Inside Self-Storage Magazine 06/2001: Generating Referrals

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Generating ReferralsAn inexpensive way to acquire new customers

By Fred Gleeck

By far, the cheapest customer to recruit is the repeat customer. A very close second is the referral customer. The reason the referral customer is so inexpensive is his low "cost of capture." Even if you give the person who refers the new customer a small incentive, it is still infinitely cheaper than searching for prospects in the sea of humanity through other marketing methods.

So, how do we go about getting referrals? It sounds simple, but few people do it. The question then becomes: When and how do we ask for referrals to maximize our effectiveness? There are three key times to ask a tenant for referrals: when he initially signs his rental agreement; when he comes in to pay his monthly bill or move things in and out of storage (but wait until at least three months after he has moved in); and when he moves out. Let's cover these opportunities one at a time.

At the Signing

When someone is just moving in, he has obviously weighed the factors and selected your facility. Asking for a referral at this time is a good idea. Why? He obviously feels he made the right decision in storing with you. Why shouldn't he want to share this information with a friend?

The key to asking for the referral at this point is to remember you are just starting your relationship with this person. That being the case, it is important to ask the question subtley--without changing the inflection or tone of your voice--as he signs his move-in paperwork. We don't want to make it obvious that we are about to shift our focus to sales. We want to execute a seamless shift from guiding the new tenant through the paperwork to asking for the names of three or four referrals.

Here is some actual verbiage that might be helpful: "Mr. Smith, I'm glad you're going to be storing with us. Now would you mind also giving me the names of three or four people you know who would appreciate receiving our free report, 'When to use storage and what to look for'?"

The key here is to have something of value that doesn't look like a sales- propaganda piece but will still get your name in front of the prospect. Customers will be reluctant to give you the names of people strictly for the purpose of sending a flier or sales brochure.

After Three Months as a Renter

After you have established a relationship with a renter, you should have a follow-up system (manual or computerized) that will alert you to the fact it has been three months since he signed his rental agreement. You then need to crank up the referral machine again.

At this point, when your renter comes in to move belongings in and out or pay rent, engage him in conversation. Get him to tell you how things are going and whether everything is satisfactory. If he says everything is great, you can proceed. Don't be concerned if he does have a concern or two he voices to you. Clear up the problem and ask if he is satisfied. When he says he is, that's when you jump in and request the referral. Here's what you say: "Mr. Smith, since you've been happy storing with us, can you think of two or three people to whom I should send our free report, 'When to use storage and what to look for'?"

When They Move Out

Hopefully, the majority of people who move out of your facility are doing so because their need for storage no longer exists. This is the time to ask them if they were happy with their experience and if they would store with you again should the need arise. A positive answer to that question is your signal to ask for referrals.

In an ideal situation, you have established a good relationship with your tenants during the time they have stored with you. Even if you had a disagreement in the course of their stay, if it was properly addressed, you are still in good shape. Customer-service data tells us customers actually feel better about companies who have righted a wrong than those that have never made a mistake. So, they are moving out. Make the standard chitchat with them as they are about to leave, then ask them for some names.

Here's what to say: "Miss Jones, I'm glad we had the chance to help you with your storage needs. Now, would there be any reason why I shouldn't send some of your friends our free report, 'When to use storage and what to look for'?" Notice in this case I used the "why I shouldn't" approach. This can only be used in a situation where a strong relationship has been established.

Remember: These are only suggestions. When you actually ask for the referral, be sure to make the words your own. They should not sound scripted. Stick to the main idea even if you do change some of the verbiage.

The main reason you, as an owner or manager, might not get a referral is because you didn't ask! You might be afraid someone will say "no." And I guarantee you they will--at a considerably higher rate than those who say "yes." But those who do say "yes" will make the whole exercise profitable and worthwhile. What if just 10 percent of those tenants you asked gave you two or three names? How much would that be worth to you? Convince your managers to do the same and reap big rewards.

When You Receive a Referral

When you get a referral, you need to reinforce the behavior and show your gratitude. First, send the person who gave you the referral a handwritten note of thanks. Then, send him something of low cost--but of high perceived value--that he will use or see regularly. A great source for these types of items--magnets, pens, coffee mugs, etc.--is close-out merchandise catalogues. I recently saw a four-piece designer luggage set with a retail price of $99 on sale for $8. Talk about something your customer will remember! Some people would recommend you send him money or give him a discount on his next rental. Not me. I want to give him an item he will see or use, and remember my facility every time. Money discounted off a rental will be quickly forgotten.

An Additional Technique: Fliers

A number of my clients are using fliers very effectively to generate referrals. They slip them under the doors of all the units on their property. They also leave fliers on the office counter. The beauty of using fliers is they are extremely inexpensive to produce and the returns are substantial. The only way to know if they'll work for you is to test them. There is no downside to giving them a try.

To make the most effective fliers, you have to design them correctly. First, you have to print them on bright-colored paper. Bright yellow, orange or pink are great colors to use. Whatever you choose, don't use dark colors that make your type difficult to read.

The headline is the most important component of your flier. It should read something like: "How to get $25 off next month's rent." Put the headline in quotes--this is always more effective. Keep the text of the flier short and to the point. Print a coupon on the bottom of the flier for people to fill out--that way you can be sure to give credit for the referral to the appropriate individual.

In Conclusion

Asking for referrals should be as natural to you as collecting rent--you just won't do it quite as often. Some of my clients now demand their managers ask for referrals and meticulously record the results. The numbers have been impressive. Remember: Using referrals is like planting seeds, and they may not bear fruit immediately. But you won't know how successful they can be if you or your staff don't try them. The only drawback is a potentially bruised ego from some people refusing to cooperate. Don't worry, that will heal. I know from personal experience!

Fred Gleeck is a self-storage profit-maximization consultant. He helps storage owners before and after they get into the business. He is the author of Secrets of Self Storage Marketing Success--Revealed! and numerous other training items for self-storage operators. To get regular tips on self-storage, send him an e-mail at tips@selfstoragesuccess.com; call 800.345.3325.

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