July 11, 2011

An Easy Way to Gain New Customers … And Cheap Too!

By Paul Bieber

Radio Advertising? No.
Television Advertising? No.
Hiring A Clown To Stand Outside Your Front Door? No.
Full Page Ad In The Yellow Pages? No.
A Web Site That Really Pops? No.
Newspaper Ads That Blanket Your Market? No.
Creating A Referral Program From Current Customers? Yes! Yes!! Yes!!!

My wife, Elaine, forwards me articles that she comes across that might make great blogs. This time she hit a home run, sending me an article about customer referrals originally published in the Harvard Business Review. The article details a large bank in Germany that started a customer referral program. It turns out that the new customers brought in during this program were more loyal to the bank, keeping their accounts longer, were more profitable to the bank, as they were less expensive to obtain and used more bank products, and they did more business with the bank than other new customers.

This study followed 10,000 new customers at the bank over a couple of years. There are no glass shops that I know of that generate this many customers. But the lessons learned are the same. Do a good job for someone, they tell others, and you will gain new business that will be profitable. A customer who wants you to do work in their home or business won’t give you a small job to try you out. After all, their friend did that for them. A referred customer will trust you from the start and will want to work with you to the fullest extent possible.

You get the picture. Let’s look at some ways that a glass shop can gain these types of customers.

  • Your first step, do a great job for your current customers. Do such a good job that these folks want to brag about you. This doesn’t mean a low price; it means leaving the site cleaner than you found it; it means being on-time, polite, and non-intrusive in your customer’s home or business. It means doing the job contracted for, or improving on the design once you opened a wall or framing.
  • As you near the end of the job, ask the customer if they are pleased so far. Get their input before you finish the job and solve any issues that come up before you close up. At the end of the job, ask the customer if they are extremely satisfied, and if not, what would it take to get to this point. Then do what they ask for. (This does assume that all financial terms have been met up to this point. If not, you will have to go the route of being cautious.)
  • Since they are now completely satisfied with your work, ask them to refer their friends to you. It sounds simple, but the basic question should be asked, planting the seed in your customer’s mind.

Let’s take it up one level. Create a program that any customer that comes to you because of a referral and spends more than $500, gets a 5% discount on their work, and the referring customer gets a certificate good for $50 off on any further work with you. Sounds corny, but it does work.

Your current customers will be giving their friends 5% off on something, which makes them feel good, and they may earn discounts on your future work, which makes them feel good. At the same time, you feel good because of the increase in business. Trust me, this works. It is used by many companies in many industries throughout business.

It takes some ongoing work, a letter every six months to old customers reminding of your program; making sure that new customers are queried as to how they came into your store, and if by a referral, getting the reward letter out right away to the previous customer.

The best advertising in the world, bar none, is when a satisfied customer tells a potential customer. You can take this one to the bank.