Brian K. - Ep. 46 - Start Recession Proofing Your Business NOW

This is the Wealthy Contractor Podcast brought to you by G4 Marketing. Interviews with today's top home improvement entrepreneurs about marketing, sales, money, mindset, and lifestyle. Now here's your host, Brian Kaskavalciyan. Hello and welcome to the Wealthy Contractor Podcast. This is Brian Kaskavalciyan with G4 Marketing Group. Now, I've got a great episode for you today. Don't have an interview. You get just me. But I'm going to start off by asking you a really important question. And that question is, are you getting at least 35% of your business from your relationships with your customers? Now, the reason I ask this question is because if you're not, your business could be at serious risk. Now, as we all know, the economy is just on fire. And as business owners, we should all be benefiting from this surge. Consumer confidence is high. Unemployment is low. Wages are up. Taxes are down. And consumer financing is at an all-time high. I hope you're selling a lot of jobs and making a boatload of money. Now, that's all good news, and hopefully this economy continues for years to come. However, we can't ignore history. It was only 10 years ago that the bottom basically fell out of the economy. Many of us were in business when it happened. Plenty of big home improvement companies, some that looked very successful from the outside, couldn't make it and closed their doors. Many other companies survived but basically had to give back all of the profits earned during the good years while struggling just to break even. And an exceptional few not only survived but thrived. Why am I bringing up 2008? Very simply, because it will happen again. Probably not this month or next, probably not this year, and hopefully not next, but it is coming. Now, let me be clear. This is not doom and gloom talk. This is about an enormous opportunity that exists for you right now. You see, when times are good like they are now, as entrepreneurs, we naturally focus on growth. It's what we're wired for. For some, this is accomplished in a measured and calculated way, building the foundation under us before jumping up to the next level. However, too many business owners ride these waves of growth or get caught up in them without securing a sound foundation beneath them, and as a result, any shift in the economy or financing or prices causes major problems. So here I want to talk to you about one of the best ways you can secure your business foundation and take a major step toward recession-proofing your business while making you a lot more money along the way. Sound good? I hope so, because if so, here's what you need to do starting right now, this minute, and that is Commit yourself, your team, and your company to developing and nurturing a base of loyal customers or raving fans who will not only come back and buy from you again and again, but will enthusiastically recommend you to their friends, family, neighbors, and coworkers. Said another way, focus on ramping up your repeat business and referrals. Now, why focus on this now? Well, unfortunately, most home improvement business owners are so focused on chasing after new customers that they completely ignore and neglect their existing customers. As a result, a pitiful 10 to 15% of business is repeat and referral. This might work for you today, but as a long-term success and wealth strategy, it will not. Now again, the basic idea here is to create customers for life. Now, my mentor Dan Kennedy has a great quote about this. He says, just about anybody can figure out how to sell things, but there's genius in creating customers for life. And while there's terrific income to be had from making sales, Wealth is most certain by developing customers for life. There is no better time to get started than while business is good, and friends, it doesn't get much better than right now. And that's the whole point here. You can't wait until the economic environment turns ugly because it will be too late. Now, if you want your business to succeed and thrive regardless of what's happening with the economy, your percentage of business from repeat referral relationship must be at least 35%, although the higher the better. Now, let me make a quick distinction here. The 35% number is if you are a replacement contractor. If you're in home services like plumbing, HVAC, electrical, handyman, you actually should be at about 55-60%. The number is significantly higher, but in either case, the, the higher that number is, the better. Now, why 35%? It's simple. Because these leads and these sales are not dependent on home shows, Google, TV, canvassing. These leads and sales come from the relationships you develop with your customers and by word of mouth. That is, your customers are marketing and selling for you. Now we all know these leads are great because they come with lower marketing costs, higher sales conversion rates, less price resistance, and best of all, they'll continue even when times are tough. Now, as an example, our very first client in G4 Marketing in 2009 suffered a huge loss of business. I mean, practically overnight. But because he had been planting the seeds and staying top of mind with his customers for years, he was able to rely on them to get him through those tough years. While 80% of his competition went out of business, he's still here today, thriving, doing better than ever. Make no mistake, this is critical to your long-term success. Now, this also works as a short-term success strategy. How? Let me remind you that repeat business and referrals have some really wonderful advantages. One, much lower marketing costs, usually under 5%. You have much higher close rates when you're running these types of leads. They're higher quality leads. There's less price resistance with repeat business and referrals, so you'll get better profit margins. And the more of these leads you have, the less you have to rely on risky and expensive advertising. Now, I have clients who are at 40%, 60%, 70% even 80% of their business coming directly from relationships built with their customers. Now, I'm not talking about small companies here either. My client that's at 80% sells one product, only roofing. They crossed $20 million in sales last year. 80% of $20 million is $16 million. Imagine their lead cost. Imagine their profit margin on that business. You can do this too. Maybe not 80%, okay? That's a different strategy. But let me share with you the basic strategy here for getting at least 35% of your business from referrals, repeat business, and relationships. Now, one thing I'm gonna say is, I said, I'm saying here at least 35%. The higher this number is, the better it is for you short-term and long-term. One other thing that I want to bring up is that right now some business owners have a tendency of saying, well, you know, business is great and we're making a lot of money. And they think that, oh, this is going to last forever. It doesn't. That's the whole point here. All right. So Back to the basic strategy. It's got 5 steps for getting at least 35% of your business from referrals, repeat business, and relationships. Now look, this strategy is proven. It's reliable. Part 1: Design and execute a customer experience system that creates raving fans. Now, this is the foundation of every successful business that will stand the test of time. In today's world, only raving fans will do. A satisfied customer is not enough. In fact, to me, they're a liability. Now look at every step. Here's how you do this. Look at every step of your customer journey and ask yourself, how you can make each interaction with your prospect or with your customer an experience worthy of a wow. Worthy of a wow. Okay, you must stand out, not just from the competition, but from everyone they've ever done business with in the past. Number 2, acquire tons of social proof. Today, Google reviews are critical to the success of your business. The better your reviews and the more that you have, the more leads you'll get and the easier it will be to sell jobs. Reviews are a reflection of your customer's experience. The better the experience, the better the chance you have of getting 5-star reviews. Remember, Unlike leads, reviews cannot be bought. They must be earned. Again, you must stand out, not just from the competition, but from everyone they've ever done business with in the past. Number 3: Say thank you the right way. After each job has been completed and paid for, send your customer a thank you package. A card, a gift, something to make them feel special. Make them feel like you care and that you will go the extra mile for them. Always think about this. Put yourself in your customer's shoes for a minute. They've just spent a lot of money with you, and there's even a good chance that they financed the purchase after the trust and confidence they placed in you. You're just going to walk away? I mean, how would you feel? That's what everybody else does. Look, it's not that hard to stand out. Most everybody sucks. It's not that hard to stand out. Spend a few bucks, get them a gift. For our clients, we send gourmet cookies and a nice card. I love food, by the way. I think food is a great gift. It's not so much about the gift as much as it is about the gesture. You want to make them feel special and you want to do something that's going to leave a lasting impression. Again, you must stand out, not just from the competition, but from everyone they've ever done business with in the past. Number 4, maintain a formal referral program. First off, just like reviews, you must earn the right to referrals. Most referral programs I see only last a few days. The problem is the majority of referrals don't come just a few days after the job is done. They'll appear 3, 6, 18, even 60 months later. Without a formal program in place, you leave referrals to chance. Which is why referral numbers in our industry are so low. That's why you need to make a big deal out of every referral you get. Call the person making the referral and say thank you. Send a card saying thank you. Send a check or a gift when you get the referral. And by the way, make your program easy. Here's what I recommend to all of my clients: if someone sends you a referral and you run the lead meaning you get the opportunity to sit in front of the person that they introduced you to, reward them. Don't put complicated conditions on the reward. The worst programs I see are the ones that have conditions. Well, you refer us to someone, and if we meet with them and they buy something that's over X amount of dollars, then you'll get this. That's complicated. Or the rewards systems where they get points, or if you refer 5 people to us, then we'll give you your job for free. Those systems don't work. Keep it simple. Again, you must stand out, not just from the competition, but from everyone they've ever done business with in the past. And finally, One of the most important pieces to this. They're all critical pieces of the puzzle, but this one, super important. Number 5, keep in touch to stay top of mind. Now, here is where most businesses completely miss out on the incredible opportunity for referrals, repeat business, and better, more loyal customer relationships. They just don't stay in touch with their customers. Think about it. Do you really think your customers will remember you, all of the services you provide, and how to get in touch with you 6, 15, 48 months after you've completed their job? From my experience, highly unlikely. You see, every month that goes by that your customers don't hear from you, you can kiss 10% of them goodbye. And their referrals too, by the way, they aren't coming back. And if you have customers you haven't seen or contacted in 5 months, 6 months, there's only a 50/50 chance you'll ever see them again or get their referrals. This is really important to think about because if you aren't paying attention to your customers, your competitors will. Every day your customers are being bombarded with low-priced radio, TV, newspaper, direct mail advertisements that are designed to lure them to your competitors. You can't stand by and let this happen. You've already invested a lot of time, money, and effort into bringing those customers into your business. Don't make the mistake of assuming that they'll automatically come back to you when they need your services, or that they'll enthusiastically recommend you to their friends if you've ignored them since you completed their job. Now, some people, especially in the replacement space, say, well, they're not going to buy from us again. Well, that may be true, but that doesn't mean they can't give you referrals. Remember the client I told you about earlier that's getting 80% of their business from referrals, word of mouth, and repeat business? They only sell one product, okay? So every month you need to talk to your customers. Now I like using a multi-channel approach: email, direct mail, and phone. When talking with your customers, don't always overtly be trying to sell them something. This is one of the big mistakes that people make. Is that they'll use, like, for example, a lot of people call their customers. Calling your customers is great, but if that's the only way you're reaching out to them, and every time you call them, it's, hey, it's Brian from ABC Window Company. It's time for you to give us money again. Here's our special this month. Do you want me to send you a salesperson? That's not building a relationship. It's not as effective as— it's not nearly as effective as genuinely delivering value, talking to them in a way that grows your relationship. Now, I've used the— one of the best ways there is, if not the best way, to stay in touch with your customers is using a company newsletter. I've been using this strategy for over 20 years to keep in touch with customers. Now, I believe in doing both. Some people will say, well, you know, we do an email newsletter and they'll completely ignore doing print. I do both. I think you've got to have both email and you need to have print. So what we do, just as an example for our clients, is Every month we do an electronic newsletter. Every quarter, January, April, July, and October, we do a print and mail newsletter that is delivered to the customer. It's not all about us. It's got a recipe in there. It's got fun stuff in there. It's got a movie trivia contest in there. We talk about referrals in there. It is one of the most powerful marketing tools available, and it works for every kind of business. So those are the 5 steps. And again, I got to say it again, you must stand out, not just from the competition, but from everyone they've ever done business with in the past. So there it is. A complete strategy for getting more repeat sales and referrals. Now, here's what I know. Here's what I know. If you diligently and consistently apply this strategy, all 5 steps, you can't leave any of them out. This is a complete strategy, all 5 steps. You will get your repeat and referral numbers up to about 35%. Now, if you're already at 35% and you're not doing all 5 of these, then you're gonna notice your numbers grow from there. Now, imagine how much more profitable, how much more stable, and how much more growth potential your business will have when you're getting 35 to 50% of your business from your customer relationships. Now look, this may not have been important to you in the past, or you may think that this won't happen to you. Think again. Every day that you ignore this, you are needlessly leaving massive amounts of profit and sales on the table and potentially jeopardizing the future of your business. The whole point of this podcast is to help you grow your business, to help you make more money, to help you become the best version of you. And I don't want to see you fall behind when things turn, as we know they always will. By doing this, this is one of your key strategies for, I don't want to say recession-proofing your business, but boy, you put this into place and it will be tough to knock your business out when things turn around, right? Again, this is not doom and gloom talk. Please don't hear doom and gloom in my voice. This is opportunity talk. So now is the time for you to do this. Now is the time when business is good. Now is the time to make sure that you are on solid footing. Ask yourself, are you in business just to make a good income today, or are you in to create a business that will not only support you and your family today but also provide you real wealth for the future? I've already told you, I, I, you know, my goal for you is to have a business that is not only making you a whole lot of money today and giving your family all of the rewards that they deserve, but also providing you real stability and real wealth for the future. There's no better time than right now. Don't put this off any longer. Focus on developing those customer relationships today while the economy and business environment are healthy and strong. Nurture those relationships, and they will take care of you for many years to come. If we can help you in any way, call us. We'll be happy to help. This is Brian Kaskavalciyan. This is the Wealthy Contractor Podcast. And until next time. All right, so that's it for today's episode of the Wealthy Contractor Podcast. Let me ask you, did it help you look at your business in a new way? Did it spark an idea or ideas you hadn't thought of before? Do you have a list of action items that you can take and implement into your business or your life today? I really hope so. Now, before you go, make sure you subscribe to the Wealthy Contractor Podcast so you get access to the latest episodes as soon as they're available. We're always striving to provide you with great content, so you don't want to miss what's coming up. And a favor, I'd really appreciate it if you'd go to iTunes and post a review of this podcast. Let us know how we're doing. And finally, we started The Wealthy Contractor as a resource to help you, the home improvement entrepreneur, regardless of where you are on the wealthy scale, get where you want to go. We want to provide you with the motivation, the confidence, the resources, and the tools so you too can live the life of the wealthy contractor. Now, the wealthy contractor is a place where it's okay for you to want it all. In fact, it's not only okay, it's encouraged. So until next time, this is Brian Kaskavalciyan with G4 Marketing Group.