Why Cultivating Relationships -- Not Sales -- Will Increase Your Profits By focusing on relationship-building, you're showing customers that they are much more valuable than the money they give when buying your products.
Opinions expressed by Entrepreneur contributors are their own.
In No B.S. Guide to Maximum Referrals & Customer Retention, business coach and consultant Dan S. Kennedy and customer retention expert Shaun Buck present a systematic approach to help you keep, cultivate, and multiply customers so you replace income uncertainty with reliable income through retention and referrals. This edited excerpt discusses the importance of focusing on relationship-building instead of prospecting to grow your business.
Business owners think about marketing as outward, not inward, as external, not internal. They are focused marketing to the public, and new prospects, and never think much about marketing to their existent customers. Some build complex "marketing machines" for external purposes but never build a Relationship Marketing Machine. Most aim for sales. Few aim to create relationships that drive sales.
When you receive a referral from a peer or friend, a significant amount of trust is already established, so you'll have to do less work before you're ready to engage in a transaction. Doubts are diminished, so everything can be fast tracked.
There are three ways you can encourage more referrals from customers. First, it's useful to give people an interesting and inspiring story to tell. A lot of people find simple, straightforward referring awkward and uncomfortable, but everybody tells interesting stories they've discovered to others all the time.
Second, you must provide good tools to your referral partners so it's easy for them to direct others to you, with a simple way for those referred to learn more about you. This works best when there's some immediate benefit to the referred person. The easiest way to create this is with information. In my case, I usually lead with my book website, a three-video informative course on how to use marketing automation for internal marketing, a live webinar, or an interview.
Third, it's important to follow-up courteously, diligently, and effectively with every new person sent your way. You never want anyone reporting to your referral source that they were ignored or neglected.
In my business, we use a workflow specifically designed to ask for referrals from select clients who are likely to give us a referral. Our system sends out a single question survey asking them "On a scale of 1 to 10, how likely are you to introduce us to a friend or colleague?" If they give you 1 to 4, you have an unhappy customer, and you should call them to resolve the issue. If they give you 5 to 7, you probably won't get a referral from them anytime soon. If they give you and 8, 9, or 10, you should add them to your VIP Club, however you design it, and send them tools they can use to give you referrals.
One effective way to woo those referrals is to send them a "shock and awe" package as a referral generating tool. The concept is this: When a customer agrees to give you a referral, you give them a couple of shock and awe packages along with a book you wrote or a video book if you don't have a book. You hand the shock and awe package to your client and ask them to give it to the person they're referring and say, "Here's the package of information from Mr. [FILL IN THE CUSTOMER'S LAST NAME]. You'll find it interesting. He's the one we trust with our [FILL IN THE NAME OF WHAT YOU SELL]."
When you give your customer a tool like a shock and awe package and help them practice what to say when they recommend you to someone, they're far more likely to give you a referral. Remember to eloquently express gratitude. Be sincere in your expression and give a meaningful gift. (No, a $100 discount added to their account or deducted from money they owe you doesn't relieve you from your duty to express gratitude).
We also send a version of a shock and awe package we call the VIP Patient/ Client Package to clients who give you a referral. After referring someone they know, you would upgrade them to a VIP level and have them join an exclusive club with some special benefits. As part of the club, you could give them some free products or services, send them birthday gifts or spa treatments, or whatever you consider tasteful.
We also encourage you to send a VIP client a WOW box. A WOW box is filled with chocolates or chocolate chip brownies, a couple of Starbucks gift cards (so they can treat someone to a cup of coffee and talk about you), a deck of business cards with a personalized QR code that takes someone to a personalized tell-a-friend landing page, eight postcards they can hand out (eight because you can print eight postcards on an 11 x 17 sheet and personalize them on demand), and a few of copies of your flagship free report or consumer guide to choosing the right business for their needs.
In 2015, we developed four types of WOW boxes for health practitioners:
- New client/patient welcome WOW box
- VIP client/patient welcome to VIP club WOW box
- End of treatment celebration WOW box
- Parent appreciation Wow box
I got the idea of Parent Appreciation WOW box from Mac Bledsoe's book Parenting with Dignity. Mac's son Drew Bledsoe played for New England Patriots. Besides being an awesome football player, Drew is also an amazing father, a wonderful husband, a generous philanthropist, and a successful businessman. I think Mac did a good job raising his son. In his book, Mac talks about teaching kids how to adequately express gratitude. I encourage my dentist clients to buy a box of Mac's book and send the book along with a handwritten card by the child to the parents. Some kids write an entire essay. Some kids just write a few words to thank their mom or dad for all they do or thank them for spending money on their braces. The experience creates a special bond between the dentist and the family. The grateful child and the joyous parent are now ready to share their experience with their friends. I always encourage the dentist to send TWO copies of the book in the Parent Appreciation WOW Box. The second copy of the book will always find its way to a family friend who will become a prospective patient.
How far will you go to wow your clients? What will you do for your clients so they would want to tell your story to their friends?