Leverage Current Business Assets to Dramatically Improve CLV
The past 10 years or so have seen a dramatic increase in competitive products, services, and sales channels. In addition to that, advertising costs have gone through the roof, compounding the financial vice that has continued to squeeze businesses all over the world.
We know it, we felt it, and we accepted it!
So how do you fight to win?
The knee-jerk reaction to increased competition is to decrease prices.
Have a sale and sell your products and services for less than your competitors! But this is a downward vortex that trains your prospects and customers to continually shop price instead of value.
Price is only an objection in the absence of value.
Now, we’re talking about increasing your lead conversions…which seems like an obvious way to increase profits. Well, not if you are decreasing your prices in order to convert more sales.
I want to show you how to leverage your current customers to help you increase your lead conversions.
Passive and Active Referrals
Increasing referrals is the best low-budget method of bringing in pre-sold, highly-qualified leads that convert amazingly well for your products and services.
We are firm believers in leverage. If you are a small or medium business nowadays, you don’t have the time, money, or resources available to scale and grow your business. So it’s absolutely critical to seek out new ways to leverage the assets you already have.
As a growing company with locations in both Wilmington, Delaware and Round Rock, Texas, we can attest to the massive advantage of having an active referral system in place.
Your current clients are a powerful asset; studies show that as high as 80% of current customers are willing to give referrals, if asked!!!
Chances are you already enjoy some form of passive referral system. You have happy customers who have been delighted with their experience with you and your products or services, and they have tweeted, blogged, and even told their friends about your company. This is great, and they should be commended.
However, you have NO control over this method of obtaining referrals.
At some point, whether your team is made aware of it or not, some of those friends turn into prospects, and some of those turn into customers, and as a Wilmington SEO Agency, we have seen this time and time again.
In general, a referral is:
- Easier/faster to sell to,
- More agreeable to work with,
- More profitable than a normal prospect,
- Happier after the sale.
Why is that?
Well, you have an army of special sales people out there touting all the benefits they’ve received from your products, your services, and your business. And they are not doing this to receive any monetary gains. They are doing it because they care about their friends and want them to experience the same level of quality and service they have received. However, you must make sure that everyone receives similar service, equal to why your past customers are referring your business.
Referrals are the most valuable prospects a business can receive.
But why just sit and wait for them to come in? With just a little bit of automated follow-up, you can turn that passive system into an active and highly profitable system that continues to send a steady stream of pre-sold leads directly to your front door.
How to create an active referral system:
It’s actually quite easy to plan and employ an active referral system.
1. Consider some incentives that your current customers would find highly valuable.
- For monthly subscribers to your services, your customers might appreciate a free month or discount off the monthly fee.
- Revisit your up-sell list and incorporate a free or discounted complimentary service into your referral incentive plan.
- Create customers levels, such as Platinum, Gold, Silver and outline their benefits. Most individuals appreciate your attention and acknowledgement of their loyalty.
- Develop a “Member’s Only Area,” that has an elite, club-like atmosphere.
- Even offer plain old greenbacks as an incentive…this age-old technique is still alive and kicking!
Now, depending on your market and your products or services, you should be able to create a low-margin or nearly-free incentive that will give your customers tremendous value and benefits.
2. Create a plan that will deliver the incentive(s) to your customer after they have sent your company X referrals.
You can also add another incentive level for when they send you Y referrals that end up moving to different stages in the steps to the sale.
Your active referral system might be structured something like this:
– For every 6 friends or relatives that visit your store, your customer receives A.
– For every 4 friends or relatives that sign up for a demo, your customer receives B.
– For every 2 friends or relatives that purchase from you, your customer receives C.
When you feel you have created some valuable incentive packages, move on to the next step.
3. Next you need to plan out how your company is going to track, monitor, and deliver these incentives to your customers.
This needs to be planned out carefully to ensure that no referral is ever missed or assigned to the wrong referrer.
It’s important to keep at the forefront of your mind that this extra program has the potential to significantly increase your company’s profitability. A customer who is rewarded for helping your company will continue their happy relationship with you.
But if the program is mismanaged, it can backfire with explosive force.
No matter how happy a customer has been with you and your service, if they feel slighted or are denied something they were promised, they can turn on a dime and will start telling EVERYONE about how your company cheated them out of something they were promised. And in the day and age of social media and online reviews, this is a VERY critical point to drive home.
So, this step is extremely important to think through, plan out and test before you implement it with your customers.
4. The next step is to make sure the incentives you are offering and the methods of tracking and delivery are financially feasible and do indeed increase profitability.
Surprisingly, many incentive programs are launched and end up having a short or long-term negative ROI. This is counter-productive to our goals here! So reworking and more analyses should be done to make sure this will benefit everyone involved.
5. Finally when you feel you have created a program that tracks and rewards your customer for referring leads and new customers to your company, you need to plan out how you are going to communicate this new program to your customer base.
Fortunately leverage has another home here! By using the power of email marketing, you have the ability to communicate your new program with your customers during their automated follow-up campaign.
Discussing and reminding them about your referral program can be easily tucked in between other pieces of valuable information you are sending them in your normal customer consumption autoresponder series.
Now, this is a good start for creating a powerful new lead generation channel by leveraging your current customer database. By engaging this one simple method of actively requesting your current customers to send you referrals, you should be able to see a steady increase in monthly profits.
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