How To Operate A Successful Referral-Based Business
Founder and CEO of The Condo Store Group of Companies, a leader in North American real estate investments. Visit The Condo Store here.
Originally published on Forbes.com
How do you spend your marketing budget? How big is your marketing budget and do you feel your return on investment (ROI) is the best it can be from this spend? Any business faces these questions, and some have the answers, some think they do and a small distinct group may know how much their marketing dollars are working for them.
In sales, and in business in general, the ideal situation would be not to chase clients but instead have them come to you. How amazing would it be to have new clients look to you for advice and ask about what you are selling? And then, you can focus on delivering top-notch service for your clients and do what you do best.
This is a referral-based business and it can be done, but it takes patience, a solid reputation and more often than not, a niche market.
My company has annual sales in the range of $500 million to $1 billion, and 75% of our clients are in the medical community — 95% coming from referrals over time.
Your business will need to be referral-worthy and it might already be, but maybe you aren’t taking full advantage of it.
Here’s how I cultivated a network of referrals.
Ensure your end results are solid before you begin.
When you are delivering the type of results your clients and customer enjoy, they are absolutely more likely to refer you and your business. This is a big idea. When you consistently deliver for your clients, you will stand out and others will take notice. Be ready to leverage this notice into future sales. When other people experience the benefit of working with you and your business, you are on the right track to a successful referral-based operation. If you don’t deliver consistently, even the best and most shrewd relationship-builder will struggle to get quality referrals from their clients, because the client isn’t sure that you’ll perform for their friend, family or colleague.
You should have a picture of what your ideal client looks like.
It is incredibly important to treat every client as your top client and deliver the respect that they deserve, but the truth is that a great deal of your business will come from a smaller amount of your entire client base. The majority of my clients are senior medical professionals, but that wasn't the original intended customer base. At least, I didn’t target a certain sector of individuals. When your clients truly understand what you bring to the table and how instrumental you are in delivering on your promises, they automatically and systematically seek out other like-minded family, friends and colleagues that are referral worthy.
When your clients invest more and have tangible value, in our case, in the form of investment returns, they will refer more and more people within their circle of influence to your firm. In turn, this will create even more clients who are willing to put your name forward as long as you don’t lose sight of the need to be consistent and reliable in your business ethics.
Ensure that your value-add is explainable.
If you can’t explain what you do in a short, succinct manner, you can’t honestly rely on anyone else to do that for you. Ensuring that your product or service is easily explained, most likely will help your business but will absolutely boost referrals. Don’t try to be everything to everybody — do your work and do it well, keep it simple and start telling your story.
Don't be afraid to ask for a referral.
It’s a tough thing to do, but you need to be OK asking current clients to refer you. If they aren’t comfortable talking about the business that they do with you, then no harm no foul, as long as you continue to service that client — your business with them is protected. And if they say yes, well then, your chances of increased sales have ballooned, and all you did was ask someone to talk about your business to others. In our unique case, some people don’t want to tell others about their investments and personal wealth, and that is OK. However, most do and are happy to talk about the wise investment choice they made and their goals for future investments.
Building a solid, 100% referral-based business is possible. You don’t need massive advertising campaigns, and most can’t afford them anyway. Ensure you have your value proposition locked down and begin to talk to your clients about their experience with you. That will lead naturally into a nice, friendly referral conversation where you can’t be afraid to ask. Be referral-worthy and reap the benefits of spending your marketing budget on gifts for your clients instead of trying to find clients.
Credit: Simon S. Mass Founder & CEO at The Condo Store Group of Companies