Recently, Zac and I have been conducting a lot of Existing Customer Opportunity Audits with prospective clients and one of the questions we ask is:
“How many referrals per active client/customer have you averaged during the last 12 months?”
We can count on one finger the number of times a client has been able to reliably answer this without guessing or having to go away and dig deep into records to find it / create it. This is a key statistic for growing your business, yet most business owners don’t measure it.
Arguably the quickest way to double your business is simply to get every customer to refer another one to you. Some may refer 5, others may refer none, but on average if every customer refers 1 other customer in a 12 month period, you will essentially double your business.
But that’s not all it will do, it will
- Lower your marketing costs. (referral generation tactics are dirt cheap or even free!)
- Referred customers have less price resistance. Referred customer have pre-established trust. They are predisposed to buy. And they have less resistant to price than new non-referral customers.
- You’ll get more referrals. Customers obtained by referral are usually more likely to refer.
There are a number of systems you can implement to increase referrals, thank you gifts, referral programs, reward systems, newsletters etc, and if you are interested in finding out more about those, simply give us a call on 1300 120 106 and book in your Free Existing Customer Opportunity Audit.
But today I wanted to focus on something that you can implement immediately at no cost. It’s all about making referrals a priority and holding yourself and your staff accountable.
There is one statistic you MUST measure, focus on and try to improve.
The Average Number of Referrals per Customer
This statistic should become you and your staff’s highest priority and your primary focus. You want keep yourself and your staff accountable and ask “What did I do today to get more referrals?”, “Who did I talk to today about referrals?”, “How many customers did I talk to about referrals today?”
Most businesses tend to be over the moon with whatever referrals that come their way… But honestly, given the power of referrals, not measuring them and just letting them happen willy-nilly is lazy and somewhat negligent.
Try to measure it weekly. Or at the very least, monthly. Just by measuring the number and being accountable, there will be improvement in the numbers, or at the very least it will remain stable.
It’s amazing what happens when you measure things… there is often significant improvement in practices purely because of the regular awareness and reporting of statistics and activities. All successful businesses are managed by statistics.
It may sound tedious or boring, but it is the only scientific way to achieve success.
Recently we helped one of our star newsletter clients, Jarrad Mahon from Investors Edge Real Estate, implement a Referral Program to insert with his newsletters.
Jarrad is a numbers man, he knows his metrics! Because he was focused on his numbers, he was actively looking for a way to increase referrals. He sent his referral program out to his landlords and he immediately got 3 referrals. Then because he was focusing on his metrics he was looking at other ways he could increase referrals. He then started getting the property managers leaving the referral flyer with tenants during property inspections, which resulted in a quick additional 4 referrals.
What Jarrad now knows is that for every ‘x’ number of newsletters he sends with the referral insert, on average he will get ‘y’ number of referrals.
Or for every “x” number of property inspections, with a flyer left, on average he will get “y” number of referrals.
Now, Jarrad needs to simply make sure that his staff are leaving the flyers, that the insert is going out reliably every month or two (which we can assure him it is!). and by watching the metrics, Jarrad will find additional opportunities to improve that statistic.
Most businesses could easily increase their business by 50-100% simple through implementing this kind of measurement across the important areas of their business. They wouldn’t need to spend a dollar more on marketing or make any breakthrough changes. Just performance improvement automatically by measuring, making it a priority and holding yourself and staff accountable for it.