May 25/June 1, 2015; Volume 29/Number 4
By Jim Augustus Armstrong
(First of two parts)
John Mapes, founder and president of My Flooring Warranty, a retailer referral program, recently told me that his company polled 65,000 consumers across the U.S. and Canada who bought flooring from one of the 1,300 dealers who participate in the My Flooring Warranty program. He brought one question in particular to my attention, knowing that I would find the results very interesting. During the poll, each consumer was asked, “What prompted you to buy this time?”
Having been involved in sales and marketing, this question immediately piqued my curiosity. So I had to ask, “What were the results?”
- A referral from one of your past customers: 50.6%
- I drove by your store: 8.9%
- TV or radio ad: 3.1%
- Social media: 2.2%
- Internet search: 2.1%
The fact that referrals ranked at 50% was not at all surprising to me. Since I started conducting polls in 2007, dealers have revealed that repeat and referral business totals 50% to 80% of their overall revenue. But even I was stunned at the utterly dismal results from Internet searches and social media. Two percent?
I knew the percentage of revenue generated from these strategies would be low, but this is shocking, especially when you consider how much time and energy is devoted to these methods by the flooring industry at large. But it gets worse; as a result of our industry emphasizing online and social media advertising—often with the exclusion of proven marketing methods—dealers wind up spending a disproportionate amount of time and money on advertising methods that produce a small fraction of their revenue.
As it turns out, the vast majority of dealers have an online presence but no marketing system in place to capitalize on their biggest source of revenue: past customers and referrals. Our industry needs to do a better job of educating retailers on strategies proven to be effective, rather than strategies that happen to be in vogue. If door hangers only produced 2% of revenue for dealers, would we devote multiple workshops, seminars, trainings and other resources on how to market door hangers? Of course not. So why do online strategies receive emphasis that is out of proportion to their effectiveness for dealers?
In a world where everyone is tethered to the Internet through the umbilical cord of their smartphones with social media taking over as a dominant mode of social interaction, some may see this article as sacrilegious.
I don’t care.
When it comes to marketing, the only thing I care about is helping dealers put more money in the bank. And if you’re a dealer, that should also be the only thing you care about when deciding where to spend your marketing dollars. If online advertising accounts for only a small piece of the revenue pie, why are you investing a disproportionate amount of time and money there? If it’s because everyone else is doing it, that’s a lousy way to run your business.
Lest anyone misunderstand, I am a big believer in online marketing. I do a ton of it and train dealers on effective online strategies. Online methods are an important part of your overall marketing mix. Problems occur when dealers over-prioritize it within that mix, while completely ignoring strategies that capitalize on much bigger sources of revenue such as past customers, referrals and affiliate relationships with other businesses. This is something that is widely misunderstood.