Did you ever read Mark Twain’s The Adventures of Tom Sawyer? Do you remember how Tom got that fence painted and how enthusiastic his helpers were? I bet you do and that you’re smiling right now.
Everyone came out of that experience getting what they wanted: Tom’s friends got to try their hand at the art of white-washing a fence, Tom received tokens of appreciation for letting them do so, and Aunt Polly got a pretty fence for her yard! Let’s explore how you can apply that win-win-win mentality to finding new customers who want to buy from you.
Step #1: clearly identify who is most predisposed to purchase your product or service
Do you know
• What do people really want to buy from you?
• What your ideal client “looks like”?
• What related products are they already buying?
Step #2: identify other businesses that have the same ideal customer you do
Approach the owner of a business that sells products or services your ideal client is already buying. For example, if you own a pet store, a dog groomer might be a great referral source for you, and you for them.
Think-out-of-box and look for businesses that sell to your ideal client, but are not obvious compliments to your business. For example, if your jewelry store sells high-end watches, you might find that a luxury automobile dealer can share ideal clients with you.
Partner with only two or three strategic partners to start. Concentrate your efforts on working with these businesses so you can build meaningful relationships with them and test-the-waters before expanding your efforts further.
Step #3: create incentive offers for each other
Passing a business card or mentioning another business really isn’t a very strong reason to contact you or visit your business. You should provide your partner business with a simple incentive offering that both makes them look good and entices their customers to become your customers.
For example, when the pet owner, Jerry, has Fido shampooed and trimmed at the groomers, he receives a coupon for a bag of doggie treats at your pet store. On the flip side, when your customer, Jane, makes a purchase at your pet store, they receive a coupon for 20% off dog grooming.
Your customers have an incentive to purchase from the pet store. The pet store’s customer now has an incentive to visit the you. Both Jerry and Jane are happily enjoying special treatment from both businesses.
Step #4: know how much your incentive offer should be worth
Knowing how much to spend on an incentive can be tricky. One way to determine that is to understand how much a customer will spend with you over time, the life time value of the customer.
For example, if you sell cars, you might say that the customer is worth a few hundred dollars to you. However, if the customer buys cars for themselves and their family members over the next 10 years, the value of that customer increases dramatically.
Here is a great formula from marketing guru Jay Abraham on how to calculate the expected life time value of a customer: Life Time Value of a Customer = (the average profit margin from each sale X the number of times a customer buys each year ) X the number of years a customer stays with you – the marketing cost per customer (total costs/number of customers)
Formula: LV= (P x F) x N – MC
• LV is the life time value of a customer
• P is the average profit margin from each sale
• F is the number of times a customer buys each year
• N is the number of years customers stay with you
• MC is the marketing cost per customer (total costs/number of customers)
Once you know the life time value of a customer, you have a better idea of how much of an incentive you should offer.
Step #4: negotiate a mutually beneficial relationship
Once you have identified valuable referral partners and determined the value of your incentive offer, negotiate with your strategic partners. Find a way that that will encourage your shared customers to buy from both of your businesses. Remember, they’d love to have more customers too!
Step #5: Set aside time to nurture these relationships
Nothing happens without putting some effort into it. Purposely focus your some of your marketing efforts on working with your strategic partners and the group of predisposed ideal customers they are bringing to you!