Local companies are struggling with how to gain clients through referrals in a world that's shifting from the handshake to the point-and-click.
While the Internet and online marketing is becoming more prevalent in their offices, the relationship-based client acquisitions through referrals are still the most successful, and companies are having a difficult time tracking how the Internet is helping them, local executives discussed at a recent roundtable hosted by The Daily Transcript and sponsored by Voice Smart Networks and Berkman Communications.
"Most of our business today and in the past is mostly due to relationships with quality property management firms, contractors and end users," said Charlie Baker, owner of California Commercial Security. "Eight weeks ago, I hired a marketing assistant and she's our social media marketing assistant … For me, the jury is out as to how it's going to affect us, but the consensus is you have to be playing the game one way or another."
Dale Stein, owner and CEO of Voice Smart Networks, tracks his client acquisition based on two categories – prospecting above the line and prospecting below the line. Above the line includes referrals from other companies who have the same clients, referrals from clients and his sales team visiting offices and recognizing the needs there. Below the line includes cold calling and direct mail.
"What happens is, every lead I get below the line, I have about a 25 percent close ratio. Every lead above the line, I have about an 85 percent close ratio," Stein said. "I'm forced sometimes to spend money and resources below the line and not realize – wait a second, I need to get above the line. Because the question I ask is, where did the last three deals you got come from? I bet 80 percent of them came from above the line."
Johnny Chan, chief marketing officer and partner at eBoost Consulting, said the Internet needs to be used as a "weapon" to incite interest and to form the relationships that bring in sales.
"It's not necessarily a generational shift. It's not necessarily what the environment gives us. It's more of a behavioral shift than anything else," Chan said. "The behavior that they want is still what everyone around the table is offering, which is an incredible relationship. So the cultivation of a relationship is still [a top priority]. I'm on the phone specifically, I dial over 100 calls in the course of the day. So it's still the calls that get it, but the way I use different tools like Facebook or LinkedIn, is specifically what it's for – I use it like a weapon."
Chan will connect with people on LinkedIn and call someone up and tell the potential client who he knows, to make the relationship seem more informal.
Some CEOs aren't completely aware of the communication tools available to help establish a position in the marketplace, which has changed and has become more competitive, said Jack Berkman, CEO and president of Berkman Communications.
"Communications today is strategic. It's not something you throw against the wall and hope it sticks," Berkman said.
James Lance, attorney at Kirby Noonan Lance & Hoge LLP, gains most of his referrals from other lawyers, and the Internet has caused an obstacle between himself and other potential clients. His company is starting to see other attorneys landing cases through electronic media that he would typically get – and losing his fair shot at getting the business.
"What we see now is real pressure from a lot of people either using the Internet, sending out information and appearing to be very knowledgeable. They'll send out articles and you'll get them on your LinkedIn page. And I know these people and I wouldn't hire them," Lance said. "The question is how do you get the message out to the people who aren't in the know?"
Berkman said the key is to "separate yourself and clearly identify what you do, so someone can understand quickly what you do."
Getting in front of clients seems to be the No.1 difficulty among the businesses represented at the roundtable discussion.
"I think we're all facing the same problem here – how do you maintain relationships, grow relationships and get meetings? Because all I want to do is to go get in front of somebody – give me the opportunity. I'll drive, fly, do whatever I need to do," said Jerry Jacquet, principal at Meissner Jacquet. "It's almost a lack of respect, of professionalism, that you put in a lot of years and you're not getting the phone call back. Just call me back, leave me a voice mail."
Chan said the younger generation is looking for a short meeting and "if you're asking for longer than a 15-minute conversation with them on the first call, then it's not good."
Stein said potential clients believe they can replicate what his company does for less money, but the products found on the Internet don't match the services his company offers.
"Our job is to try to explain the difference, try to show the added value. But we still have to be in a position where somebody is going to allow you to tell them your story," Stein said.
Relationships formed through referrals make it easier to get the attention from potential clients, said Steve Downey, owner of Ask Us Financial Insurance Service. The referral leads to the conversation that businesses need to make sales.
"As an advocate for referrals, I find it harder and harder to get referrals … How do we get people who love, trust and know us to extend that relation?" Downey asked.
Slowing down the sales process and explaining to people information obtained from the "technology typhoon" may help to establish the rapport and gain trust from clients, said Steve Hundley, CEO of 1parkplace.
"You almost have to take a step backwards and be very patient with the people you're working with because they're getting misinformation oftentimes because they're seeing price versus value," Hundley said. "The key is patience in a lot of this, and trying to slow down the sale a little bit so you can actually be different."
Chan said the younger generations are skeptical of the sale and react more favorably to being educated. Matt Garrett, CEO of TGG Accounting, uses three-minute, how-to YouTube videos to help his clients and to build relationships and trust with them.
The Internet is also used to check up on companies after the initial contact is made.
"If you do have the opportunity to touch somebody, introduce them to yourself, your business or your brand, they're going to follow up and they're going to do some informal checking, Google, Yahoo, Bing. They're going to dig. They're going to dig in reviews, which may or may not be favorable," said Jeremy Fusselman, managing partner at Reprepair. "It's looked at as more of an objective resume, what's in those search results. It's good to keep your reputation clean, work with reputable people, communication up and follow through."
Jack Burger, owner of Burger Construction, said San Diego has always been a "handshake town" and he maintains and gains relationships by "pressing the flesh" and keeping an appearance outside the office and in the public – whether it be on boards or at volunteer events that his company sponsors.
Instead of beating the pavement trying to gain more clients, companies can also raise prices, Garrett said. If a company that makes 30 percent gross margins increases prices by 10 percent, Garrett said it can lose 23.7 percent of its clients and still have the same bottom line.
* Charlie Baker, Owner, California Commercial Security
* Jack Berkman, President and CEO, Berkman (sponsor)
* Jack Burger, Owner, Burger Construction
* Johnny Chan, Partner and Chief Marketing Officer, eBoost Consulting
* Steve Downey, Owner, Ask Us Financial Insurance Service
* Jeremy Fusselman, Managing Partner, Reprepair
* Matt Garrett, CEO, TGG Accounting
* Steve Hundley, CEO, 1parkplace
* Jerry Jacquet, Principal, Meissner Jacquet
* James Lance, Attorney, Kirby Noonan Lance & Hoge LLP
* Dale Stein, Owner and CEO, Voice Smart Networks (sponsor)