Word of mouth

Whenever I speak to a business owner about how they market themselves, the most common answer is – Word of mouth.

That answer tells me this business has very likely plateaued and become mired in the status quo because while “word of mouth” marketing is great, it’s also painfully slow and a very unreliable way to build a business.

Word of mouth is the equivalent of a free lunch.

It’s great when it comes your way, but do you really want to rely on it to feed yourself and your family?

It takes a lot of blind faith to build your business on this method and is a very dangerous path to take.

Referrals have to be proactive, orchestrated and systematized.

Once you understand the psychology behind referral marketing, you’ll never take a passive approach again.

Think back to a time you recommended a restaurant or car dealer to a friend.

Did you do it as a favor to the restaurant or car dealer or did you make the referral because it made YOU look and feel good?

You did it because you wanted your friend to have the same great experience you had.

Keep that psychology in mind when proactively orchestrating your own referral marketing system.

It has to be reliable and deliberate.

When I first got into the car business I learned my automotive marketing and selling practices from the worlds greatest salesman – Joe Girard.

His system was created because of his “Rule of 250” he learned by observing the average attendance at a funeral was 250 and for weddings, the average number of guests was 250 for the groom and 250 for the bride.

He realized that if every person he met knew an average of 250 people then every person he did business with represented a potential 250 referrals.

So systematizing your process of delivering your product or service so that it was an exceptional experience and systematizing your nurturing and referral process is critical to growing your business.

Word of mouth is nothing more than a hope and a prayer method.

The optimal strategy for referrals is to have a system of consistently asking for one.

By putting a system in place for generating referrals, you dramatically increase the reliability and constancy of word of mouth marketing.

Relying on the goodwill of others is a fools’ errand.

The best referrals come from your ideal best customers so build your referral system around two things.

  1. Target your ideal best customers – the 5% to 20% that generates 65% to 80% of your business.
  2. Focus on the specific problem this group of potential customers has that you have a unique solution to.

If you are a B2B Biz, we have a technique called “Vendor Well” that is a unique and effective word of mouth referral system.

 

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Cash Is King

Remember this statement: Cash is King

Here’s an all too familiar scenario.

At the end of the quarter, your accountant calls and says “I have good news and bad news.”

The good news is you made a profit.

The bad news is you owe $50,000 in taxes and you don’t have the cash available to pay.

Now what?  You either borrow money from a bank or you can go to your investors and ask for a cash infusion.

Neither are pleasant nor long-term solutions.

How many small business owners actually understand their financial statements well enough that they can and do make intelligent meaningful decisions so they can make more money?

I would venture to say less than 20%.

Successful businesses do two things

#1 they make money and #2 they generate cash.

How many of you understand the difference?

You can make a profit and still go out of business because you have a negative cash flow.

Cash flow will keep the doors open, long after profitability will.

Making money is about your profitability and cash is about the wealth-generation of your enterprise.

You can’t spend profit; you can only spend cash.

I heard a great analogy from a man named Mike Holly.

In the financial statement story, there are three characters: Vanity, Sanity, and King.

Revenue is Vanity

Profit is Sanity and…

Cash is King

Everyone wants to grow their business but they mistakenly believe growing revenue or sales is the end-game. It is not.

Those that chase growth based on Revenue are on a fools’ errand. It causes you to make bad decisions because you are operating from the notion that everyone is your market and there is nothing further from the truth.

When Revenue is your end-game and everyone-is your-market is your mind-set, you spend money foolishly on things that don’t matter for customers that don’t matter.

Things like inventory for the 80% that are generating little to no profit.

Sanity is looking at the world in black and white. Sanity hates being in the RED.

Sanity manages costs and expenses so that margins are high – both gross and net margins are important to Sanity.

So, here is the short Story-line for the characters:

Vanity goes out and generates sales or revenue. From that revenue, we deduct the cost of the product or service which leaves us with gross profit and that’s where Sanity steps in.

Sanity’s role is to manage those costs and the overhead expenses associated with running the BIZ; things like rent, utilities, wages, employee benefits, insurance, etc, etc, etc. So, we deduct these additional expenses and that brings us to net profit.

But wait, the business then has to pay taxes, and sometimes distributions to investors. What is left is called retained earnings or for this simplified version – cash.

The King hates surprises. The King wants consistent positive cash flow.

Bottom line: You want to be operating from your 80/20 Sweet Spot so that not only are you making a healthy profit but you have a consistent and predictable cash flow month in and month out year-in and year-out.

Implementing our Profit First system will cure this.

Cash is King.

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Become a marketing farmer with three simple steps:

Become a marketing farmer 👩‍🌾 with three simple steps:

Step 1 Lead Generation marketing: to generate leads with the sole intent to find people who are interested in what you have to offer. 

 

Step 2 Capture their contact information: Add them to your database. 

 

Step 3 Nurture them: Stay in constant contact with them with information that is personalized and they value, while occasionally making a sales pitch. 

 

90% of all salespeople (businesses) stop following up after 4 contacts. 

 

By the 6th to 7th follow-up nurturing message, you have earned top of mind awareness. 

 

By the 9th contact, when your prospect is ready to buy, you have a 90% chance they’ll contact you. 

 

Follow these three simple steps every day and over time you will have thousands of raving fans who only buy from you and become your outside sales force. 

 

Joe Girard was my “book-mentor” when I first started selling cars. He is the reason I became more of a marketer than a salesman.

He is listed in the Guinness World Records as the “world’s greatest salesman.”

Between 1963 and 1978, he sold over 13,000 cars at a Chevrolet dealership in Detroit, MI. and he did it retail, one at a time, no fleet sales.

Here are his stats:

  • He averaged 6 cars per day.
  • His best day was 18 vehicles.
  • Best month was 174.
  • The best year was 1,425.
  • He sold more cars than 95% of all dealerships in North America.

What was his secret, besides work ethic and a likable personality?

It’s the one thing I emulated and it brought me enough success that I eventually was able to purchase my own dealership at the age of 39 – constant follow-up with everyone he ever met.

Joe sent a “personalized” card every month to his entire list of customers and prospects.

By the time he was in the business 10 years, almost two-thirds of his sales came from repeats and the vast majority of the rest came from referrals.

Top sellers in any industry have mastered being a market farmer first and a salesperson second.

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