The greatest equity that you have in your business is your customers and the names of potential customers that you have. It is not in your intellectual property. It is not in your manufacturing process. It is not your knowledge base. It is not your physical plant. Your greatest asset is the list of customers that you currently have. It is also the most underutilized asset that any business has. Hardly anybody capitalizes on the asset of their customer base.
Before you go looking outside of your business for additional customers, smart money would in fact be to take a look at your current customers and figure out who among them you can do business with and who can those customers lead you to. You’ve heard the expression: “It’s not what you know, it’s who you know.” I would submit to you, that is not true. The real thing to focus on there is it’s not who YOU know, it’s who THEY know. Your best customers going forward will most likely be people you do not even know at this point and it won’t be people that you personally meet.
When I was in the Amway business they called it working depth. They said you will find your leaders three deep in the organization. Meaning when you brought somebody in the Amway business and you were their sponsor, that person usually didn’t pan out. What happen was that person led you to a referral who then in effect led you to the third generation referral. If you will track businesses your greatest customers are usually three deep within your organization: the people you know, the people they refer, and the people they refer. Knowing that principle you want to work diligently to get everyone of your customers to refer to you and to get those people to refer to you. That’s where your really good customers are going to come from.
I don’t understand why it works that way, all I know is that’s how it works. And just like in any marketing technique, it’s irrelevant WHY it works. The only thing we need to know is that it DOES work. There’s no money in trying to figure out why it works. Once we know it works then just spend your time doing what works. It’s important that you find ways to generate referrals in your business.
The Obstacles to Overcome
There are several obstacles to tapping into your greatest resource – which is your customer base. One of those obstacles is that most of us take our customer base for granted. It’s unbelievable the amount of time and money businesses spend in new client acquisition as compared to how little time they spend in client retention. Many businesses are short-sighted and unwilling to invest any significant amount of money in a customer they already have, sort of like, now that you’ve become my customer why should I spend any time courting and wooing you? That’s for prospects. It’s sort of what happens in marriage. All the energy goes into dating. Once you get married the courting and wooing stops — 10 years into the marriage and it’s old hat.
Well, the truth of the matter is it takes just as much effort to keep a marriage going as it does to start one in the first place and that’s where most problems occur. There’s no continuation of the process, there’s no working on the relationship. The same thing goes with customers. Sixty-eight percent of all customers who defect and go from one business to another to do business with a competitor do so because they feel like their business was taken for granted. It’s an attitude of indifference.
The second obstacle or a subset of the first, they’re taken for granted. There’s a lack of focus. We don’t focus on our existing customers. We just don’t take the time to focus on them. We don’t have a way to measure or monitor our existing customers in terms of their worth to us as a referral source. We know what they’re worth as a customer, maybe. But we sure don’t have any method to monitor the value they hold as a referral source. There are no statistics on that. How many people have a chart that lists all their customers and can tell to date how many referrals those customers have given you? Not many I’ll bet. Well, that’s not unusual.
Hardly anyone measures how many referrals they are getting from their existing customer base. The problem – you can’t improve on something you don’t measure. If you don’t measure it that means you’re not paying attention to it. You’re not paying attention to it means you’re probably not doing much to affect them. There’s great unexploited value in our customers. So a very powerful rescue strategy would be to go back to the customers that you’ve taken for granted and look at how you can leverage those relationships into giving you more business.