The No. 1 Way to Grow Your Business
Forget the fancy advertisements and expensive PR campaigns. The best way to build business is still through good ol' word of mouth.
Opinions expressed by Entrepreneur contributors are their own.
Editor's note: This month's column is excerpted from Ivan R. Misner's The World's Best Known Marketing Secret(Bard Press).
Reality-check time. How many ways are there for you to increase your business? Dozens? Hundreds? Maybe thousands? Guess again. Try four. That's right, there are only four main strategies you can incorporate to increase your business. Don't believe me? Then read on.
First, you can advertise. Competition for customers in our society is fierce. Your competitors are trying to win over the same clients or customers that you are. Even in a good economy, advertising doesn't guarantee success over your competitors. The people you're trying to reach, by some estimates, are bombarded by nearly 2,000 advertising messages per day. This constant inundation means your prospects potentially have many alternative sources of supply for the products or services you provide.
The second way to increase your business is through a public relations campaign. This can be very expensive and time-consuming for a small business. Therefore, if your company is too small to hire a PR firm, you need to create your own personalized PR program.
The third way to increase your business is through word of mouth. Word of mouth has long been recognized as the most cost-effective form of marketing a business can use. Tom Peters, author of Thriving on Chaos, regards word of mouth as one of the major ways a business can bring in new clients or customers. Peters asserts that one has to be "just as organized, thoughtful and systematic about 'word-of-mouth' advertising" as with other forms of advertising and marketing. Yet, "you never see a 'word-of-mouth communications' section in marketing plans," he says. I, too, believe that if you don't have a well-structured plan, you're not likely to have impressive results. Many business professionals make the mistake of thinking that developing good word of mouth is about providing "good customer service."
There's one other marketing strategy that a lot of people use as an alternative to advertising and PR, and that is, yes, that's right, the "C word"--cold-calling!Cold-calling--just mentioning it makes me shiver. Given the other options, who in his right mind would want to spend the rest of his professional life cold-calling?
Well, there it is, your marketing reality check. Given only these four strategies for increasing your business, I'd have to recommend advertising. However, most businesses have a limited budget to spend on advertising. PR is best used in conjunction with other marketing efforts. And I don't know about you, but many years ago I promised myself I would never do a cold call ever again for as long as I live! That leaves only one other way you can effectively build your business: by word of mouth.
A Cost-Effective Form of Advertising
Word of mouth is a form of advertising and, like media advertising, requires careful planning to achieve a worthwhile return for your time and energy. As you begin to use and benefit by word-of-mouth advertising, you'll see that it's a very cost-effective medium. If you haven't developed a structured word-of-mouth marketing program to generate referrals, then you can't enjoy its benefits.
While many entrepreneurs recognize the value of referrals to their respective organizations, they're not clear on how to consistently generate a large number of referrals. Worse, they don't realize there's a segment of the population looking for their product or service right now.
People Want Referrals
People don't want to go to the telephone book to pick a lawyer. People don't want to pick a real-estate agent from the Yellow Pages--or an accountant, or a chiropractor, or an insurance agent, or a dentist, or a mechanic. People want referrals! Historically, the only problem has been linking the people who need services or products with the people who provide them. A structured word-of-mouth campaign begins by acknowledging that there's a segment of the public that wants you and your service as badly as you want their business.
People from all walks of life want referrals--not just the business community, but the general public as well. Few people want to choose a dentist, for example, from a printed advertisement. People want to have more personal information before making such selections because whenever you choose a professional exclusively from an advertisement and have no other source of information, you may be taking a big risk as to the quality of service you will receive. With referrals, the risk is greatly reduced. Someone else has done business with that person and is recommending that professional to you with confidence.
Referrals Are Good Business
Compare a lead that you receive from an advertisement with a similar lead (that is, referral) that you get from someone you know. The referred lead is easier to close and costs less to obtain. Often, the referral provides a higher-quality client or customer with less chance of misunderstanding or disappointment. When I ask audiences why referral business is better than the business they get from ads, they say the referred business:
- is easier to close,
- has far fewer objections,
- has a stronger sense of loyalty,
- remains a client longer, and most important of all,
- has a higher sense of trust.
Relying on the advice of a mutual friend or acquaintance, the referral starts with a higher level of trust for you and your product or service. Getting dozens of people to send such referrals your way every day is what building successful word-of-mouth business is all about.