Word of Mouth

The Only Way to Grow a Business

The Only Way to Grow a Business

According to Andy Taylor, CEO of Enterprise Rent-A-Car,

The only way to grow a business is to get customers to come back for more and tell their friends.

He seems to know what he is talking about. A recent Enterprise press release notes that they are the largest car rental company in North America and the fastest growing rental company in the airport segment. They also happen to be number 16 on Forbes list of largest privately held companies.

What is their secret? This is what Taylor says: “Our success in growing our airport business can be attributed directly to the highly personalized brand of customer service that we extend to each renter.” Just words? Apparently not. Over the last four months Enterprise was ranked #1 by Market Metrix for customer satisfaction in the car rental industry and JD Powers ranked them highest in customer satisfaction among airport car rentals.

I hope it is obvious that it is not just a coincidence that Enterprise keeps their customers happy and they have been growing like crazy. Happy customers come back and they tell their friends about their experience. So how happy are your customers and do you know how to find out?

That is the question that Fred Reichheld (author of Loyalty Rules) and his team at Bain Consulting set out to answer. Is there one “customer satisfaction” type question that explains or can predict growth for a company? You can listen to a summary of their findings here.

What they found is that there is one question that has a very high correlation to growth across most industries. The question is:

“How likely is it that you would recommend us to a friend?”

Makes sense, doesn’t it? If your customer is willing to put their reputation on the line for you they must have had a pretty good experience. So that should be the goal: give every customer an experience so great that they would be willing to recommend your business to their friends.

Now the question becomes, “how do you measure that?” There are probably lots of ways to do it, my bias is that Promoterz™ is probably the quickest and easiest way to implement a measuring process. The Promoterz™ feedback survey is built around the “recommend us to a friend” question. It also automatically calculates the net promoter score that Reichheld and his team developed to predict company growth.

However you decide to measure and manage customer loyalty, don’t think of it as a “one time” event or a seasonal activity. Andy Taylor, CEO of Enterprise Rent-A-Car can rank order his 5,000+ facilities based on customer scores every week. He also ties the compensation of his employees to those scores. It is an integral part of his organization’s operating metrics. If you are serious about growth, it should be a key part of yours as well.

More happy customers. More repeat sales. More referrals. Learn more

"Dude, You Gotta Try This"

"Dude, You Gotta Try This"

Is there anything more powerful than a referral from a friend? Money can’t buy the credibility that a friend, or even an acquaintance, commands. The recommendation above was actually emailed from a happy Sport Clips™ customer to his friend along with a coupon for $3 off. This is just one of many referrals sent by the customers of Joan & Chuck Matheny.

The Matheny’s own two Sport Clips™ franchises. Sport Clips™ features an atmosphere where men and boys feel comfortable getting their hair cut. Every chair has a television tuned to a sporting event, there is a sports theme throughout, and their premier service is the MVP. The MVP includes a shampoo, a neck massage, and a hot towel--dude you gotta try it!

In September 2005, Chuck was looking for a way to communicate with his customers without having to buy expensive ads. He also wanted to improve 1st Time customer retention. He decided to give Promoterz™ a try in one of his locations to see if it would help. He’s been so pleased with the results, his second store is now using the system as well. You can read the details of the Matheny’s experience here.

I’m obviously biased, I think Promoterz™ is a simple and inexpensive way to generate referrals and I hope every business owner signs up. Having said that, it is certainly not the only way to encourage your customers to tell their friends about your business. Mity Lite, maker of world famous lightweight and durable folding tables, credits 40% of their sales to the fact that their sales reps always, always ask “Who else do you know that would appreciate the quality of our products?”

Another company that attributes a large portion of their sales to referrals is Bike Friday. Here is a description of their referral program from CMO (http://www.cmomagazine.com/read/100105/power_one.html):

The company also uses a referral awards program. Customers receive a set of 12 prepaid postage cards with their name and that of the Bike Friday expert who sold them their bike. Whenever a customer meets someone whose interest is piqued by his bike, he'll fill out a card and drop it in the mail. Bike Friday then mails information to the contact. It also captures this interaction in its database so that riders who make a referral receive a bonus if their prospect purchases a bike. Customers can choose either a $50 check or $75 credit toward future products. Day accumulated enough referral credits to purchase a $2,000 bike last year.The referral program has helped the company acquire more than a third of its 10,000 customers; it also helps drive sales. Over the last three and a half years, the program has generated $1.3 million in sales. In 2004, 29 percent of its sales came from referrals.

Customer referrals work and as the advertising chaos continues to increase, they will become more and more powerful. If you are not already doing it, spend some time thinking about how you can make it easier for your customers to tell their friends about your business. It will be worth the effort.

More happy customers. More repeat sales. More referrals. Learn more
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