Building referral business
If you do not need more business, then skip this article and go on to the next one. But, if you are like most business owners, you always welcome "more business." If you are in this category, then read on.
Promoting new business should be an ongoing program and part of your annual budget. Many franchise and non-franchise successful businesses budget up to 10 percent of gross sales on marketing and promoting business. The important thing here is to budget "something" on an ongoing basis and not do a hit and miss job when you think it is needed.
Many business owners only think about obtaining additional business when business is slow and their shop is not overflowing with work. They then launch a marketing effort, which many times takes several months to show results and does not address the immediate problem. The "Law of the Farm" explains why.
Never forget the "Law of the Farm." It is a natural law and cannot be hurried or accelerated. It must run its course. It goes like this. At the proper time, you prepare the fields for planting. You plant the proper seeds, water and fertilize them. You control the weeds and wait. At the proper time, your seeds will germinate and start to grow. With the proper care and time, you will be able to harvest your crop and take it to market. If you want good results, you can't skip any steps or hurry the process.
Promoting your business may come naturally to you or may be as unfamiliar as piloting the space shuttle. Promoting your business should be a constant 365-days-a-year program. If you are not good at this phase of your business, hire a professional to do it for you.
Everyone is familiar with the common ways such as the yellow pages, direct mail, radio, TV and newspapers, but few business owners actually have a plan to promote referral business. Building referral business is just like the "Law of the Farm."
The first step is to formulate a plan and start with one step. Remember, a journey of a thousand miles starts with one step. You are already doing some of the actions needed or you probably wouldn't be in business. The key is to formalize your program, put it down on paper and as Nike states, "Just do it." Make it part of your policies and procedures.
If you don't already know the importance of referral business, simply track all jobs. If you are like most shops, a large percentage of your new business will be referrals.
After all, a referral customer has already been pre-sold by the person doing the referral. Your cost of obtaining a new customer is much lower than conventional methods of marketing and advertising.
Referral business comes from many sources. The strongest referral comes from an existing customer. This brings up the subject of CSI, or Customer Satisfaction Index. You read about it everywhere and many companies make it their business to report and publicize CSI. The most prominent company tracking CSI in the automobile business is the J.D. Powers customer satisfaction index. The automobile manufacturers live and die by their indexes, in much the same way your business will live or die by CSI.
If you are having difficulty satisfying your existing customers, you can bet your referral business is suffering. Customer satisfaction is very necessary in today's ultra-competitive market place.
Assuming your CSI is good, how do you formalize a program?
- Track referrals on your computer or by hand if you are not computerized.
- Always thank the source of the referral(s). This can be as simple as a phone call or a letter thanking the person for the referral.
- Some shop owners reward those doing the referrals with a free oil change, detail or perhaps a point system of some kind leading to a more substantial reward. We give a $25 bonus to any team member who is responsible for a new referral. Perhaps a discount on future service would be appealing. Whatever you do, write it down and be consistent. If there might be an ethics concern, a simple thank you is in order.
This is especially important for body shops since they do not see most customers on a regular basis like mechanical shops do. No matter how good you are, customers will forget your name if you don't keep it in front of them. If this were not true, industry leaders such as Coca Cola, Ford and McDonald's would not spend millions of dollars reminding you of them.
One good way to keep your name and phone number in front of a person referring business is to give that person a desk diary. Before you say, "That costs too much," think of what a good customer is worth to your business. Certainly more than a desk diary.
Also, keep the dollar figure in mind when it comes to satisfying an upset customer. Would you run off a good customer for $100? How about $300 or $500?
Another good way to keep your name and phone number close at hand is to take your good, commercial referral sources a jar of chocolates or mints. Have a professional looking sticker made that fits the particular jar you are using. You then drop by from time to time and refill the jar and thank them for their business.
When you sit down and make a list of who might refer customers to you, you will be surprised at the number of sources. Depending on the type of service you perform, other auto service businesses can be a great source of referrals. Mechanical shops can refer their customers to body shops, and vice versa. One key to a successful auto repair business is the ability to refer your customers to another shop for work you do not perform. They'll do the same thing.
When you get right down to it, everyone who is aware of your business can and should be a referral source. Your job is to formalize your program and start promoting to these sources. The rewards will come over time and they will be substantial.
How you choose to tackle this important source of business is up to you. The important thing is to "Do It."
Steve Louden, AAM, owns Louden Motorcar Services Inc., in Dallas, Texas. He is a past chairman of ASA and AMI. He was an AMI founding director and is a current AMI instructor.
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|| How Clean Are Our Cars? || What Do Body Shops Think Of Diminished Value? || Building Referral Business || Guest Editorial: Revolution, Evolution, Devolution Or Chaos? || Tech Tips || Tech To Tech || News Briefs || Taking The Hill || Around ASA || Shop Profile || Net Worth || Chairman's Message
AutoInc. Magazine ®, Vol. XLV No. 9, September 1997