Greetings Floor Dealers!
Welcome to Part Five of my Summer Series all about commanding higher retail margins!
Today we are going to cover the second 40-50% margin strategy.
Have A Referral Marketing System In Place To Create A Predictable,
Continuous Stream Of Referred Customers
The first step in any referral marketing strategy is making sure that customers will actually want to tell people about you and refer you; in other words you must create a “culture of referrals.” This is accomplished by providing stellar service to your customers, totally “Wowing” them from the time they walk into your store, throughout the installation, and in your follow up. This is how Starbucks built their empire. They do relatively little advertising, instead choosing to focus on providing a consistently fantastic customer experience, which in turn generates tremendous word-of-mouth (referral) marketing. This also enables them to command prices 2-4 times higher than a traditional coffee shop.
Okay, let’s assume you’ve laid this foundation. Most dealers stop here, but if you want to create a consistent and predictable stream of referrals you must take it further.
First, do a post-installation follow up visit where you inspect the flooring and make sure everything is just right. I recommend surprising your customer with a gift basket or other gift when you arrive. Both of these things create total differentiation from other dealers and “Wow” your customer, and make them much more willing to give you referrals.
Next, present your referral program to your customer. I recommend having the details of your program printed onto a form or letter. The form should contain these elements:
- How they will be doing their friends and relatives a big favor by referring you.
- A reward for anyone they refer who becomes a customer, like movie tickets or dinner for two. This is actually the least important part of the strategy. I’ve done referral strategies without a reward. However, it certainly helps.
- A list of people who have referred. (Social proof.)
- It should let them know that each person they refer will receive a gift certificate or coupon to your store in their name.
- On the back have blank spaces for them to write in their referrals.
Important! Do not leave the referral form behind and wait for them to mail it to you. You’ll be waiting until the next ice age. Instead, have them fill out the form right then. You can provide an incentive for them to do so, like a Starbucks card or a gift certificate to your store.
Some dealers have said to me, “This won’t work because my customers won’t give me names of their friends,” or “This won’t work because my customers will feel pressured.”
Hogwash.
Done properly your customers will love doing this, they won’t feel pressured, and you’ll make a ton of money. David, a dealer from Texas, generated over $90,000 in revenue the first month he used this exact system. Garry, a dealer from Illinois, went from nearly closing his doors to (this June) opening his second store, all while charging 50% margins. This was one of his main strategies. Jerome, another dealer from Texas, went from charging 15-30% residential margins to commanding 45-50% margins within 90 days. He’s currently booked out for three months. Again, this was one of his main marketing strategies. I could cite example after example of dealers all over the country who are generating hundreds-of-thousands each year, and charging high margins using this strategy. In other words, it’s been proven to work, and proof trumps opinion. Don’t let your preconceptions rob you of this incredible money-making opportunity.
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!