Greetings Floor Dealers!
Welcome to Part Four of my Summer Series all about commanding higher retail margins!
“I did an extra $90,463.00 last month.”
I was on the phone with David, a dealer from Texas, and he was telling me about the results he got from a referral marketing strategy he had recently implemented. Several other things make this story even more exciting. First, less than $100 was spent generating this revenue. Second, this was David’s first month using this strategy. Third, it happened during a very slow market in his area.
Savvy dealers from every market are getting phenomenal results with referral marketing, generating a tremendous amount of revenue while spending very little money.
5 Reasons Why Referrals Are The Best Form Of Marketing To Get New Customers
- Customers who are referred to you are already pre-sold on your service. They are much easier to sell to than a suspicious, stand-offish, tire-kicking prospect brought in with “traditional” advertising (brochure-type websites, newspaper, radio, TV., etc.).
- You get the “halo” effect. Other people saying how great you are always sounds better than you saying how great you are. They are giving you a halo, and making you look good without you saying a word.
- Skepticism is very low. After all, if their sister-in-law, or aunt, or best friend bought from you, you must be pretty darned fantastic.
- Referrals have lower price-resistance than cold prospects. It’s much, much easier to command margins of 40-50% (or more).
- Referrals have little-to-no advertising costs.
These are extremely powerful, but most dealers miss the importance of referrals. Think about it. With a referral, you are being handed a pre-sold, non-skeptical customer with low price resistance who sees you with a “halo,” and it costs you nothing!
In spite of this, only a tiny fraction of dealers have a Referral Marketing system in place to dramatically increase their referrals. For most dealers, referrals are a “happy accident.” They do a decent job, and eventually they get some referrals. But there is no Referral Marketing System in place to generate an ongoing, predictable stream of referrals.
Customers Obtained Through “Traditional” Advertising Don’t Trust You
Here’s a question I ask dealers attending my webinars: are new customers more distrustful and skeptical than they were 10 years ago? The overwhelming answer is always “Yes!”
Why the growing distrust? Because your prospective customers have been lied to and ripped off by flooring companies, or they know someone who has. They’ve also been lied to and ripped off by politicians. By Wall Street. By internet scams. The financial meltdown and collapse of the housing market in 2008 has left a permanent mindset of caution and fear in their minds.
Is it any wonder cold prospects don’t trust you? Why should they? As far as they know you could easily be another company out to lie to them and rip them off.
This is why having a referral marketing system is no longer a luxury. Traditional advertising is designed to attract strangers; and strangers don’t know you, like you, or trust you. This makes them much more difficult to sell to than repeat and referred customers. Therefore, having a dependable method to create a dependable, predictable stream of referrals is a necessity if you want to prosper, and command margins of 40-50% or more. This means having a referral marketing System in place.
By the way, I’m not against cold marketing to strangers. After all, I teach dealers effective methods for doing it. However, the vast majority of dealers spend the lion’s share of their time, energy and money trying to attract strangers, while putting little-to-no effort into a referral marketing system. Big mistake.
In the next installment, I’ll cover specific strategies that go into an effective referral marketing system.
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!