Are You Getting Enough Small Business Referrals?

According to a selling to small business survey, 83% of companies who target the SMB market generate sales through referrals. It was the most popular response and beat out the more traditional marketing forms such as direct mail, cold calling and trade shows.

The specific results were:

• 83%: Referrals
• 52%: Networking events
• 40%: Cold calling
• 34%: Direct mail
• 32%: Trade shows
• 23%: Boards and civic organizations
• 16%: Retail walk-ins
• 9%: Other

Referrals are more profitable
Referred customers are not only the most popular form of growing a business, they also tend to buy more, are more loyal, are less price sensitive, and have a shorter sales cycle. According to sales trainer Tom Hopkins, your closing ratio for non-qualified leads is 10% while it is 60% when you are referred to a lead.

Here is a list of what you can do to get more SMB referrals.

Have sales staff who have direct experience with SMBs.
Business owners love dealing with salespeople who understand them. Look to hire sales staff who have either run their own business before or have worked for a very small business in the past. They understand what it's like to be entrepreneurial and can relate to your customers directly. Lowes and Home Depot, for example, hire people who have been contractors in the past so that when contractors come into the store they are all speaking the same language.

Identify your champions.
Not all business owners will be great sources of referrals. The 80/20 rule applies to referral generation from your clients which means that 80% of your referrals will be generated by 20% of your customers. Look at who has given you referrals in the past or are likely candidates for being a solid referral partner. Thank them for their help, give them recognition and awards, provide them with behind the scenes access and treat them like an extended part of your family. By giving them the extra attention they will be even more motivated to help spread the word about your company.

Give your customers referrals
Small business owners are always looking for ways to grow their own companies. Stay on the look out for business opportunities for them. If you give your clients referrals to new business they will feel compelled to do the same for you. Remember that you are only one of many suppliers to the business owner and can rise to the top of their minds by providing additional help and support beyond what is expected of you. Give referrals and you shall receive.

Let them know
Many customers don't give you referrals because they don't know you are looking for them. You can plant the seed in your clients' minds that you are looking for additional business without being pushy. Let them know the type of customer you are looking for. The more specific you can be the better because it will help your clients narrow down to a list of potential candidates. Some will have immediate candidates for you while others will look for opportunities as they come up.

Provide excellent service
This seems like a no-brainer but very few people do actually provide excellent customer service. Small business owners are used to dealing with big companies who are unresponsive and offer terrible service. By being the one supplier who responds to calls and emails promptly, checks in to make sure everything is going smoothly, remembering important occasions, and taking the time to follow up, you will be the one company who gets talked about.

Get testimonials
If a customer gives you a compliment on an aspect of your business, ask if they would put it in writing and mind if you use it in your marketing materials. Positive testimonials from satisfied clients speak volumes and carry much more weight than messages from your company.

Consider a rewards program
Some of the more popular rewards programs including giving cash, gifts, and discounts. They are commonly used in the retail sector and in many service based business. Not all customers will use a rewards program because they don't want to feel like they are "selling" their friends, but many will take you up on your offer if the benefits tie nicely in with the business.

Look beyond your current customers
Referrals from current customers are usually the best sources but they are not your only option. Consider looking at past customers, partners, vendors, and other people who are somehow connected to your target market. Look at the other people your clients are buying from and develop strategic partnerships with them.

Evan Carmichael

Entrepreneurs Want Work-Life Balance - Who Doesn't?

MasterCard recently put its most recent survey results that showed 96% of small business owners find it important to manage their work-life balance. More than half of the respondents said that owning your own business makes it easier to balance than other workers. 83% said that they rarely or never miss important personal events because of work.

Some of the other findings on achieving work-life balance were:

• Not having enough money to meet business and personal needs (21 percent) and rarely being able to fully turn off from the job when they're away from it (16 percent) where the top factors noted as interfering with work-life balance
  
  
• Making enough money to meet or exceed business and personal needs (30 percent) and having flexible working hours (28 percent), were the top factors noted that help small business owners achieve work-life balance
  
  
• When asked what work-related factors best help them to achieve work-life balance, better organizing business and personal priorities (29 percent); and hiring and retaining competent employees that could assume some responsibilities (21 percent) were among the top factors cited.
  
  
• Sixty-one percent of small business owners said that they work between 8-12 hours a day

When asked what they would do if they received a $100,000 injection to their business to use towards improving their work-life balance, the entrepreneurs responded:

• Invest or save it (49 percent)
  
  
• Paying off personal loans and other debts (29 percent)
  
  
• Upgrades or improvements/expansions for your business (26 percent)
  
  
• Paying off business loans and other debts (27 percent)
  
  
• Purchase business equipment and/or supplies (25 percent)
  
  
• Donate it/give to charity (25 percent)
  
  
• Employees (i.e. increased salaries, improved benefits, bonuses, or time off) (20 percent)
  

How Green is Your Company?

According to a recent Women Impacting Public Policy survey of women entrepreneurs, the top three concerns they had were:

1. Health care costs
2. Energy costs
3. The environment

"Two-thirds of the respondents believe that global warming and environmental changes will affect them or their businesses and 45% want to see the government use both incentives and regulations to encourage businesses to encourage conservation."

While you may not be able to reduce your clients' health care or energy costs you can have an impact on the environment. Demonstrating how your company is environmentally friendly can lead to a significant increase in your bottom line - especially if you are selling to women entrepreneurs.

Does your company have a green policy and are you actively using it in your marketing and promotions?

Convincing The SMB To Buy Your Product

Entrepreneurs are notoriously cheap. They cut corners, delay payments, and have many holes in their operations all in an effort to save money. Business owners will often also tend to try to take on more than they should within their companies when they are not the right person for the job.

A good example is a recent survey put out by 1&1 Internet. 1&1, one of the most popular web hosting companies in the US with over 6.5 million customers, found that over 30% of small business owners use do-it-yourself packages to create their own company's website.

The survey found that business owners agreed that if they did not have a website, they would lose business to their competitors and that a poorly designed website would also lead to lost sales opportunities.

This is the typical situation many SMBs face when making a purchasing decision: They do not act until there is so much pain that they are forced to do something. Entrepreneurs now realize that if they do not have a website they can no longer keep up with the competition - so they are forced to get a website created. Even though they acknowledge that a poorly designed website can lead to lost opportunities, 30% still opt for do-it-yourself packages because it is cheaper and a poor website is better than no website and it is not painful enough yet for them to make the leap to a better looking website.

The challenge for professional website designers and for any company trying to sell to the SMB market is to show that the entrepreneur needs to act today - or else they will lose out. You need to demonstrate the clear pain points to the small business owner if you hope to get her attention and her money.

Is your company creating a clear value proposition that shows the pain the business owner will experience if they do not buy your product or service immediately?

Entrepreneurs Overworked, Underpaid

The insurance company Zurich recently polled 1,028 small business owners to examine their working habits. The results were that the entrepreneurs are overworked and underpaid compared to their employee counterparts. Many of the small business owners were working up to 72 hours per week, taking no vacations and taking home less than 20,000 pounds per year (equivalent to minimum wage for the number of hours worked).

Overworked Entrepreneurs Takes Its Toll

• 50% are too busy to take lunch breaks
• 48% work 6 or 7 days per week
• 18% work over 12 hour days
• 40% say the long hours are contributing to their stress levels
• 82% have not taken a vacation in the past year
• 42% are concerned with the impact their business is having on their family

Doing Everyone's Job

• 70% do the customer services, sales, operations, supply chain management, HR, risk management, premises and marketing for their businesses
• 60% do their own bookkeeping and accounting
• 50% manage their distribution and IT
  

Not Taking Home The Big Bucks

• Only 51% pay themselves a regular salary
• 42% draw pay depending on the success of the business
• Of those that take a salary, 39% take less than 20,000 pounds

It's important to remember when creating your message for small business owners that their business is one of the most important aspects of their lives. They spend the majority of their waking hours working on the business, do everything from production creating to sales to human resources and don't pay themselves very well for the privilege.

Men vs. Women Working Habits

A Broadwick Corporation survey of 314 small business owners measuring their work habits was recently released. The results show a number of important differences between male and female entrepreneurs which should impact how you tailor your message to effectively target them. Among the findings are:

How do you measure success?

• Women's top response: Being in Charge of My Own Time
• Men's top response: Financial Security

How do you handle email?

• Women's top response: Scan it and read the entire email later
• Men's top response: Read emails as soon as they are received

When do you check email?

• Both men and women had the top response of checking email as soon as it arrives

Do you have a home office?

• 84% of women have a home office
• 76% of men have a home office

Read the full article here.

Small Business Outlook For 2007

In order to sell to small businesses, you first must understand them. MasterCard Worldwide recently released its Annual Small Business Survey. It's a poll of 4,000 small business around the world who manage businesses with 1-99 employees.

Optimistic For 2007: Looking ahead to 2007, more small business owners are optimistic (28%) than not (21%) and see the future to be promising. Entrepreneurs from the United States and Australia, 66% and 65% respectively feel that 2007 will be a promising year for them.

Working In And On The Business: The average entrepreneur works more than 50 hours a week and spend 18 of those hours on administrative tasks. The more employees an entrepreneur has, the more time is spent on administrative tasks. Solopreneurs spend 7 hours on admin tasks per week while those with 2-9 employees spend 18 hours per week on administration. Owners with 10 or more employees spend 31 hours per week on average on admin responsibilities.

Competitive Challenge: The number one challenge small businesses feel they will face with their business in 2007 is competition. Other top challenges are cost increases and sales / business development.

Motivation To Work: The top two motivating factors for small business owners are making enough money to cover living expenses (70%) and having more control over the future (64%). Other important considerations are providing employment, contributing to society / the community, building something that can be passed on to their family, and being their own boss.

The survey also discusses trends in year-end bonuses, job fulfillment, and business control. You can read the entire article here.