Step 8: Build strong networks
Most businesses generate the vast majority of their new business from referrals. And the great thing about referrals, is that they don’t cost you anything. The best place to gain new referrals is by networking with your existing clients and people you do business with. This is Step 8.
So, how can you maximise referrals from your networks? Here are five ideas for you to consider:
- Consider the lifetime value of a new client to you.
Let’s say you own a restaurant. The average customer spends $100 per visit and visits five times per year. The restaurant’s gross profit margin is 66% and their customers generally keep returning for around five years.
So, the lifetime value of the restaurant’s customers would be $1,650 ($100 x 5 x 66% x 5). With this value in mind, what could you give your customers to demonstrate how much you appreciate their repeat business? Perhaps it’s as simple as complimentary drink. They will certainly spread the word.
2. Identify the businesses you work with that complement your services.
For example, a surveyor may work with lawyers, valuers, bankers, accountants, and tradespeople. Create an informal group of these people who work well together, and commit to a regular social get together. Focus on how you can work more effectively together. Or simply use the time to be more sociable and have fun!
3. Focus on referring more work to your network than you seek in return. When you give work to others, it will create a desire in them to give back to you. This is called the Law of Reciprocity. When you do something nice for someone, they’ll often reciprocate with a gesture far more generous. In this case, more referrals.
4. Find out where your target market hangs out in the greatest numbers. There may be existing networks that you can join that refer work to you when you join them. For example, BNI, Rotary, Chamber of Commerce, etc.
5. Sponsor and get involved with voluntary or non-profit organisations. Choose something that you or your team are interested in. This could be a sports club. Don’t ‘peddle your wares’ or try to sell when attending these clubs. Just wear branded clothing or have signage up as appropriate. Prospective customers need to know you, like you, and trust you before they will buy from you.
Which of these five ideas can you implement today?