The dealer who has implemented systems and strategies so he/she can succeed in any economy is in a far stronger position than the dealer who is forced to ride the economic roller coaster. I want you to be in that first group, which is what this series of articles is about. In Part 1 I talked about Joint Ventures In this installment, I discuss how to get an ongoing stream of referrals.
Key Elements To A Successful Referral System
Notice that I use the word ‘system.’ Just as you have a system for ordering materials, scheduling installations, and doing follow up calls or visits with the client after each job, you must have a system for generating referrals. Let’s look at some key elements your referral system should include.
From the time a client walks in the door, throughout the ordering and installation, right up to the follow up call or visit, your entire system should plant referral seeds and move the client towards giving you referrals. One of the things I teach my clients to do is to send creative, fun and carefully worded letters and mailers throughout this process that ‘prime‘ the client to give you referrals.
Have a system for requesting referrals.
I recommend doing a follow up visit after every job for this very purpose. If this is not practical, then a meticulously-prepared-and-rehearsed phone script should be used. The request system should include a carefully worded referral request form and detailed scripts for your sales team. It should not be dependent upon the moods or whims of your staff.
Does getting the materials ordered or the installation scheduled depend on the whims of your staff? Of course not! Neither should your referral program.
I had one coaching client whose sales team was being stubborn about following his referral system, so he did something very bold, which most dealers lack the courage to do: he withheld their paychecks until they followed the system. Sound too harsh? Sound mean spirited? Consider that the very next month he made over $90,000 in extra revenue as a direct result of his sales team getting their act in gear, and it happened during this crummy economy! He did his team a gigantic favor by:
- insuring the survival of his store during a time when other dealers are getting cut down in the streets;
- helping them make more money via larger commissions. Sometimes you gotta be cruel to be kind.
You need to have a referral follow-up system in place to market to those who were referred. I recommend including entertaining, fun “outside-the-box” letters and mailers, special offers, and follow up calls. Finally, the scripts, forms and systems should be exhaustively rehearsed by your team until it’s second nature.
Let’s look at some numbers that will illustrate how powerful a system like this can be.
- Assume an average ticket of $3,000 and 30 retail jobs per month.
- By using a system like this, I’ve been able to average 5-7 referrals from every job and my clients get similar results. But let’s be conservative and estimate 3 per job. 3 referrals x 30 jobs per month = 90 referrals/mo.
- By following a system like this, you should be able to convert at least 9 of those referrals into immediate business. 9 x $3,000 = $27,000 per month or $324,000 per year. Marketing costs? Less than $500.
What about the other 81 referrals who don’t happen to need flooring right then? Long term lead nurture.
To Tons Of Customers!
Jim Augustus Armstrong is The “Coach”
Jim Augustus Armstrong is the President of Flooring Success Systems, a program that equips dealers to double their profits, cut their work hours in half and beat the boxes! Many dealers have totally transformed their businesses and their lives for the better after joining Flooring Success Systems.
See what real, live dealers are saying!