonged to the owners: my mom, dad, aunt, and uncle. They thought about how to get more guests to stay at the lodge. Their simple strategy is even more valid in today’s highly connected world: referrals and repeat business.
Figure 147.1 The Revenue Formula: Referrals and Repeat Business
Referrals
The key question to ask your clients and customers is this: will you speak highly of us to your peers, family, friends, and associates? Consider these questions to assess your current state of referrals:
- How much of your new business is generated by referrals?
- What is your formal referral process?
- How do you inform people that you accept referrals?
- How do you reward people who send you referrals?
Most businesses grow by referrals yet very few have a formal referral strategy or process. Here’s an extremely cost-effective place to start: ask you existing customers for referrals.
Repeat
People take vacations every year. Every August, we still go camping at Clear Lake for a long weekend, and we take other vacations throughout the year. In fact, I recommend that business owners take at least a week every quarter to recharge; ideally a couple of those breaks should be at least two weeks long.
- What percentage of your revenue is from your existing customers?
- How do you inform and educate your current customers about your full range of products, services, and value?
- How do you quantify the economic value of your results? (This is especially relevant in business-to-business and financial services.)
- In what ways do you treat your best customers differently or better than your other customers?
- How do you oil the squeaks (those who grind you on price—a squeak—and then complain about everything—another squeak) and turn them into better customers?
Most repeat business is customer driven. Be proactive and create the next transaction for the customer. Offer to schedule in advance, pick up, deliver, store, fix, maintain or refill at a specified time. Don’t wait for your customer to place the order. Be proactive and you’ll increase your sales and your customer’s happiness.
Tough Questions
Do you really know how much business you generated from referrals and repeat business in the last month, quarter or year? What’s your ROI on advertising compared to referrals and repeat business? How can you increase your referrals and repeat business volumes?
From the Vault
The most cost-effective methods for marketing are to take great care of your existing customers, ask them for two names of people that would benefit from your value, and to come back as customers. Better yet, schedule their next visit on the way out the door. If my dentist and hair stylist can do it, so can you.
Future Events
Attention: Business Advisors
Phil will be speaking on Consulting to Small and Medium Enterprises at Alan Weiss’s Consulting Convention in Atlanta on March 11 – 13, 2015. This is one of the most cost effective events where you can spend three days with Alan, a group of his elite consultants, and special guest speaker Martin Seligman. Here is the link to Alan’s site: http://www.alanweiss.com/growth-experiences/million-dollar-consulting-convention/
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Phil Symchych, C.P.A., M.B.A., is the president of SYMCO & CO., the founding partner of Builders Group Chartered Accountants, author of Phil’s Profit Points™ and co-author of the upcoming book, Business Wealth Builders, along with Alan Weiss.
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