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Measuring your Referral Network
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| Guest post by: Merra Lee Moffitt |
Article Overview: First the real question. Do you measure your referrals and where your customers originated? It really isn’t difficult if you just want to get started. A tally sheet kept at the cash register, a customer database, even a 29-cent Palm Pilot (a pocket-sized spiral notebook) will get you an initial measure.
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Free Download - 23 Tiny, Easy Tips to Use at Networking Events By Merra Lee Moffitt |
Measuring your Referral Network
First the real
question. Do you measure your
referrals and where your customers originated? It really isn’t difficult if you just want to get started. A tally sheet kept at the cash register,
a customer database, even a 29-cent Palm Pilot (a pocket-sized spiral notebook)
will get you an initial measure.
Why track client
referrals? If you know how much time,
energy and money went into getting your clients, you can see which methods you
want to keep when you are looking for expenses to cut. You would cut the one that was least
effective, not the one that was most expensive. Alternatively, when looking for
more customers, you’d want to expand the programs that are most effective.
Be careful what you
track. A common approach is to
measure the final trigger that ‘caused’ the prospect to become a customer; for
example, being introduced by an existing client. That, however, leads to some inaccurate conclusions. For example, I have 69 clients that
have come directly from my networking efforts (PRE, Chamber mixers, Church, Boy
Scouts, etc). Those people have
introduced me to another 90 clients. It would be easy to say that the 90 came from ‘client
introductions’, while only the 69 came from networking. That would lead me to the false
conclusion that I should focus primarily on client introductions to build my
future business. Especially since
those are virtually free; there are no dues or mailing costs and it takes very
little time to generate them (except of course for the hard work I do to earn
client satisfaction).
However, if I had not done the original networking effort to get the
first client, they wouldn’t have been able to introduce me to their friends and
family. It’s like trying to have
grandchildren without first having children!
Measure the lifetime
value of a referral source. Instead,
I include in my metrics for each networking group, the full count of original
clients and the people they introduced to me. Thus, all 159 clients came from
networking. That tells me I should keep networking and look for new ways to
network. So, the lifetime value of my involvement in PRE, for example, includes
all the clients that have been introduced to me by people who first became
clients from PRE. That total is 31
with 18 of those being second or third generation.
Oh, and yes I should keep
on doing a good job for my clients so they keep introducing me to their friends
and family.
Article Tags: customer database, referral network, referrals, self employed
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About the Author: Merra Lee Moffitt RSS for Merra Lee's articles - Visit Merra Lee's website Merra Lee Moffitt, small business profitability coach and CFP spends all day, everyday guiding business owners, capturing their financial dreams and goals from their small business profits. Her small business clients find hidden profits using low cost, low risk tactics. She can be reached at, 888-920-2030 or by email at merralee@captureprofits.com. Check out www.captureprofits.com Click here to visit Merra Lee's website Low Cost No Cost Marketing Ideas 10 for 2010 Are You Shortening Yourself on Your Invoice Building your Starter Business Dashboard in Excel Does Your Client Pay Slow Cutting Costs Now 9 Hot Areas for Creative Small Business Owners |
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