Why Doesn’t Your Firm Get More Client Referrals?

Why Doesn’t Your Firm Get More Client Referrals?

Why Doesn’t Your Firm Get More Client Referrals?

client referralsWould you prefer to build a business that no-one knows anything about, so that every new customer is hard won from cold calls? Or would you want a business that people know about, trust and happily approach to do business with?

It’s likely that every business that starts will always have an element of the hard won, cold called business. Like it or not, cold calling is still an effective way to build business. Cold calling needn’t necessarily even be picking up the phone and ringing prospects, it could be emailing, direct mailing, door to door knocking or any other way you can think of to put yourself in front of a potential client who has never heard of you before.

While this is a tried and tested method of business building it’s also exhausting, time consuming and inefficient. At times it can also be demoralising if you encounter multiple “no” or “I’m not interested” or “please don’t call again!”

What’s the alternative?

In an ideal world you would have customers coming to you. Not just once in a blue moon referrals, or one off incoming calls, but customer after customer approaching you to work with them.

The benefit of having a business that clients know of and want to work with are plenty and obvious. It enables you to spend less time on drumming up sales, more time on closing business and serving customers – increasing your bottom line.

If this is the ideal situation for your firm then why aren’t you doing everything you can to ensure that this happens? Or if you think you are already doing everything you can to generate more referrals why isn’t that your business isn’t growing? A steady stream of customers who are enough to pay the bills isn’t enough, what you want is as much as you can handle, or more!

For a business to successfully grow by referrals you need to have an excellent reputation, an easy to find, informative website, great customer service and possibly some kind of client referral or incentive scheme.

If you feel you’re already doing all of this and the referrals aren’t coming in thick and fast then the number one reason is probably down to you.

Referrals usually come from a few main sources. These are:

  • Current Clients
  • Former Clients
  • Non competing firms in your industry
  • Companies not in your industry but in a similar field.

In order to maximise the number of referrals you win, you should think about how you can best target these individual groups.

Email Marketing and Newsletters are great for getting back in touch with former clients, in fact they are one of the most effective forms of marketing when they are followed up consistently. One of the great advantages of email marketing over direct mail is it is a much lower cost, another is that the email can sit in someone’s inbox quite unobtrusively, whereas unwanted direct mail usually goes straight in the bin.

With existing clients you can publicise a referral scheme to them while you are dealing with their case. If you have done a good job for someone, the best time to ask them for a referral is straight away when they are happiest with your service. Some businesses have really great referral or loyalty schemes set up for their clients, and while it’s not appropriate for every business you could offer a prize for every fifth referral you get from someone, or enter a monthly prize draw and everyone who has referred a friend gets a ticket.

Consider setting up a joint venture with a like minded business. If you are a conveyancing lawyer, you could build relationships with local estate agents or removal firms – these businesses aren’t competing for the same business as you but they will certainly be interested in some of the same clients.

client referrals

Look for opportunities to get involved in industry events where you can be seen as an expert speaker, or a moderator on a panel. Not all networking events are going to be right for you, you shouldn’t turn up to something just because it’s local or because you know a lot of people who are going already. Instead, target specific industry groups or target small client only seminars.

Finally, think about ways you can get referrals from within your own industry. If your firm specialises in certain areas of the Law for example, can you get referrals from another firm who offer their services in different legal fields, or maybe a firm from another town?

Some of you may have noticed that all of these things I have just mentioned are still you selling your business. Yes, they are. But the idea is that you aren’t touting directly for sales, you are targeting specific groups who are most likely to be in a position to help you. It will take time to build a good referral business, but by putting your efforts into getting groups of referrals rather than individual sales you are giving your business a better chance to be seen by as many people as possible.

The Most Expensive Thing in Your Business is a One Time Client

The Most Expensive Thing in Your Business is a One Time Client

Businesses of all sizes could do well to think more carefully about customer retention. Acquiring new customers is not only critical to ensure your business grows; it also satisfies your need to move on to the next thing and provides a fresh start and a blank slate. Unfortunately, acquiring new customers comes at a cost, which some sources suggest is around 7 times as much as reselling to your existing customer base.

 

Although acquiring new customers is a necessary and very important part of any business, it shouldn’t be your only focus. Once you have done the hard work of getting a customer on board you need to make sure you keep them! After all, how can you expect to grow your business at all if you can’t keep your existing clients happy?

 

Without repeat business from an existing client base you are constantly trying to plug the gap. A great month in terms of new business needs to be repeated month in month out if you have no steady income from your existing customer base. In short, running a business solely on one off sales does not make good business sense.

 

Some sources have suggested that it’s possible to increase your profits by up to 95 per cent just by improving your customer retention rates by five per cent. This seems like a pretty bold claim, but even an increase in profit of 20 per cent would seem like a huge win to most businesses!

 

So why are existing customers worth so much more than new ones?

 

With new business you are likely to have a longer lead time. The prospect has to be convinced that you are the right company to work with. Their doubts have to be addresses, whether they are about your product, service, price, quality, location, personnel or anything else. For every prospect that eventually buys you have to factor in not only the cost and time you’ve spent selling to them, but also to all the other prospects who haven’t bought anything.

 

Once a customer is on board you are likely to have overcome most, if not all of their concerns. The benefit to you, and the reason they’ll become easier to sell to in the future is that you will have built an element of trust with them. They are likely to be less sensitive to price, less likely to shop around and likely to buy from you more readily than go elsewhere. This again means shorter lead times, meaning less time, meaning you can focus more attention in other areas (like winning new customers!).

 

That doesn’t mean to say that existing customers are worth less of your attention, far from it! If you don’t give every customer the respect they deserve then they will leave you and go elsewhere. What I mean is that if you do your job right from the start, the process of retaining customers should be far easier than the process of attracting new ones.

 

Happy customers means you are also in a position to benefit from additional customer referrals. Good old word of mouth marketing is still a great tool for any business, especially now that you utilise the internet. If you have dozens of satisfied customers talking about you online, and possibly sending out referral offers to their friends it means that those friends who approach your business aren’t a “cold” customer. They already know about your business and have had a personal recommendation from a friend.

 

Existing customers should be at the heart of your marketing strategy, without a strategy to retain customers you leave yourself open to losing customers unnecessarily which puts you right back at square one, looking for new customers who cost you seven times more to win than retaining existing customers costs.

 

Given the recent economic turmoil (even the weather is being blamed for a potential triple dip recession!), frankly we could all do with whatever help we can get in order to reduce spending and increase efficiency. Our customer bases are one of our best assets and most valuable resources, make sure you’re getting the most out of yours!

 

Leave your comments below, we would love to know your thoughts are on customer acquisition vs repeat business!