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Advertising and Referrals: The One-Two Punch of Marketing

Bob Janet

Advertising brings awareness. Referrals bring customers.

ADVERTISING

There are five great reasons to advertise:

1. To reach new customers.

2. To keep your name before current customers. The National Retail Merchants Association states, “Mobility and non-loyalty are rampant. Businesses must promote to get former customers to return.”

3. Because it pays over the long term. A five-year survey of more than 3,000 companies found that advertisers who maintained or expanded advertising over a five-year period saw their sales increase an average of 100 percent, and companies that cut advertising experienced sales decreases.

4. To generate traffic. If you have a showroom, continuous traffic is the first step toward sales increases and expanding your base of customers.

5. To increase sales and profits. Businesses that succeed are usually strong, steady advertisers.

But never advertise for the wrong reasons:

• Because your competition is advertising.

• Because the media representative tells you to.

Advertise for the right reason - to make a sale.

REFERRALS

I think I first started looking for a way to complement my media advertising when I heard my father telling one of his colleagues, “I know half of my advertising works. I just don’t know which half.”

Knowing it would be a sales disaster to eliminate advertising from my marketing plan, I looked for a means of marketing that would complement my advertising and enable me to gain new customers, retain present customers, and lower my marketing cost.

I discovered that the top sales producers maximize their sales and profits by complementing their advertising with “referral marketing.”

It is as true now as it was when commerce first began: “The more referrals you get, the more sales you make.”

You should use referrals because:

1. People like to make purchases from businesses where others they know have had success and been satisfied.

2. The cost of gaining referrals is a fraction of the cost of an advertising campaign.

3. All referral marketing costs is the short time it takes to ask for referrals and an occasional lunch or thank you gift.

4. One satisfied customer can give you numerous referrals.

You do the math. How many satisfied customers do you have? Put your numbers in.

Example:

You have 1,000 satisfied customers. Let’s say only half of your satisfied customers give you referrals. That would be 500.

Now you ask all 500 for five or six referrals, but they only give you two.

2 x 500 = 1,000 new quality prospects

Okay, let’s say you are not all that good at closing, so you only close 25 percent of the referrals. You still have 250 new customers, and it did not cost you a cent. Plus, after you make your new customers happy by solving their needs and problems, they will give you referrals, if you ask them.

5. Most people love giving referrals when they have been satisfied and have had their needs and problems solved by your products and services. People like to help others.

It’s a no-brainier. Combining referral marketing with your advertising is a big win. Gaining and using referrals:

• Cuts your marketing cost;

• Increases your sales; and

• Increases your profits.

So why isn’t everyone in business using referrals? Why are only the top sales producers using referral marketing?

I think this is the case for a couple of reasons. One, and the most prevalent, is that most salespeople don’t ask for the sale, and asking for a referral is much like asking for a sale, although much less stressful because the person already knows and loves you. After all, you have solved their needs and problems. And second, most salespeople, 80 percent, are just plain not aggressive. Not aggressive because somewhere along the way to modern-day selling someone made aggressive a four-letter word.

Perhaps it was the loudmouthed, pushy prototype salesperson we all dislike and dislike being compared to. But you do not have to be loudmouthed and pushy to be aggressive. All you have to do is make sure your aggressiveness is a benefit for the customer. I call that professional aggressiveness.

Publication date: 03/07/2011

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