Generating Referrals

An inexpensive way to acquire new customers

By Fred Gleeck

By far, the cheapest customer to recruit is the repeat customer. A very closesecond is the referral customer. The reason the referral customer is soinexpensive is his low "cost of capture." Even if you give the personwho refers the new customer a small incentive, it is still infinitely cheaperthan searching for prospects in the sea of humanity through other marketingmethods.

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

At the Signing

When someone is just moving in, he has obviously weighed the factors andselected 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'the want to share this information with a friend?

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

Here is some actual verbiage that might be helpful: "Mr. Smith, I'm gladyou're going to be storing with us. Now would you mind also giving me the namesof 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 thepurpose 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 afollow-up system (manual or computerized) that will alert you to the fact it hasbeen three months since he signed his rental agreement. You then need to crankup the referral machine again.

At this point, when your renter comes in to move belongings in and out or payrent, engage him in conversation. Get him to tell you how things are going andwhether everything is satisfactory. If he says everything is great, you canproceed. 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 whenyou 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 towhom I should send our free report, 'When to use storage and what to lookfor'?"

When They Move Out

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

In an ideal situation, you have established a good relationship with yourtenants during the time they have stored with you. Even if you had adisagreement in the course of their stay, if it was properly addressed, you arestill in good shape. Customer-service data tells us customers actually feelbetter about companies who have righted a wrong than those that have never madea mistake. So, they are moving out. Make the standard chitchat with them as theyare 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 youwith your storage needs. Now, would there be any reason why I shouldn't sendsome of your friends our free report, 'When to use storage and what to lookfor'?" 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 beenestablished.

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 themain idea even if you do change some of the verbiage.

The main reason you, as an owner or manager, might not get a referral isbecause you didn't ask! You might be afraid someone will say "no." AndI guarantee you they will--at a considerably higher rate than those who say"yes." But those who do say "yes" will make the wholeexercise profitable and worthwhile. What if just 10 percent of those tenants youasked gave you two or three names? How much would that be worth to you? Convinceyour 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 yourgratitude. First, send the person who gave you the referral a handwritten noteof thanks. Then, send him something of low cost--but of high perceivedvalue--that he will use or see regularly. A great source for these types ofitems--magnets, pens, coffee mugs, etc.--is close-out merchandise catalogues. Irecently saw a four-piece designer luggage set with a retail price of $99 onsale for $8. Talk about something your customer will remember! Some people wouldrecommend 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 everytime. Money discounted off a rental will be quickly forgotten.

An Additional Technique: Fliers

A number of my clients are using fliers very effectively to generatereferrals. 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 theyare extremely inexpensive to produce and the returns are substantial. The onlyway to know if they'll work for you is to test them. There is no downside togiving 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 pinkare great colors to use. Whatever you choose, don't use dark colors that makeyour type difficult to read.

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

In Conclusion

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

Fred Gleeck is a self-storage profit-maximization consultant. He helpsstorage owners before and after they get into the business. He is the author of Secretsof Self Storage Marketing Success--Revealed! and numerous other trainingitems for self-storage operators. To get regular tips on self-storage, send himan e-mail at [email protected];call 800.345.3325.