I have a random question for you. Which cell phone carrier do you use?
I’ve been using Sprint PCS forever. Frankly, I don’t even know why. It’s not so much that I am loyal to them, but more so that it works, and they don’t bother me much.
However, there were a few occasions over the years when I seriously considered switching to another carrier, and I finally had to ask them:
“Why are you (Sprint PCS) giving so many incentives to NEW CUSTOMERS & not the ones who have been with you the whole time?!”
Can you relate?
I don’t think it matters which carrier you use. In the US, as far as I know, carrier companies are obsessed with stealing customers from their competitors and completely neglecting their existing customers. I can see that it has loosened up a bit recently, but 5 to 7 years ago, it was so painfully obvious that the only thing they cared about was acquiring new customers.
To make matters worse, most of the carriers have a hefty penalty in place for those who want to switch carriers before their contract expires. It’s a punishment for leaving your carrier.
How’s that for CX (customer experience)? I say it’s a crappy one, for sure.
You must have seen this pop-up window show up on any website asking, “From 0 to 10, how likely are you to recommend us to your friends?” This is a part of NPS (net promoter score) in the world of CX. In this case, I would score low for how likely I would be to refer Sprint to my friends.
To be clear, I am not ranting here about Sprint. I’m using this example purely to make my point for this post. If this idea of being mistreated and under-appreciated resonates with this you, a long-time customer of any brand, you know how your existing customer may feel about your service. So, let me ask you:
How have you been treating your existing customers lately?
Many of us tend to focus more on acquiring new customers when it comes to working on our lead generation efforts. From what I see, I don’t believe it is always intentional. Rather, it’s a combination of unknowingly gravitating towards flashy new tactics and strategies and making a large, hopeful assumption that new customers will bring fast revenue opportunities.
Then…we forget the actual low hanging fruit-leveraging our retention strategy, which is far less costly to pursue (more on this later.)
I hope I just provided an opportunity for you to say, “Oh sh*t!”
Yeah, I know. Don’t feel too overwhelmed. We are going to fix this here. Look at it this way, you are doing the right thing by reading this and learning how to supercharge your “non-stop referral pipeline.”
By the way, if you are running a startup needing to measure the stickiness of what you offer, your sole focus should be on acquisition. In this case, there are plenty of articles and resources online to do this successfully. (Or just reach out to me so that I can help you with that.) Here, my intention is to provide useful insights for service-based, creative entrepreneurs.
Alright, let’s do this thing!
Hey! I’m Maiko.
Thanks for stopping by. If you are a visionary business owner with the desire to build a high-functioning, profit-generating machine of your dreams, let’s connect!
Sign up below to receive my weekly email packed with strategies that will accelerate your business growth! 👇
Referrals – Acquisition or Retention?
Every chance I get to speak to service-based business owners, I ask, “Do you have a retention strategy or an acquisition strategy or both?”
What do you think the majority of the answers are?
None.
That’s OK. I am not here to shame anyone, but I want us all to recognize the importance of knowing the difference between those.
Also, it is important for business owners like yourself to know that it is not about “which is better.” You absolutely must consider both of them to grow your business. There are only 3 ways to increase your revenue other than raising your price:
1. Acquire new customers (and increase the number of your customers).
2. Have your existing customers buy more often (frequency).
3. Have your existing customers buy other offers and items you provide (upsell / downsell).
That’s it. Notice, out of these 3 activities, 2 of them are retention-based activities, which you can easily leverage.
This is where referrals come into play. Where do they fit?
Referrals sit closer to retention than to acquisition. Referrals do not come from a cold audience; they come often (but not 100%) from existing customers. But those who come through your pipeline via referrals are likely to be new customers.
Simply put, getting referrals is good leveraging of existing customers. But without happy customers, referrals become extremely hard. Focusing on taking good care of existing customers will lead to referrals and widen your reach without spending too much on paid ads to capture a cold audience.
So, if done right, this is a win-win strategy!
Mind-Blowing Stats on Retention vs. Acquisition
After seeing these numbers, you will soon find that shifting your focus onto retention is inevitable.
1. It costs 5 times more to acquire a new customer as opposed to keeping an existing one. Recently, I heard someone say now it is 7 times more. (Invesp)
2. Referral marketing makes up 26% of the top marketing channels for customer retention (FinancesOnline)
3. 69% of consumers do not trust advertisements, and 71% do not trust sponsored ads on social networks. (HubSpot Research)
4. The probability of selling to an existing customer is between 60% and 70%, whereas the probability of selling to a new customer is only between 5% to 20%. (Semrush)
5. 55% of consumers rely on word of mouth to make purchase decisions, as opposed to 27% who trust crowdsourced review sites. (HubSpot Research)
6. Nearly 70% of companies surveyed say it’s cheaper to retain customers, yet only 18% of the same group focuses on retention. (Invesp)
7. Happy and satisfied customers (those who rate their customer experience as “very good”) are 87% more likely to purchase upgrades and new services, with 1 in 3 customers paying more for a better experience. (Annex Cloud)
By just glancing at these facts, it is clear that not taking advantage of what you can control (high touch interactions with customers, either in-person, through phone calls, or email marketing) can be detrimental to small service-based owners. Online paid ads are becoming more expensive and competitive. That’s not all, the ROI of these paid ads are experiencing fatigue (don’t get much in return.)
If you want to know more about the most recent data and trends in customer loyalty, customer lifetime value, and the retention vs. acquisition discussions, I found the HubSpot article I referenced here was the most comprehensive (with lots of infographics!).
Share | Connect | Grow
www.maikosakai.com
What You Need to Do First
First, you have to do some prep work so that you can stick with this new daily habit and stay consistent. But don’t worry, it’s not difficult. Just 3 steps.
Step #1: Consolidate All Your Contact Lists & Create a Master Referral List.
Some of you may already use a CRM system, such as Nimble, Zoho, Salesforce, Insightly, etc., to manage your customers. Even then, you may not have all of your contacts in one place. What you want to do is to either create a segmented list in your CRM or create one by using Google sheets or Excel, just so that you only have one place to go.
Most email platforms, i.e. Outlook or Gmail, have a feature to export your contacts. LinkedIn also allows you to do the same. So, you don’t have to manually create a list.
While you are at it, one thing you want to be mindful of is “being imaginative” when you decide who makes the cut on this list. When it comes to referrals, existing customers are not the only ones you need to focus on. Here are some examples to consider:
College professors and/or employees you stayed in touch with
Peers from your old jobs
Non-immediate family members, i.e. in-laws, second cousins, etc.
Neighbors
Employees of places you frequent, i.e. restaurants, coffee shops, dry cleaners, hair salon, day care, gym/yoga studio, etc.
Any hobby related groups or any online groups you belong to, i.e. book club, weekend tennis, wine tasting, etc.
I bet you can find one or two things on the above list you haven’t given much thought to. Because of this, you may also want to take a look at your phone and export some contacts from that list as well.
Step #2: Segment Your List (Optional)
Depending on how many people you have on your list, it might make sense to segment your list based on your relationship level, just so that you can prioritize better and make it much easier to manage.
This is optional because you do not want to over-complicate your list. But if you have more than 50 people on your list, I suggest you segment. There are 2 ways to segment.
1. Based on how well you know these people from warm to cold, regardless of which social group they belong to.
2. Based on social groups, i.e. ex-coworkers, former classmates, family & friends, meetup group, etc.
If you want to take one step further, you can create each category under a separate tab in your worksheet.
Step #3: Add a Simple Note Section to Keep Track of Your Progress
In your worksheet, you probably have a few columns already after importing various contact lists. You should have their names and basic contact info, such as phone numbers and email addresses. What you want to do is add another column for a note section.
Under this section, you can add the date you last contacted them and what it entailed. You can add another column solely dedicated only to the last contacted date if you prefer.
Here, I want to keep it simple so that you have no problem starting. As you move along with this process, you will find ways to make your list more robust & comprehensive. Or, you may decide to take this list back to your CRM of choice so that you can automate some activities, such as setting reminders to follow up or letting it make suggestions as to who to reach out to for the day. (Yep, CRM’s offer these.)
Do This “Referral-Inducing” Activity Daily that Only Takes 15 Min or Less
I don’t know about you, but I am all about “front-loading work” so that the rest will be easy. The prep part above was the front-loading. Now, we are getting into the fun & easy part. I promise.
The daily activity is ridiculously simple. From the list you just compiled, you pick 1 person per day. Then, choose 1 activity from the below 11 Referral-Inducing Activities. Your comfort level matters when you are picking an activity, so I wanted to give you a wide range of options to explore.
1 person per day for 5 days a week means 260 people a year you can reach out to without feeling the pressure. That’s 260 people you don’t normally do anything with, if you aren’t being intentional. With this method I’m sharing here, it will increase your chance of getting more leads.
Say, 5% of those 260 people will actually do something for you, that’s 13 people. So, you realize this is not to be taken lightly!
Once you establish your own rhythm, whether you do this first thing in the morning or during lunch time or right before you wrap up for the day, it shouldn’t take more than 15 min. The key to this strategy is to consistently do something small over time and make a habit of it.
The goal is NOT to bluntly ask for referrals. The goal of building your non-stop referral pipeline is to stay on their minds. However, if you feel comfortable just asking, then go ahead and do that. There is nothing wrong with just cutting to the chase and asking for what you want if you feel that’s appropriate with a specific person.
11 Referral-Inducing Activities:
1. Ask whom you can refer this person’s business to (as opposed to you asking for referrals).
2. Stalk the person in a non-freakish way to learn what this person cares about the most, then support his or her causes on social media.
3. Recall a special moment with this person and actually write a note to him or her about it.
4. Offer a collaboration opportunity. Maybe you can offer partnering up over Instagram to support each other’s posts. It doesn’t have to be a big offer.
5. See if you can find out his/her birthday & plan to send a card or email by setting up a reminder.
6. Ask, “I’m testing a new offer. Do you know any of your friends who may be interested in participating?”
7. Find ways to make the person look good when they aren't asking for it.
8. Ask your first layer of LinkedIn folks about someone you don't know that they know. When you do some research on LinkedIn, it maps out your relationship with this person. Find the 2nd connection you are interested in learning more about & ask your 1st connection about that person.
9. Plan on sending a surprise gift that doesn't break the bank. It’s more effective to give something for their kids or pets.
10. Email or call and ask how his/her family is doing. Pay attention to future milestones he/she may share with you so that you can set a reminder to send congratulations.
11. Plan a small gathering & invite the person along with a few people he/she may be interested in meeting.
I’m sure you agree that these things don’t involve too much heavy lifting. Because of it, it is far more effective if you commit yourself to be consistent with it. Before you know, some activities listed above will come incredibly naturally to you that you don’t even think about doing it; they become your daily routine.
Soon, you will start receiving emails about possible new projects or someone you can help when you are least expecting it. That is EXACTLY what you want. You want these opportunities to flow into your inbox when you are not needing them. This eliminates the “feast & famine” cycle many service-based business owners face. Once you have your non-stop referral pipeline sorted out, you can check out this blog post that has 5 tips for closing the gap and elevating your perceived value.
There you have it. If you find this post helpful, please do like or leave a comment below. I would love to hear your stories on what worked and what didn’t.