This is too bad, because these reps don’t expect commissions. Why not? Because they don’t know they’re sales reps. They think of themselves as customers.
Obviously, your customers aren’t sales reps in any strict sense; for starters, they don’t have access to your pricing information or your paperwork. Nevertheless, you should view every single one of your customers as a sales rep for your company, and here’s why.
Customers generate sales by referring new customers to your company. This you already know. But when a customer makes a referral, he (or she) actually does the hardest part of any sales job: bridging the credibility gap. This means that when you make contact with a referred customer, that person already believes that you install quality equipment, that you are comfortable to deal with, and that your prices must be reasonable if Mrs. Jones (or whomever referred them) hired you.
In other words, they’re already pretty sure they’re going to deal with you because they’ve talked to the best kind of salesperson — the kind who really believes in what they’re promoting.
Even if only one out of four customers refers a potential new customer in the next year, you’ll get 1,250 leads from a starting base of 5,000 customers. You won’t generate this number by advertising in the Yellow Pages, newspapers, or on television.
Of course, not all of these leads are going to turn into active customers, but studies show that a referred person is a lot less likely to obtain quotes from other contractors. If you conservatively estimate that just 40% of leads become active customers, over 5 years you’ll add 3,000 new customers through referrals alone.
All sales reps need to be motivated to sell, whether they are on staff or not. To motivate your customers, just remember the EAR principle: E = educate, A = ask, R = reward.
EducateTell your customers about every single product and service that you offer, and explain to them how they will benefit from what you do. How does educating your customers motivate them to refer other people to you?
First, people have far more access to information today than ever before. As a result, most people don’t become comfortable with a new company, product, or service until they know as much about it as possible. When you provide this information, your customers become more comfortable with your company, which helps establish trust and significantly increases the likelihood that a customer will refer a friend to you. This is especially true if you give them useful, “extra-value” information that goes beyond your particular products and services, such as energy- and money-saving ideas, or ways to maintain a healthy home.
The second reason to educate your customers is that an educated customer might not need a particular service this year, but they may know someone who does. For example, with your educational materials in hand, a customer can easily do a favor for a neighbor who just found out her son has asthma and needs information on air cleaners and a good contractor to supply one.
Finally, never assume that your customers know all about what you do, even if you’ve been communicating with them for years.
A few years ago one contractor I know spent thousands of dollars on a new gas fireplace showroom. The company installed 10 operational fireplaces and had the area beautifully decorated. Much to the contractor’s surprise and chagrin, months went by and no one came. Having been in business for over 10 years, the contractor had been confident that his customers were aware of his products and services, and hadn’t budgeted for ways to inform his customers about his new showroom. A subsequent survey revealed that most of his customers were completely unaware that the contractor sold fireplaces at all, and had purchased from someone else as a result.
How To Educate Your Customers
Your company brochure, product catalog, and newsletter are three of the most important pieces you should have working for you. Use your brochure to tell your customers about your company. Include testimonials, mention any awards you’ve won, list your products and services, and include all of your contact information, including your website address. Use your product catalog to list and briefly describe everything you sell.
Use your newsletter to expand on the benefits of a particular product or service and keep your customers informed of company or industry happenings that may affect them. In addition to brochures, catalogs, and newsletters, you can provide your customers with simple, single-page information pieces on specific topics, such as indoor air quality.
Most people interact with a yearly average of 200 people. Among five employees you’ve got potential interactions with 1,000 people over just one year.
Let’s say your payroll clerk goes to a party, and someone asks her where she works. She responds and the person she is speaking with says, “Wow, I need a new furnace.” Maybe your clerk will be able to tell her new friend about the benefits of a high-efficiency air conditioner, or maybe she’ll say, “Well, you really need to speak to someone in sales, I just pay their bills.”
If you don’t have regular meetings with your staff, start. Have your people do ride alongs with each other. Each office person should ride with a tech once or twice a year. Each tech should go on sales calls, etc.
AskWhen you feel you’ve done a good job and your customers are happy, go ahead and ask them if they would be willing to refer you to someone else. Ask them if they know of any neighbors who might need your services. Besides the direct approach, you can politely ask for referrals by sending out referral packages or by using other methods.
About three days after an installation send a referral package. The package should contain a letter explaining how your business lives on referrals and that you’d appreciate your customers’ assistance. Include several referral certificates. These are pre-printed forms that your customer can pass out to friends and neighbors.
One of the most effective referral programs I have ever seen included flowers. After every installation the contractor sent a mug (with their logo on it) filled with flowers. With the flowers the contractor sent a set of five Good Neighbor Certificates for the customer to hand out. When possible, the flowers were sent to the customer at work.
The rep from the heat pump company was there and they held a little seminar in the basement on how ground source worked. Several homeowners from the area decided to convert their systems as a result of the party. You could also use the party concept to introduce a neighborhood to other special systems, such as high-efficiency heating (or cooling) and zone controlling.
RewardOnce you receive a referral from a customer, reward them. Rewards can take many different forms, and they don’t have to be expensive. Methods of reward include:
Ask them if they would be willing to share the cost in exchange for some promotion, such as having their name printed on a gift certificate. For example, ask to buy a $50 gift certificate for $25, or make an arrangement in which the certificate will be paid for on redemption, not on purchase. About 50% of gift certificates will never be used.
At the party, award the customer who provided the most referrals with a great prize, such as a new barbecue grill. Invite your top-producing customers to your Christmas party. Give them a nametag and make sure all your employees make them feel welcome. Tell them that they are appreciated and that they are part of your team.
SummaryThe EAR principle is a plan to grow business through referrals. Many of you are already doing some of the things we’ve talked about in this article, but you should be working within a plan so that you can regularly compare what you’re actually doing with what you should be doing. Wherever possible, you should try to track results so that you can see which parts are working and which aren’t.
Just one referral from each customer per year could lead to tremendous growth, so educate them, ask for their help, and reward them when they give it.
Parsons is president of Ackray Communications. He can be reached at 800-522-4729 or firstname.lastname@example.org (e-mail).
Publication date: 01/13/2003