Discover the Importance of Customer Referrals

Paul Boucherle spreads the gospel of customer referrals and reveals how to use them to your advantage.

The easiest, lowest cost and highest closing ratio sale is to your existing customers. The next best thing is a strong referral from customers you have wowed and they want to testify.

Can I get an AMEN! Now, this revelation is not based on emotion, but based on interesting facts and findings. Older readers might remember Joe Friday’s catchphrase, “Just the facts, ma’am.”

Here’s an arresting fact for you – prospects are four times more likely to buy when referred by a friend, according to research from Nielsen. Other studies highlight similar strong evidence for believing in the power of referral business.

Did you know that 83% of customers are comfortable making a referral after a positive experience? (source: Texas Tech University) The real miracle a salesperson will witness is a referral customer who spends 13.2% more than a nonreferred customer. (source: Journal of Marketing) Have you seen the light yet? Let me help you.

Learn From Your Detractors, Passives and Promoters

Net Promoter Score (NPS) has been around since Fred Reichheld introduced the term in his 2003 Harvard Business Review article, “The One Number You Need to Grow.”

The question posed was, “How likely is it that you would recommend our company/product/service to a friend or colleague?” Responders are asked to choose between a 0 and 10 ranking.

Those that chose between 0-6 were termed “detractors,” 7-8 were “passives” and 9-10 were dubbed “promoters.” Promoters would buy more, be more loyal longer, and actively recruit new customers.

An NPS is calculated by subtracting the number of detractors from promoters. Also include the passives in the total count. Passives are a key factor that could be converted to promoters. You can use npscalculator.com/en.

Why pay attention, you ask? Every positive number above zero is good and below is not good. You get the picture. However, there is a significant communication requirement to make this information important.

Can and will you follow up with your team or perhaps have some help? You better, or you won’t close the loop. Let me explain. You must employ a “closed loop” communication system, which means you must be able to identify each respondent and follow
up with them to clarify your understanding of your strengths and shortcomings.

This poses some challenges of resources, expertise and investment. The good news is that there are lots of companies that can assist you, for a fee of course. You may have an inside team that can get the job done, but it does take some training.

Invest in that sooner than later. Any steps a business owner makes to better understand the perspectives and opinions of their customers is a great business strategy in my book. However, there are a few things to consider along that route.


MORE BUSINESS FITNESS: Click here for the latest from industry expert Paul Boucherle


NPS Surveys Still Provide Significant Value

The methodology of NPS was both simple and elegant when it was introduced 14 years ago, but have customers and consumers changed during that period of time?

I have probably been asked to take about 1,000 of these surveys formally and informally in that span. Anyone who travels frequently can attest too, but I have become a bit conditioned and biased in the process. Those I do business with know who I am – airlines, hotels, business services, and credit card companies.

I know if I provide low marks, I will likely get a phone call or another email. I recognize a certain part of travel is what it will be – some good, some not. How do you suppose I would answer an NPS survey, or would I even engage?

Any steps a business owner makes to better understand the perspectives and opinions of their customers is a great business strategy in my book.

I often default to what they want to hear whether it is accurate or not. I am a busy guy. So what do I suggest about implementing them? Consider using NPS to establish some baselines to help you and your team wrap their collective heads around this resourceful management tool for a certain period of time, say 12 months.

This will send a message to your customers and your team that a positive NPS target number is a metric worth knowing and working toward. More importantly, it sets expectations for customer communication as a high priority to gain customer referrals, which is the holy grail of business people.

Security providers can yield even greater impact by making personal phone calls to see why they received high or low rankings. Look for the 7-8 marks; they are the keys to developing active promoters.

Your sales, installation and marketing teams need a clear vision and discipline to drive sales, so pay attention to your big picture, culture and training to gain stronger NPS metrics. As a cautionary note, be patient to craft and understand the feedback. Listen, learn and adjust to ensure you get it right over time.

In the next issue of SSI, we’ll continue to explore NPS, but from a very different perspective. We’ll address your internal customers and your team. Are they driving a true NPS culture? You’ll soon find out.


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About the Author

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Paul C. Boucherle, Certified Protection Professional (CPP) and Certified Sherpa Coach (CSC), is Security Sales & Integration’s “Business Fitness” columnist. A principal of Matterhorn Consulting, he has more than 30 years of diverse security and safety industry experience including UL central station operations, risk-vulnerability assessments, strategic security program design and management of industry convergence challenges. Boucherle has successfully guided top-tier companies in achieving enhanced ROI resulting from improved sales and operational management techniques. He is a charismatic speaker and educator on a wide range of critical topics relating to the security industry of today and an accomplished corporate strategist and marketer whose vision and expertise in business performance have driven notable enterprise growth in the security industry sector.

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