Sales Tip: Local Area Marketing Tools…Which Works Best?

Newsletter Feb. 2010 by John Boyens Part 1 of 2

“My sales numbers stink and my average ticket is shrinking so now cash flow has become a huge problem!  My best customers are spending less and buying less often.”  Does this sound familiar?  I have heard similar comments over and over from senior executives in a variety of industries.

This article is part-one of a two-part series sharing local area marketing “best practices” from our franchise systems and corporate clients across the globe.  While not all of the “best practices” may be applicable to your business model I’m sure that you’ll find two or three nuggets that can positively impact your business.  I truly believe that local area marketing is one of the keys to driving same store sales and increasing customer counts for 2010.

Referrals

By far and away the least expensive and easiest local area marketing option is to ask for and receive referrals on a regular basis. The majority of businesses in the United States make the majority of their revenue by up-selling or cross-selling existing customers. Business development becomes much easier if we ask for and are given referrals on a regular basis.

Here are some “facts” about customer retention and referrals:

• Studies have proven that a mere 5% increase in customer retention can result in profit increases of 20 to 80% for most businesses
• Repeat customers spend an average of 67% more than new customers
• After a customer purchases from the same supplier more than twice they’re 50% more likely to provide referrals
• The close rate on referrals is often three to five times better than the close rate on cold calling

The first step in generating referrals is to learn to ask for them.  Let your customers know you’re interested in receiving referrals and what you’re looking for. Another step is to give referrals to get referrals.  There is nothing quite like leading by example.  Demonstrate how to refer by providing your friends, customers, and business partners with a stream of helpful and useful referrals.  A third step to generating referrals is by asking for letters of recommendation.  Here are some tips to help you get those letters.

• When you sign the initial contract or order with a new prospect let them know that you’ll be asking them for a letter of recommendation within the next 60-days based upon their experiences with you, your company and/or your products or service.  This will give them confidence in the service you will be providing and at the same time set an expectation of them.
• Always ask a person whose recommendation will be respected.  For instance key clients, industry leaders, “thought” leaders, big “name” companies in your area or industry or other persons whose judgment the reader will value.
• Since some clients might write a weak letter of recommendation you could ask them if it would be helpful to send some samples of other letters that they could use as a template.  Sending samples of other letters serves two purposes.  First, it gives you a tremendous amount of credibility.  Second it ensures that you’ll probably receive a well written letter that includes key performance indicators.
• Always thank the person who allowed you to use their name.  Your thank-you letter not only shows your appreciation, but it also opens the door for you to ask for assistance again in the future, should you need it.
• Always give status updates to the people that provide you referrals!  Whether the person they referred purchased from you or not you need to let them know that you valued their referral enough to keep them in-the-loop.

Social Media

The first rule of social networking is to use it on a regular basis!  Companies large and small use social media to communicate with and market to customers. Here’s a good example connecting through social media. A pizza chain offers promotions through a variety of mobile messaging options.  They send a quick message (e.g., Don’t feel like cooking tonight?) at 4 PM with a code for someone to receive a discount at one of their stores. Another example is from a window covering company has created a Facebook page showing before and after pictures of work they’ve done for homes and businesses in their territory.  Their Facebook page has worked so well that they were able to significantly reduce the money they spent on print advertising (i.e., brochures, collateral, etc.) in the past.

Social media helps extend your brand.  Getting people to blog, post or tweet about your company is a great way to generate interest and curiosity.  Companies like Dell, Starbucks, Papa John’s, Ford and Oreck have seen tremendous lifts in performance for relatively small spends in marketing dollars not to mention the fact that their customers feel more connected to their Brand.

Social media also helps companies keep their finger on the pulse of their customers and markets by reading what people have to say on blogs, posts and tweets.  By collecting this data companies are able to manage perceptions in the market place and even test new messaging, pricing and product offerings in “real time.”

Franchise system executives need to blog.  Some business owners believe that it’s too difficult or that it’s too technical but that’s not true.  Existing blogger sites (Blogger.com, Goingon.com or WorPress.com) offer customized templates to get you started.  You can blog about your company’s history, new product launches, new employees, awards, etc.  The list of topics to blog about is endless!

If your Franchise System sells in the B2B (business to business) space it’s critical that you use LinkedIn (www.linkedin.com).  I believe that LinkedIn is the best B2B social networking site.  Here’s a quick overview:

• LinkedIn is geared towards the working professional and allows their users (over 50 million worldwide) to create a profile.
• LinkedIn users can recommend one another, join groups, make introductions as well as post and apply for jobs.
• In addition, it’s a great tool to identify and connect with prospects, dormant clients, former associates and potential partners.
• LinkedIn is great for doing research on companies, organizations and industries as well as to build a “buzz” about your organization.

So how can someone use LinkedIn to generate referrals and new business opportunities?  By adding connections you will increase the likelihood that people will see your profile when they’re searching for someone to do business with.  People would much rather work with people who their friends/colleagues know and trust!  When someone accepts your invitation, immediately go to their connections and see if they are connected with anyone you want to know or do business with and then ask for a “warm” introduction.

In closing …there’s an opportunity for you to increase your sales, average ticket and build brand awareness through referrals and social media. You’ll need to train yourself to ask for referrals and you’ll need to learn new software for the social media of your choice.  However, the time invested will pay huge dividends going forward!

The second part of this series will appear in our next newsletter and will focus on Paid Advertising, Database Marketing and Networking.

Spotlighting a Top Performer

Here is an excerpt from a recent email from Owen Littlewood, a FASTSIGNS Franchisee, based in Virginia Beach, Virginia:

I would like to thank you for your valuable sales coaching on how to solicit appointments and get targeted potential buyers to listen to what I have to say. I feel I have received great value for the money and will be booking more one-on-one sales coaching come the New Year. The tools you have introduced are well thought through and yet so simple to follow. The e-mail templates have proven invaluable as well. Just to let you know
I‘ve already won three bid jobs in December and had sales of over $30,000 in just seven days which is unbelievable! Owen, congratulations on your success and keep up the great work!