The remodeling world, including flooring, is awash with business right now. However, with rising interest rates and hyper inflation, some economists are predicting a recession within the next 12–24 months. Will this happen? Maybe, maybe not, but dealers who have implemented strategies to prosper during a recession will be far better off, whether we go into one or not.
During a recession (or any slowdown in demand for flooring), the pie of potential flooring customers shrinks. This means you need to cut yourself a larger slice of the pie simply to keep your revenue the same.
Networking with aligned businesses is an effective way to expand your slice of the pie without dramatically increasing your marketing costs. Each of these businesses has their own “pie” of customers and participating in networking groups is an effective way to get them to serve you continuous slices.
BNI and LeTip are two well-known networking groups specifically designed for business owners to meet and send each other referrals. Rotary, Lions and the Chamber of Commerce are examples of groups that exist for purposes other than referrals, but still make excellent referral sources if handled properly.
Let’s look at steps you can take to maximize your networking efforts.
Focus on them. When you’re speaking with business owners during networking events, don’t spend your time selling your business; that will come later. Instead, spend the majority of your time asking them lots of questions about their business. At some point, say something like this: “Susan, so I can be sure to refer the right people to your real estate business, who is your ideal client?” This will instantly communicate that you care about their business.
Follow up. The next day, send them a hand-written note telling them you enjoyed meeting them. Include a couple of your business cards in the envelope.
Go to lunch. The following week (after they’ve gotten your notecard), give them a call to invite them out to lunch or coffee. This is your opportunity to propose a referral relationship.
Nurture the relationship. Take business cards to their office, along with cookies or some other treat. Introduce yourself to their staff. Subscribe the owner and their staff to your newsletter. Connect with them on Facebook, LinkedIn and other social media. Stop by their office periodically with business cards and treats. Take the owner out to lunch every couple of months—more often when it’s appropriate.
It’s common for dealers to have a handful of business owners, such as realtors, designers, remodelers, etc., who are sending them referrals on a regular basis. What are these relationships worth? My own informal polls of dealers have shown that the average value of these relationships is between $25,000 and $35,000 in revenue per year, with some superstar relationships being worth hundreds-of-thousands of dollars. So, if you have 10 relationships, that’s $250,000 to $350,000 in free business. If you increase that to 20, 30 or 40 relationships, you can easily generate over a million dollars in additional revenue with virtually no marketing costs. What would you have to spend in advertising to generate a million in revenue?
Jim Armstrong is the founder and president of Flooring Success Systems, a company that provides floor dealers with marketing services and coaching to help them attract quality customers, close more sales, get higher margins and work the hours they choose. For information, visit flooringsuccesssystems.com