Steven Smalley, owner of Exterior Home Improvement, in Indianapolis, doesn't run the traditional print, TV, or radio advertising that most home improvement contractors rely on for sales leads. "I dabbled in it a little bit, threw some money at it," he says, "but it never worked."
Instead, it was referral business generated through networking of one form or another that pushed sales over the $4 million mark last year.
For example, Smalley and seven sales reps sold some $600,000 (15% of total sales) through business networking ? participation in various groups, which most contractors think of as "networking."
Another 40% came from Angie's List, the Internet-based, consumer word-of-mouth network. Some 20% came from past customers. Referrals from an informal network of contractors Smalley has cultivated contributed as well.
As Smalley's experience shows, you can network in many ways. Networking through business groups generally comes to mind first, yet not many contractors understand it. It is not the in-your-face, glad-handing of the stereotypical hyper-aggressive salesman. Rather, it is "working with other people and developing a relationship of trust and confidence in which we will recommend each other's business," explains Mike Macedonio, president and partner of The Referral Institute, in Rohnert Park, Calif., a referral sales training organization. It is also a skill and tool in the larger realm of referral marketing, he adds.
"In a networking group, in effect what you are doing is teaching the members to prospect for you," Smalley says. He belongs to a number of networking groups, including BNI ("the largest business networking organization in the world,") Rainmakers, and the Chamber of Commerce.
Of these, BNI is the most "focused and structured," Smalley says. At weekly meetings, each member has one minute to present his or her business, and in rotation one featured member gets 15 minutes. Over time, members get to know one another's businesses and build relationships. "You give leads and get leads in turn," Smalley says.
Tom Cardona, owner of Handyman Unlimited, in La Verne, Calif., says that he has received "well over 1,000 leads and done far in excess of $500,000" in business, participating in a BNI group. He also gives "a ton" of referrals, he says, adding, "that is huge because if you don't give, you are never going to receive."
Businesspeople such as Smalley and Cardona, who understand that they must spend time working on their business instead of in their business, are the ones more likely to be successful, says Ivan Misner, Ph.D., founder and chairman of BNI and author of nine books on networking and other types of personal marketing. "You are out there developing relationships, connecting with people, and setting up for business you are going to get down the road," Misner says.
Business networking has proven so successful for Smalley that he requires all his reps to belong to a networking group. "It's a condition of employment," he says. Smalley pays the fees, generally a few hundred dollars a year for each, which is a tiny fraction of the return he gets.
Working the High Points
Other types of networking have an element in common with database marketing. But past clients are just one part of a contractor's database, Macedonio explains. "People get very myopic when they think of their database as clients and past clients. That just scratches the surface of what is available to any salesperson or business owner. They have vendors, suppliers, people they do business with, different organizations they belong to," he points out. All, he maintains, are a potential source of new business.
That's not to say that customers, present and past, aren't a great place to start networking. Consultants and contractors recommend that salespeople begin networking as soon as the job is sold.
And there are three or four peak times when asking for referrals is most productive, say contractors and sales trainers. "Referrals occur when the job gets started, during construction of the job, and at the finish," explains sales and marketing consultant Chuck Anton. That's when the consumer likes the salesman most. One device to prompt immediate referrals, Anton suggests: Add space at the bottom of the contract for the consumer to jot down the names of a few people who might be interested in the company's services.
"Sometimes the salesman doesn't ask for a referral after he's made the sale because he forgets or he is excited or he doesn't want to push his luck. But if you make it part of the paperwork of the sale, he'll ask the question," Anton says
Require that the salesman visits the client while the job is in progress, advises Jake Jacobson, vice president of sales for Premier Window & Building, in Owings Mills, Md. A client's emotions go on a "roller-coaster ride" during the course of a job, he says. They're high when signing the contract, then drop a bit, rise again at the measure call, descend again while waiting for the job to begin, and head upward as construction starts. Salesmen need to work those high points, and Jacobson reminds them daily.
"Every day we tell our salesmen which jobs are getting started and which are finishing. Those two happy moments are when you are going to get your repeat business and recommended business," he says.