Marketing Mastery: Creating profitable referral relationships

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July 3/10: Volume 32, Issue 2

By Jim Augustus Armstrong

(Third of three parts)

In parts one and two I presented strategies for developing and nurturing referral relationships with other businesses, and how those relationships can generate $250,000 to $1 million or more in annual revenue with extremely low marketing costs. Essentially the goal is to round up, nurture and profit from a herd of businesses that send you ongoing referrals. In this part I’ll cover more strategies for nurturing and profiting from your herd.

Affiliate appreciation events

Let’s say you’ve got 20 businesses in your herd. Here are some events you can host to nurture the relationship and position yourself as the “hub.”

Host a drinks and hors d’oeuvres networking event in your showroom. Send a series of email/print invitations to your group. Hire a photographer to take photos for your newsletter.

Throw an appreciation dinner at a hotel and give awards to the top referrers. You can defray the cost by having other business owners speak during the dinner. This gives them exposure to your group and provides valuable information. Have them each pay one-third of the event’s cost.

Educational events

Every month I co-host the FCNews Marketing Mastery webinars with Ken Ryan, senior editor. Oftentimes these webinars feature business experts speaking about topics that apply to any industry. Invite your referral partners to attend at your store. Set up a large monitor and seating, and provide snacks and drinks. This demonstrates to your partners that you care about their success and provides a great networking opportunity.

Affiliate marketing

Let’s say you’re working with an interior designer. Offer to send your monthly newsletter to her list and include her photo and business name on the front page, alongside yours. Offer to either split the cost or pay for the entire mailing. The cost is worth it because you’re now marketing to an entirely new list of customers who already know, like and trust her. The designer is the ambassador introducing her customers to your business. A dealer in Utah did this very successfully with both a designer and a realtor. This produced ongoing referrals to his business, including a $40,000 job from one of the realtor’s customers.

You can take this idea further and do a host/parasite mailing. This is a bit more complicated but I’ve made a lot of money doing it. Here’s how it worked when I did it with a designer:

I wrote a letter from the designer to her customers. This letter had a photo of her at the top and introduced me and my business to her list. In the letter she raved about my business, and said “enclosed is a letter from Jim with a special offer because you’re a customer of mine.”

Underneath this letter was a second one from me with my photo at the top. It thanked the designer and had a special offer “exclusively for customers of XYZ.” The letters were on slightly different colored paper and written with different fonts.

I made it easy for the designer and handled everything: writing the letters, and handling the printing, postage and mailing. The only thing the designer had to do was supply me with address labels. I made at least a 20-1 ROI with this campaign and repeated it several times.


Jim Augustus Armstrong specializes in providing turnkey marketing strategies for flooring dealers. For a complimentary copy of Jim’s book, “How Floor Dealers Can Beat the Boxes and Escape the Cheap-Price Rat-Race of Doom Forever,” visit beattheboxestoday.com.

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