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Marketing mastery: Creating profitable referral relationships

May 8/15, 2017: Volume 31, Issue 24

By Jim Augustus Armstrong

 

(First of three parts)

Screen Shot 2017-03-06 at 10.45.16 AM“How many realtors send you referrals?” I was on the phone with a dealer from Texas, trying to determine where his sales were coming from. He mentioned he worked with some realtors who sent referrals. His answer: “five.”

“How much revenue did these five realtors generate for you last year?”

“About $100,000.”

“That’s an average of $20,000 per realtor,” I said. “Imagine if you had 20 more sending you the same amount of business. That’s $400,000 in additional revenue with no extra marketing costs.”

“Wow, I’d never thought of it that way before.”

Many dealers don’t, which is too bad because acquiring new flooring customers through advertising is getting more expensive and more difficult. There are a variety of factors affecting this, including the sheer number of advertising channels (both online and offline) and the fact that consumers are more skeptical than they were 15 years ago. This is why you should market to your past customers. They already know, like and trust you, they have a shorter buying cycle and it’s far easier and cheaper to get them to buy from you and send you referrals. A monthly newsletter—supplemented with a short email newsletter—is the most effective way I’ve found to market to past customers.

Now let’s assume you’re already doing that. What’s another group to tap that has some of the same characteristics as past customers? Characteristics like built-in trust, lower price resistance, a shorter buying cycle, higher margins, etc.? The answer is referrals from other businesses. Realtors, interior designers, remodeling contractors and carpet cleaning companies are just a few of the businesses that can send you referrals. Let’s look at some ways you can quickly establish relationships with multiple businesses.

Networking groups. BNI and LeTip are two well-known networking groups that exist to exchange referrals and help grow each other’s businesses. Only one business category is allowed for each group, so there will only be one flooring company. Check out your local chapters and join if there is an opening.

Civic groups. Rotary, Lyons, the Chamber of Commerce and other civic groups exist to help the community, not to exchange referrals. Directly trying to get sales or referrals at these meetings is not very effective—a different approach is required.

First, introduce yourself to people who own businesses that are most likely to send you referrals. Second, devote most of the conversation to talking about their business. Third, ask them how you can help them spread the word about their business. Fourth, after the event send them a hand-written notecard with your photo, business name and contact info. Tell them you enjoyed meeting them, and mention something positive about their business. Also, add them to your newsletter mailing list. Finally, phone them a couple of weeks later and invite them out to lunch or coffee. This is the time to talk about establishing a referral relationship.

In part two I’ll cover another strategy for establishing these relationships, and how to make these relationships as profitable as possible.

 

Jim Augustus Armstrong specializes in providing turnkey marketing
strategies for flooring dealers. For a complimentary copy of Jim’s book, “How Floor Dealers Can Beat the Boxes and Escape the Cheap-Price Rat-Race of Doom Forever,” visit beattheboxestoday.com.