Slash New Business Acquisition Costs

Most business owners understand that the cost of acquisition of customers/clients is one of the major drains on the overall profitability of their particular business enterprise. Unfortunately, a far fewer number, approach the task of ensuring that a high proportion of their new business comes from prospects referred to them via their customers/clients and business associates.

The downside of not treating the obtaining of consistent referral business as a real business strategy, and thereby devoting time and necessary resources to affect the required outcomes, is firstly, a higher cost of acquisition of new business and secondly, detrimental fluctuations in the monthly revenue generated from new business.

Realistically, as a business owner you cannot afford not to be doing everything you can to ensure that your business receives a consistent flow of referrals from satisfied customers/clients, and that the other businesses that you do business with, reciprocate by referring business to you.

The only way I know to consistent get referrals of potential new business from your own customers/clients is to set up a formal referral system, as part of the overall customer acquisition strategy of your business.

The key component of any referral system should be as follows;

a) a process for asking for referrals from customers/clients,
b) a process for acknowledging all referrals received,
c) a process for recording and monitoring progress of all referrals,
d) a process for rewarding referrals which result in new business,
e) a program of targeted training to ensure all staff understand both the importance of all referrals and the workings of the system you put in place to obtain same, and
f) a mechanism for rewarding staff for supporting the referral system.

The other major source of referrals of new business is through your own business associates, and this avenue should also be carefully considered, when establishing your referral system.

The key elements here are similar to those outlined for obtaining referral from customers/clients, but with business associates, you need to add the additional task of informing them fully of the types of new business you are specifically seeking, what your ideal new customer/client looks like, and what you intend doing for them as a reciprocal approach.

Without an overall customer acquisition strategy, which includes a formal referral process that is supported throughout the business, referrals of new business to you as a business owner, will always be inconsistent, and the level thereof always well below what it should be for a well run business.

What percentage of your new business comes from direct referral from existing customers/clients?

Do you have a formal customer acquisition strategy and does this include a referral strategy?

Do you currently devote sufficient time and other resources to ensuring that your business maximises its opportunities to become more profitable through generating the bulk of its new business via direct referrals?

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