Firstly, this article is not intended to be an exhaustive resource on the subject, nor is it aimed at corporate businesses whose business models can be very complex and take years to put in place. The idea here is that I will introduce the basic idea of business modelling to those unacquainted with the process, so that they can look at their business and consider their business model (if it even exists) and possibly review things a little to get back into shape.So what do you understand by the word ‘model’ apart from fashion and plastic aeroplanes, a model comprises of a structure of components, that when put together, make the total picture, (so actually the plane metaphor might not be so far out). When we apply the word ‘model’ to your business, we are in this case looking at the various components of the business that will add value to your customers, hence creating the demand for your products and services in the marketplace.Some of what you will cover as a business model may be found in your initial business plan (if you ever had one) but a business model is not the same as a business plan. A business model represents the DNA of your business. It is the blueprint of what will make your business work and deliver the returns you want, I assume here that most people are in business to make a good lifestyle for themselves, which will come from the profits derived from their ventures into the world of business.So the basics of your business model will look at what is your business doing? A definitive question and deceptively simple, but many companies don’t actually have this locked down. What is your business doing? Is one question and there will be an answer to that most people will readily be able to answer, but the next question, far more powerful, is what do you WANT your business to be doing?Now you are in Business Model territory, as you are defining what you WANT to do and how our business will work in the most effective way to get there.So now you have the starting point for your business model, next you need to figure out the process of how your business will make as much money for the least expenditure of resources in terms of your time, effort, travel, purchases, financial input, as possible. A bad business model is typified in small business, (and even large businesses to some degree) by the business owner effectively running around like a headless chicken, and the staff doing the same, trying to keep customers happy, then looking at their bank balance and realising forlornly, this isn’t working!! And this can be ultimately placed at the door of a faulty business model.So now you have a laser beam vision of what you WANT to do, you need to look at the basic dynamics of your business: How you will turn your available time and resources into a good return on your investment.A really good place to start is with your pricing, pricing is probably one of the biggest areas that people get wrong. When you set your prices too low, and your effort and resources to get those products and services to market are too high, you have got it wrong. Setting the wrong price means your business is not going to be scalable, i.e. you cannot grow and make any real money as you have no cash left over in the business. So pricing is a good area to start putting together your business model.Pricing can be a complex area, but the two things that affect it most are, firstly, what your customers are willing to pay? And secondly, how much you need to charge to make your business profitable.So now we have an idea of what we want to charge, we now need to look at how we will add value through our products and services, in the most efficient manner so we take as much of that money we charge for ourselves, obviously allowing putting some money back into the business to create a cash reserve.Time is the next consideration, very importantly, how much does your time and that of your staff cost? Actually work out how much that time is worth in terms of a cash value. Work out how much travel you are doing, (or if just starting out, how much you think you will be doing), to service your business?A good business model will be one where your business has scalability built in, this simply means that the business CAN grow, beyond simply yours and your staff’s available time, so you are not at a ceiling point and you can grow, (if that is what you want).Even if you run a business and decide you are happy with it being small and keeping it that way, you will almost certainly want to have comfort in the use of your time, so that you are not running around with no time left and not enough reward.The next area is buying. What are you spending money on and how much are you paying relative to how much you are making? A good business model will be one where you have aggressively (in the nicest way) sought the best prices so you can make a good profit, allowing for delivery charges etc. Look at this area and make sure it works, that is modelling, simulating the scenarios so you can see it all working.The last area I will ask you to consider, is what you are personally taking out of the business? Many business owners are taking a little too much from their businesses and that can extend to the salaries and benefits extended to their staff. I am all in favour of having a highly dedicated workforce, and this should rightly be rewarded, but control is so important here as getting it wrong can be difficult to reverse once it is allowed to get out of control.Your business model MUST be able to sustain the money you are taking out of the business, as mentioned, the idea should be that the business grows a surplus of cash, so that you are well placed for any opportunities that may require funding, or for overcoming any short term adversity.In summary then, your business model is the DNA of how you WANT your business to work for you. It is the simulation of how it will work and an overview of how you will maximise your return for your time, effort and financial investment.A simple business model can usually fit on the back of a postcard, it summarises the main cornerstones of your success formula, most importantly, you CAN change your model along the way. Very few get it 100% right first time every time, and it’s actually fun working on what will ultimately make you successful and hopefully give you a very good lifestyle.Let me know how it goes for you.
Step 1: Change Your Mindset on ReferralsFirst of all, let’s clear out some cow webs from your thinking about referrals before we dig into creating a system for getting and increasing referrals to your business. Realize that referrals are the least expensive and one of the most efficient marketing methods to build a business and practice. Yet most businesses do not create and implement a complete referral blueprint system. They haphazardly take a shot at it but are not consistent with it as they do not have a true referral system in place in which they and their employees routinely implement. Therefore, client referrals are the untapped “gold mine” collecting dust or are right underneath a business rarely explored and left un-mined.This is what many of you do or have done in the past: plow straight to asking for referrals almost immediately after the “close” or delivering a of product/service without establishing a foundation of trust. That’s like asking someone to marry you after just going out one time. Huh? Are you kidding me? Then why do you ask for referrals before establishing and building trust? It can be perceived as sleazy and lowers your credibility.Step 2: Are They a “Client” or a “Customer.”The term “client” originally denoted a person or entity under the protection and patronage of another, hence a person protected by an adviser (trust-based relationship), while the term “customer” denoted a person or organization that simply buys goods or services from a business (transactional relationship only). So from now on refer to them as a “client.”So here’s a simple question: Which would you rather be, a trusted adviser and authority for your clients and someone who they will keep in mind (two-way benefit), or just a person or business that a client contacts or visits only when they want something (one-way benefit)?Step 3: How Referrals Happen:Referrals take place when your client trust you or your business to deliver high-quality products and world-class service(s). When you’ve just closed a transaction but not yet delivered, you still have to prove to the client that you can. So, rather than do the typical thing and ask for a referral at “closing”, as has been taught for decades now, change things around and use the “post-closing” conversation to describe action items that you will take on their behalf that will earn the client’s trust. Ask the client how you could be of service to them or what other services or products would they like to see offered that would help them out or make life easier?With that mindset and foundation in place, here are the 10 Strategies to Increase Referrals and Revenue to Your Business:STRATEGY #1: World-Class Service!Provide world-class service so that the customer feels that there is little risk in recommending your business, your firm or you to their network of family, friends and associates. You do that with each and every single client, no matter how big or small the value of the transaction. In some cases, they may be “testing the waters.” Case in point: I had a client who began our business relationship with only $5,000 but within a couple of months it turned into a $450,000 client. He said he wanted to see what kind of quality service was delivered. He also happily referred other major clients as well.World-class service, first of all, is the correct thing to do. What did you think you would do: provide sub-par service and expect to build a long-standing business? It also makes clients feel and believe that they matter, make a difference and are important to you and your business or practice. You are their trusted advisor, expert and “doctor” that can cure the pain they have in the area in which you provide services or products.STRATEGY #2: Be Engaging, Not “Salesy!”Befriend your existing clients and future clients by engaging with them in friendly non-business or non-marketing conversation at school, meetings, social events, business networking events, place you frequent often (restaurants, church, synagogue, market, etc.), community events (parades, fairs, farmer’s markets, etc.) and other non-business related gatherings (local chamber, city or entertainment). The hint: don’t approach every engagement as a possibility to sell but rather to offer service, educate or help people.STRATEGY #3: Ask and You Shall Receive!Once you’ve engaged the client and earned a level of trust, ask for a referral appropriately, but ASK! What it would it take for the client to refer you to his or her network of family, friends, acquaintances and colleagues? Let them know that you prefer to work with and service a network of clients you have a connection to.Advise them of Strategy #7 and if they are willing, receptive and, in some instances, incentivized to giving a referral, then get the contact information (name, address, phone number and email). The best referrals are when a prospect calls you (not the other way around) as the result of a recommendation from an existing client.Then kindly ask the client to contact the referral (text, call or email) to let them know you will contact them and remind the client that with their permission you will mention their name to the referral.STRATEGY #4: Them First, Not You! Since you are their trusted advisor, resource and expert be proactive on their behalf and about their needs by anticipating what they’re likely to want and arranging ahead of time to have it handled, if not by you then someone else. Always be thinking of your client’s interests, hobbies, likes, and needs.If you find an article or story you believe will help them, will educate them, enhance their life or give them a pep, then send it to them. However, do not make a habit of sending “junk” weekly just so you keep your name in front of them. Yeah, you will but they’ll start to think of you as a spammer not as a trusted advisor! Ask if it was helpful or insightful?STRATEGY #5: Bring Unique Value to Relationship!Bring unique value to the relationship with your clients. Be a provider of extra value, by finding something that you can do for the client that may be outside of the expected products and services you already offer. If you don’t know: Ask! Perhaps you can provide that for them in the future and to the rest of your client base. Or, if appropriate, to fill that need you would be willing to recommend another business or person to solve a problem, need or issue they may be experiencing.By all means, make sure to follow-up with the client on the referral(s). It’s professional and lets them know they matter to you. Thank them and send a “Thank You” card. Be unique and send them a $5 coffee shop gift card or even a $1 lottery ticket.STRATEGY #6: Be a Referral Machine!Become a referral marketing machine and consistently give referrals to your own clients, network of family, friends, acquaintances, associates and other businesses that you have previously approached and set-up a mechanism for two-way referrals so that they too can quickly build their own business. This will undoubtedly create a sense of gratitude on their part and increase our side-revenue.Ask for their business cards and for the referrals you give to them make sure to write on the back of their business card something like: “Thinking of You Jane, Louis F. Vargas”, and keep them always with you. Give them your business cards and marketing literature.STRATEGY #7: Provide Incentives!Advertise and announce that your business or practice offers incentives, discounts or “thank you” rewards to anyone who gives your business or practice a referral that turns into a client for you.You can incentivize clients and tun them into an unpaid sales staff and pied piper for your business when you pay them a bonus for sending you referrals. You can give them discounts on their next transaction or appointment with you. Or, in cases, where regulations exist and a professional cannot pay an unlicensed individual for a referral you can offer “goodies” (for example, gift basket, gift certificate, movie tickets, lunch/dinner certificate to their favorite place, etc.) as a way to thank them and to them show how much you appreciate the referral.STRATEGY #8: 100% Money-Back/Warranty!Offer a no-hassle 100% money-back guarantee that is unabashedly and clearly marketed on your website, flyers, print material, business cards, business signs and place of business. A guarantee can be in the form of cash-back, credit for other merchandise or 100% protection warranty for 12 months from the time the service was completed.This is a huge trust generating factor and crucial for new prospects or referrals. It lets their guard down significantly.STRATEGY #9: Testimonials/Endorsements!Obtain testimonials and endorsements from your clients. People are busy and have no idea what to write as a testimonial, so ask them if it would be easier for them if you pre-wrote a testimonial which they could review and edit, if necessary. That way it’s nice and easy for them and they feel they are helping you without having to bog down their mind about “writing” a testimonial.You then use them everywhere: on your website, place of business, business cards, marketing literature, etc. It establishes trust.STRATEGY #10: Educate Clients and People!Attend business networking meetings and events (chamber of commerce, Meetup, BNI, conferences etc.) with a purpose to educate and offer advice, not just to gather business cards and be a “hustler.”Give out valuable literature that contain “social proof” (i.e. testimonials/endorsements and (eBook/article/Special Report) that educates people on the topic or area in which you are an expert in. Ask for referrals from business people at networking events in the course of an engaging conversation if appropriate at the time if not set up a date and time to find out more about them and their needs.CONCLUSIONYup, you got it! Clients and prospective clients like and prefer to do business with people and organizations that they know, like and trust. Be honest in how you provide services to your clients and how you answer questions from prospective ones. If you don’t know the answer tell them so. We’re human and are not expected to know everything. But do tell them you will find out and follow through with them. Then do it!Referrals are about trust, acting like and being perceived as the go-to expert and trusted advisor of your clients, business associates, colleagues, media and even your competitors. Implement this strategic referral system with military-like consistency, precision and dedication to achieving victory and you will find all the gold there is!
This Weekend has seen me reflecting on modern marketing methodology. My personal use of these technologies with YourNetBiz has enabled me to market and promote my business, products and services and even use some of the tools to move traditional business from advertising with traditional media and hoping for results, to working more scientifically with today’s technology and buiilding an effective marketing machine. This gives my clients a strategic marketing and promotion system which can be turned up or down, on or off and the whole thing can be fine tuned on the fly. What a concept for most business.Last week I was asked to visit a successful company based in the South East of England and talk about how they market and promote their products and services and how we could expand that promotion and market effectively using today’s technology. I have already examined their business and implemented technology to ‘capture’ clients email address’s and build a list of customers and potential customers all on autopilot. This has built a list of over 1200 in it’s first few weeks! With the ability to communicate via email directly with that list, the client can look to create an offer and market directly to his customer list. This can enable the business owner to create an offer and see if it is a success before committing financially!!!!! This is Big News!!!!!Today’s savvy customers are ‘googling’ your products and services to the tune of 1.2 Billion searches every day. Yes 1.2 Billion searches on Google, and Google isn’t the only game in town. According to comScore based on a million users performing searches Google accounted for 43.7% so while it may not be the only game in town it is certainly the widest used. If 1.2 billion searches on Google only accounts for 43.7% of searches overall then we could be looking at approximately 3 billion searches every day across the search engines as a whole. Thats 12.5 Million per hour, or 208,333 every minute of the day. The Referral Sources for buying demonstrates the tendency for this type of search activity is growing in popularity with the results of Q1 2009 up over 2.5% over 2008 ( in a so called recession). So more people are doing it and therefore it is the smarter entrepreneur who invests now for the future.This made me wonder about how many of today’s small, medium and even big businesses are wasting their advertising budget doing the same things that they have always done and really are not taking advantage of today’s technology. Many business’s have a web presence but where are they on the Search Index and will they appear to a customer looking for their services or products using, for example, the Google search box. For this example I am going to get into the customers mind as he is searching for a fine dining experience to celebrate his 50th wedding anniversary.A quick search right now for the search term ‘fine dining’ has produced over 25,600,000 results. Narrowing down to UK pages only there are now only 738,000 results! Well our customer lives in a small village called Middleton St George just outside of Darlington in County Durham so he adds the search string ‘Middleton St George’ to Google’s search within results box. Google returns 5470 results.Now let me just explain that Google has returned 5470 results for the search query fine dining middleton st George. All pages that have one or more or a combination of these words on the page will be listed in the search results. So many of the results will be of no use whatsoever. A closer examination of the results reveals that many have been triggered by the word fine or by the word dining. So for example dining triggers many real estate listing’s with the term ‘dining room’ as part of the description.As a matter of interest ( this would be very interesting to a restauranteur in the local area) the only listings in in the results on the first page of Google are from Google maps and only one listing had its own website I could click on. (It was a restaurant in a different village). Continuing with our example we click on our restaurant website link and we are welcomed into a home page that is very nice to look at describing the venue with pictures and further links to a virtual tour of the restaurant, menu’s contact phone numbers and even a newsletter I can subscribe to, find out local events and what’s happening.Our customer has found his venue! calls the number and books his evening out. It’s a flowing example and It’s a real example I have just done today 01 June 2009. With a little work this niche could be examined and dominated by a local business with the right marketing efforts. At the very least we should be looking to give the customer a choice of restaurant’s, in our example only one had it’s own site!!!!!!!Traditional business has spent many years advertising through traditional media, newspapers and local magazines forming the backbone of their advertising spend and maybe they have a website that offers some kind of presence however it isn’t optimised or have any form of marketing within it’s pages. They probably have a relationship with the local publications and it’s more a habit to continue to advertise rather than to examine what actual returns they are achieving through their present marketing methodology. Word of Mouth continues to be as important as it has always been and passing trade is hit and miss. Direct Mail is very interesting and I feel warrants covering in much more detail in another post.It is safe to say that advertising in the local media would be the first port of call for any local business looking to increase their exposure make more sales and or service more customers. This is ‘traditional’ and many local advertisers now offer an online service so your ad can become part of their online service. This is great for your local advertiser as you are effectively paying them to create a better online presence for their website! Only a couple of years ago I had a traditional business in the construction field and we covered electrical contracting as part of our services. We looked to advertise with a very well known UK company directory (the biggest) and when all told we were looking at around £3500 to place a decent sized advert in the right category. We immediately placed our adverts to appear in their online directory and expected to have the phone ringing off the hook. To this day I don’t believe we ever had one call as a direct result of this ad. And this is the point I am trying to make, that their is a Massive difference between advertising and marketing your business!.Placing your business into a directory no longer guarantee’s the same level of response you could rely on ten years ago. And the directory companies will tell you the same and offer their online solution to ‘compliment’ your order (and take another slice of your advertising revenue). How effective it is will be determined to some degree by the market you are serving, if its a competitive market then you really need to do a lot more than just pay up and hope it all works out. And lets remember that the directory company will have their hand in your wallet year after year after year!. Is there an alternative? Well yes that’s the easy answer. It’s a little more complicated than just giving your advert to a newspaper but with the right effort you could rank your own website for search terms that you desire. With a little more homework you could find the search terms used by Google’s millions of users to find the results they are looking for. This arms you with the right terms to ‘optimise’ your site for. And you could have our Friend celebrating his fiftieth wedding anniversary with all his family at your restaurant. The added advantage of course is that over the course of your optimisation you are spending monies on your own website.Your investment in your own piece of internet real estate will come to offer far more returns over the long run than feeding into a local advertiser’s coffers. As your site becomes a more targeted marketing machine delivering results for ever more searches and ranking up its authority within Google’s engine it’s nice to remember that your investment in time or money will be delivering results 24/7 for as long as the internet is working! This is BIG news! You can build an effective marketing machine that is quietly operating in the background 24/7 365 days a year and lest we forget this ’24 hour Automatic Salesman’ we have only paid once. Once he has been paid off he goes working on your behalf forever.Exciting times indeed that for a small investment you can build many automated salesmen out there looking to present themselves just as soon as someone asks via the search engine machines. You can build one salesman or a hundred and 1 it’s completely up to you and as time passes there will only be more competition not less. If you wondering how to get your adverts onto the first page of Google for the keywords that you choose then Google AdWords is the answer your looking for. Google AdWords is beyond the scope of this post however I will be writing a post soon about getting started with Google AdWords.