Do you think your business has enough clients?
Ask 100 different SMEs, and the answer you get will almost always be a resounding “no”. Of course, a few businesses in the bunch may be happy with their client base and don’t want to attract new business, but that won’t be the case for the majority of businesses.
The simple truth is that most companies want to keep moving forwards. To move forwards, you need more revenue. To build up more revenue, you need more new business customers.
It sounds easy, but as we all know, the reality is far different. It can be extremely tough to build your client base, which is why not everyone has reached the dizzying heights of success that Coca Cola, Apple, and Nike have. If it was easy, every brand would become a household name!
But, it’s far from impossible. Let’s take a look at how you can start winning new business without the price tag.
How Can You Win New Business Through Networking?
Networking is one of the oldest and greatest marketing tricks in the book. By networking, you can earn new business directly through the people you talk to and through referrals. In fact, those referrals are often the best source of new customers, so maximising your networking opportunities is a must.
But why are networking and referrals so important?
To start with, creating awareness and credibility in your company (one of the hardest areas of any sale) is already taken care of. When someone is referred to you by a third party they trust, they’re more likely to trust you. A referral is also pre-sold, meaning that the consumer is coming to you because they need what you’re offering. It’s the opposite of traditional adverts, where you’re trying to make them want what you offer.
Yet, despite all of the perks, few companies spend the time developing a network of contacts that can become a rich source of revenue. This is a strategic activity that you may have to lead yourself, which puts many CEOs off. But, if done currently, it will contribute to your bottom line.
To begin building your network, you first need to develop a plan with targets that you can monitor closely. You then need to look at the new business you want to attract. Will you be happy taking on any company that comes your way if it’s profitable, or will you be pickier?
How Can You Spot the Clients You Need?
The referral strategy you create can help you attract the type of new business you want. The best way to differentiate between the most profitable clients and ones that may bring in less money is to take a planned approach to client management.
Your first task will be to review your client list and identify who produces the most ongoing revenue. Then, start to build a profitable client rating and categorisation system. This will help others understand what features make a high-quality client (such as minimum spend and level of servicing).
As an example, let’s look at an IT hardware company. They found that they weren’t making enough profit from the SME sector, but when their research discovered it wasn’t industry or company size, but whether or not the company has a full-time IT manager. Those with a manager tended to spend five times as much as an identical company with only a part-time manager. From then on, at the start of any sales contact, the first step was to ensure the potential client company employed a full-time IT manager.
Spend time researching your own clients and delve into the factors that separate high-profitability from low-profitability. When you understand the criteria you need to look for, you can start growing your business quickly.
How Can You Use Networking to Bring In the Right Clients?
Once you’ve identified the right clients, it’s time to look at who can introduce you to them.
Directors within your business may have relationships with potential contacts that need to be transferred to the company database. You should also look to organisations outside of your direct connections that could open up the opportunities you’re looking for. You can also look for established networking groups with members who match your criteria.
If you’re looking at another company with which you could simultaneously refer business, there must be similar energy. You should both be in the same growth phase to match momentum, for example, or the same stage in your lifecycle.
What Happens Once You’ve Identified a Possible Network Relationship?
Once you’ve found someone to build a network relationship with, arrange an open meeting to discuss the opportunities and benefits. Be honest about any fears, too. Fear will often play a part in network relationships, and to grow your sales through referrals, you need to know what the other is scared of and ways to alleviate their fears.
Just as with anything in life, fear can hold you back. If you have worries and anxieties, they’re always going to prevent your network relationship from reaching its full potential.
For example, if you have a food product and a supermarket is your network distributor, they’re going to have fears. What if the product isn’t to a consistently high standard? Is the packaging acceptable? The supermarket needs to ensure they’re stocking the right items, and these fears are how they do that.
But, they can also start to outweigh the benefits of taking you on very quickly. If you don’t discuss these issues and find ways to alleviate them, the supermarket will never be 100% happy stocking your product.
Why Would a Third-Party Refer New Business to You?
It’s a dog-eat-dog world out there, so why would a third party bother helping you out with referrals or distribution?
It’s often thought that the only reason is for commissions, but that isn’t the case. Commissions are definitely one reason, but many factors will make the right partner refer new business to you.
For example, they may be looking to make their own customers happy. If they know that their client needs something you offer and that you’d be a good fit for one another, why not refer them to you and win bonus loyalty points with their client?
Knowledge is another motivating factor. If a third party can learn something from you in exchange for a high-quality referral, they will.
When creating relationships, you must know how the connection will benefit the other party. But, first, you need to gain their trust and help them overcome their fears.
Can Referral Relationships Ever Fail?
Yes, without a doubt. There will have been countless times when referral relationships have failed, and the major reason is fear.
If you don’t talk through your partner’s fears with them, make sure they’re properly resolved, and give enough time in ongoing meetings to monitor them, your partner may feel they’re losing control of the relationship. That isn’t a path you want to go down.
In social situations, we don’t rush in and offer to make a mutual-benefiting partnership without trust. You wouldn’t arrange a school drop-off carpool with a stranger, right? You’d get to know each other first and build up trust before you spoke about taking each other’s kids to school every other day. It’s the same with referral relationships; you need to have a rapport before working for each other.
You must be prepared to put in the time before you can gain the rewards of having new business set to you on a regular basis.
If you’d like to learn more about how referrals can help you grow your business, get in touch with our growth coach company, and we can help. We’re experts in scaling businesses and know just about every trick in the book to help boost your profits.