Maybe you have been on the fence about this whole social media – online marketing stuff you’ve heard about. Maybe you’re a nuts and bolts, meat and potatoes kind of contractor who doesn’t think spending his nights on Twitter or Facebook will amount to much.
But you do know that a good referral or testimonial is worth its weight in gold right? And you would do anything to be able to generate enough referrals to stop having to spend on advertise your contracting business altogether wouldn’t you?
Well you can’t, you will always have to spend on advertising (spoken like a true ad man right?) but you can cut costs, and the way you do that is to find out what the lifetime value of a client really is. To track this, you can simply use a spreadsheet to figure out how much your typical customer is worth in both direct sales and referrals.
Let’s do some math
Let’s say you’re a painter, and Sally Homeowner bills out at $2000 for a job. Since you did good work, she referred you to her sister and neighbor. The neighbor billed $2500 and the sister billed $1500. Sally Homeowner now has a customer value of $6000. Unless you spent $6001 dollars to get her you should have made money on the deal. Now, I am obviously talking top line sales here, but let’s hope you made money.
Now, Sally’s sister refers you to her brother and the neighbor recommends you to his mom, and they all book your painting company for a total of $4500. Sally’s lifetime value just shot up to $10,500, while the sister and neighbor get their own little branches on the referral tree.
Don’t stop there!
By continuing to market to Sally (and her down line) you will continue to grow Sally’s lifetime value, and the best part is that it will get easier to estimate the value of your referrals and reco’s if you track how this business comes in to you.
But where’s the cost?
Ah, so far I have only talked about Sally and what she has been able to do for you. We don’t how much we spent to get Sally in the door in the first place right? And that my friend is the difference between developing a social media program vs. the cost of traditional advertising.
Social Media is a new referral branch on the tree!
Dedicating the time (either yourself or someone in your company) to get involved in the online community that is actively seeking your product or service is all the investment you need to make…time. And since there aren’t many contracting companies out there right now not watching their advertising budgets, being able to develop a new Sally Homeowner everyday for free sounds pretty good don’t ya think?