How can you grow your business wealth? The options come down to:
- increasing the profit per customer,
- increasing the number of customers you sell to, and
- reducing your operating overheads
All the options you have for growing the wealth of your business fall into one of these three categories.
Increasing the Profit per Customer.
- Increase your selling prices.
- Eliminate discounts.
- Increase your product and service range( to do more customer jobs better.)
- Increase the average sale per customer (companion selling.)
- Increase the frequency of loyal customer repeat sales.
- Change the customer mix – focus on more profitable customers…
- Reduce your production costs (materials, labor and shipping.)
Increasing the Number of Customers
- Buy/sign up new outlets (wholesale network, retail outlets, pop-up stores, weekend markets.)
- Increase your distribution channels (eg online sales.)
- Website SEM (search engine marketing) which includes SEO (search engine optimization) and pay-per-click advertising.
- Promote to bring more visitors into your distribution channels.
- Increase your conversion rate of visitors into customers (staff training, POS merchandising, website design.)
- Utilise after sales lead and referral generation.
Reduce your Overheads
- Reduce your operating expenses (productivity improvements, technology.)
- Reduce the size of your operating premises and associated rents.
- Reduce usage of utilities – electricity, phone, water, gas.
- Outsource overhead activities – marketing, financial services, HR, IT, transport.
If you really want to grow your business then you will have strategies (action plans) for all of these options.
You will have a very clear idea of:
- your own personal Heidi customer, and where and how you will find more like her.
- your niche market. You will be matching your products and services to the range of jobs she wants to have done, where you can provide exceptional and perfect service to help her achieve the most critical outcomes she desires from your products and services.
- The return on investment for each of these wealth growth options, so that you can prioritize your efforts over time. As I’ve mentioned before some of these options are smart, and others require hard work.
Sales Leads and Referrals
In a previous article, I mentioned that ZenDesk had stated that the cost of acquiring a new customer can be 6 to 9 times the cost of keeping Heidi as a repeat customer.
How can you keep down the cost of gaining new customers? Referrals can be a very effective and cost-effective way to achieve customer growth. Satisfied customers are more likely to provide free and credible advertising on your behalf.
- 84% of consumers trust recommendations from their friends (Nielsen)
- 68% of consumers trust opinions posted online (Nielsen)
- People trust recommendations from friends 7X more than traditional advertising (Nielsen)
- Nothing accelerates a purchase decision faster than a word-of-mouth endorsement from a peer whose only agenda is to help (Gartner)
- Heidi’s friends are your best new customers. Referral marketing generates customers who have higher lifetime values, are more loyal, and contribute higher margins per year than other customers (AMA)
Referral Followers rely on Heidi to spread the good word in her own good way.
Referral Leaders give Heidi a nudge – they use a mechanism to help Heidi help her friends.
The offer to Heidi is something like this:
- Invite your friend to this website/ store/ business, by sending an offer (the referral.)
- When your friend takes up the offer they get a credit voucher or discount on their first purchase (maybe based on a minimum purchase.)
- You get a credit or discount on your next purchase from us once your friend has bought.
A typical referral form (online or offline) looks like this:
Refer a Friend and Earn $15.
To: your friend’s email
From: your email
I wanted to share this great offer with BaliBizWiz. Because I referred you, you will get 50% off your first hour of business consultancy when you register with BaliBizWiz.
SEND EMAIL BUTTON
Other ways to share:
Logos for Facebook, Twitter, etc
Key Elements of the Offer
- Compelling for Heidi – generous, unique, special
- Generous for the friend
- Equitable and fair between Heidi and friend
- Tested and optimized variations to generate best conversion rate – especially of the pre-written text.
- Your business only pays for the new business acquired.
How to Generate Referrals
You can promote a referral like this in a number of ways:
- On product pages on your website
- On your website checkout thank you page
- As an email campaign to your customer list
- As a POS hard copy slip.
- In your social media.
- On your product labels
- On your invoices/sales slips.
Behind the Scenes
Your business mechanism is:
- a database that records key information:
- Email addresses
- Date offer sent to friend
- Referral ID to quote
- Date of To first purchase
- Date offer sent to referrer
- Date of From offer takeup.
- Access to the program details by shop sales staff.
- A trigger to send a thank you email to the friend once they have bought from you – and offering them the same deal!
- A trigger to send an email to the referrer once their friend has purchased, thanking them and reminding them of their available earning on their next purchase.
- A trigger to send a thank you email to the referrer once they have used their offer, and inviting them to do it again.
Measuring Referral Success
Monitor, analyze and improve your referral offers to get the best results. The types of elements you can measure include:
- Offer changes – text, colors, calls to action, placement.
- Referrals sent – average per customer.
- Referral conversion rates.
- The share of new customers from referrals versus other channels.
- The retention rate of referrals (ie multiple sales.)
- Cost of the sale of referral versus other channels.
Referral Benefits Summary
Referrals are a cost-effective method to grow your customer base and are likely to attract better lifetime customer value.