Trust is Most Important

There is a common saying that people refer to people they “know, like and trust”.  I am not sure where the cliché came from, but it is not really true in many cases.  Consider these three examples:

Discount Tire has a great reputation.  As I was going up, many people I knew raved about them.  I heard several testimonials before I even owned a car.  I did not KNOW anyone who worked there, and certainly could not LIKE them since I did not know them, but I did TRUST the company.  I trusted them because I heard so many great testimonials.  I referred business to Discount Tire before I ever used them.  TRUST is all that was needed to generate referrals. 

Mark was good friends with Danny the Handyman.  Mark KNEW Danny and he LIKED him, but he did not TRUST him to take care of his clients.  Mark refused to refer any business to Danny, but they were still very good friends.  TRUST was the only factor when it came to generating referrals. 

I had a friend who was a graphic designer, and I KNEW, LIKED and TRUSTED him.  I met another graphic designer and looked at his website.  After seeing examples of his work, I knew he was the most talented graphic designer I had ever met.  There was a great opportunity to do a big graphic design project for a national company.  I referred it to the new guy that I did not KNOW, or know if I LIKED.  I referred it to him because I TRUSTED him more. 

If people TRUST you, they are more likely to refer business to you.  It is the single most important factor, and you can establish trust with people, before you ever meet them. 

Be sure everything you do creates a feeling of trust.  This includes your actions, appearance, conversations, and the passion in your voice.  How about the image your business cards and website create, or the people you associate with?  What about the way you answer the phone? 

People judge you in almost everything you do, and they need to trust you.  Try and create a great impression. 

 

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Buy Local

There is a growing trend to “Buy Local”.  More and more people are talking about it and local companies are including it in their advertising.  What does it really mean, and why is it so important?     

As we spend our money locally, as opposed to buying online, every dollar circulates several times before finding its way out of our economy.  As it circulates, the money flows through all of the businesses in Southern Arizona.  This revenue allows those businesses to hire and promote more people.

As businesses create additional jobs, there is less pressure on social subsidies like unemployment and food stamps. 

In addition, every dollar spent locally generates taxes for schools, roads, fire, police and other services we all appreciate.  The additional tax revenue would allow municipalities to reinstate programs that were cut due to funding concerns.  Schools could offer more sports and arts programs, and pay teachers enough to attract the very best of the best. 

Municipalities would have money to offer tax incentives to attract quality companies to Southern Arizona.  These quality companies bring with them quality jobs.  Imagine the people with these new high paying jobs spending their money locally. The benefits never stop.     

Conversely, money spent online is gone from your local economy immediately.  You might save money initially when buying online, but your taxes would go up, services would diminish, roads would deteriorate, the quality of fire and police protection would go down.  It would be impossible to pay teachers what they are worth, good businesses would continue to close and unemployment rates would go up.  Buying online could cost you a lot more in the long run.  It might cost all of us.   

Consider diverting some of your online spending to the local economy.  Find a brick and mortar business in Arizona to spend your money with.  Any small business or franchise physically located in your community will do. 

Supporting them might create a much better place for all of us to live. 

 

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Sharpen your axe

A few years ago I worked seven days a week.  When I arrived it was dark, and when I left it was dark.  I was driven and proud of my work ethic.  Then I had lunch with Dan Kalm. 

Dan is a pretty sharp guy who runs a very successful insurance brokerage.  He has built an organization that runs itself when he is gone.  While I was working 70 hours that week, he was just getting back from long cruise and was planning the next BIG vacation.   

Somehow the subject of my hours came up.  I was proud and boasting about the amount on time and level of commitment I made in my business.  Dan was not impressed at all.  In fact he told me a story about a lumberjack that has had a long lasting impression on me. 

The story went something like this:  “Imagine you are a lumberjack, swinging your axe at the base of a large tree.  With every swing a chip of wood falls into a pile at the base of the tree.  As the swings continue, the chips get a bit smaller but they continue to fall.  Each swing dulls the axe a bit and the chips get smaller and smaller.  You can keep swinging harder and harder and maybe eventually the tree will fall….Or you can stop swinging for a minute, take some time to sharpen the axe, and then get back to work.  If you take time to sharpen the axe you will cut down more trees.”

Dan taught me the value of talking time off from work to sharpen the proverbial axe.  I have not worked seven days since then, and my business is more successful than ever.  Now I spend lots of time doing the things I love to do, not the things I thought I had to do. 

Thanks Dan!

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Reduce Opportunity Costs

Every hour you invest doing something has an opportunity cost.  Every hour you spend doing one thing means you are not doing something else.  What else could you have done with that hour, and what would have been the return on that hour invested?  If you could have been more productive, spent your time more wisely or made more money doing something different, why wouldn’t you?  The lost opportunity is what we call the opportunity cost.   

Time is money.  You can make more money, but you cannot make more time.  Always consider the opportunity cost of the time you invest in various aspects of your business. This applies to you, and to all of your employees.  

Imagine someone in your office takes off for an hour and go buy supplies and coffee for the office twice a month.  That adds up to 24 hours a year they spent going to the store to buy coffee and supplies.  What opportunities could have created if you ordered your supplies from a local company like Gibson’s Office Supply to be delivered the next day, and had that person spend the 24 hours building relationships and generating referral business instead?  

Imagine you join a networking group that meets every week.  What if you joined two networking groups that met twice a month instead?  You would spend the exact same amount of time in meetings, but double your connections and increase your referral business.   

Make a list of the 10 things you spend the most time doing in your business.  Think about alternatives that will save you some time, improve your productivity or generate additional business.  Invest your time wisely in everything you do, and minimize the lost opportunity cost as much as possible.  You will reduce your expenses, improve you efficiencies and generate a lot more business as a result.  

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Intro to strategic partners

Someone should have said “not all relationships are created equal,” because they aren’t.  Some are better than others, some much better than others.  When it comes to business referrals, none are better than strategic partnerships. 

The concept of strategic partners is the most powerful aspect of networking.  Nothing will provide a greater return on your networking investment.  Read this more than once.  Make sure you understand this concept well.

Every business, organization and non-profit has many strategic partners.  You have them too.  They are not necessarily your clients.  They are individuals/organizations who are well connected to a large number of your potential clients.  Once a strategic partner trusts and begins to refer business to you, expect to see a significant amount of business, on a consistent basis.

It’s easy to build great relationships with strategic partners because they want your help as much as you want theirs.  If they are connected to lots of your potential clients, you are just as connected to theirs.  You both do business with the same people, you target the same market.  You have just as much ability to positively affect their bottom line, as they do yours.  Together, you are both much stronger than you are alone.  You are each other’s strategic partners.   The more strategic partners you have, the better. 

Let’s look at an example:  Many of us offer services to businesses, we are “B2B” service providers, and wish to meet small business owners.  Good strategic partners who are well connected to lots of small business owners could be: 

  • Business attorneys
  • Printing companies
  • Business consultants
  • Marketing and PR firms
  • Business brokers
  • Business bankers etc…

We all have many strategic partners.  Make a list of yours by profession, know who they are.  Network and build relationships with them, market to them.  The return on your networking invest will increase dramatically!

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Generate instant loyalty and referrals!

One problem with creating trust and loyalty is the time it takes to get the relationship to that point.  Another is  often times the other person has a good relationship with one of your competitors.  Is there a way to accelerate the time it takes to establish trust and loyalty?  Is there a way to get the other person to sever an existing relationship, stop sending business to your competition and start sending it to you?  That is exactly what happened in this case study.   

The mortgage company  I ran did considerable volume.  Our preferred title company was Title Guaranty Authority (TGA).  They got all of our business, and every title company in town wanted it. 

TGA did a fantastic job and we trusted them with our clients.  The other Title Companies wanted our business and sent their marketing  people out with tickets to basketball, football and baseball games, nice dinners etc.  We told them to keep it, and use it for other lenders who might give them business.  We stayed loyal to TGA for 11 years, until one day Craig, from Ticor Title, called.   He said:

 “Bill, do you have something to write on?  I just had lunch with Joe realtor with Coldwell Banker.  He is looking for a good lender to refer his clients to.  I gave him your name and he is expecting your call.”

For the first time, a rep from another title company approached me with a way to grow my business, instead of baseball tickets.  The other I had been loyal to for years never did that.  When Ticor brought me business, they instantly created loyalty.  I gave them a chance to earn my trust.  Within a week, I sent three files to the escrow officer Craig recommended to test the service.  After seeing great results, I transferred all of our business to Ticor.     

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Be selective with your time!

Before you begin to expand your network of connections, it is important to note that all relationships take time, and time is money.   You do not have enough time to build and maintain relationships with everyone, nor do you want to. 

Be very selective who you allow in your network.  You only want those who provide exceptional service to their clients, and who bring value to you.

If you think about the general population, less than twenty percent of people deliver exceptional service on a consistent basis.  Less than half of those are good referring partners, or know how to reciprocate value back to you.  This means only one out of ten people will qualify to be in your network of trusted referring partners.  Your job is to quickly identify who they are, develop that relationship and do everything you can to keep it.  

If you are going to invest the time to build and maintain a relationship, it should be in one which lasts, and provides value to you.  We have all invested time and energy building relationships that provided no value to us, with people who drained our energy and resources.  What if you had spent this time building relationships with the “right” people, developing long lasting relationships?  How much better off would you be now? 

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The HOA Management Company that did not want a referral

One day Martin, the owner of a large HOA Management Company, joined my professional referral group.  I sat with him at lunch and explained it might be difficult for us to send him a lot of business.  The discussion that followed taught me the value of a referral group is not just measured in the amount of business you get. 

Martin explained he did not join the group to get referrals, he joined the group to give referrals.  He regularly refers business to home service roofers like painters, roofers, landscapers and electricians.  He explained with more than 10,000 homes under his management his biggest challenge is finding good quality people to service them.  He needs contractors who do the job right the first time and show up when they are supposed to.  Martin had a friend in our referral; group who told him we vetted the members and removed people who do not provide exceptional service  on a consistent basis. 

Having a network of trusted service providers to refer business to was all the value Martin needed to join the group!

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How the painter grew his business

Richard owned a large house painting business for almost 30 years.  Most of his business came from the yellow page ads he ran.  The ad was on the first page and cost him nearly $40,000 a year.  

As the economy worsened, the callers from the yellow pages seemed to be price shopping, calling his competitors which were also listed on the same page.  His closure rate dropped to almost zero and he was forced to lay off most of his employees. 

Richard joined a good networking group and cancelled his yellow pages advertisements.  Through the group he met people who could refer business to him on a regular basis like the Realtor, handyman, insurance agent and home inspector.  It took some time and effort to build the relationships, but then the referrals started pouring in. 

His business grew, he hired more painters and joined a few more groups.  His conversion rates went up, the cost to acquire customers went down and almost none of the client’s price shop him because they were recommended by someone they trust. 

Now Richard has 11 employees,his profit margins are higher than ever and the vast majority of his business comes by direct referral.     

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Don't make a bad recommendation

When you make a recommendation it has a direct reflection on you. Do not refer someone just because you know them.  You have to trust them with your reputation.    

Before you refer someone to your family, friends and clients, make sure they are good at what they do.  It is far better to make no recommendation at all, than to make a bad referral.

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