Every business creates its own professional reputation. Sometimes we refer to it as “word of mouth.” Given enough time, a positive reputation may be all that’s necessary for a business to become successful.
But even word of mouth reinforces either a relational or a transactional mindset. Which means you’ve got to choose which kind of customer you want to do business with.
Often I hear operators of small businesses say “That may be true for big companies, but my company is so small that I can’t afford to pass by any customer.” They’re wrong. Very wrong. It’s likely to be even more important to small business.
Let me give you an example of how well this can work, when done correctly.
Meet Spiro Dendrinos, owner of Mobile Mechanical service. You can’t get any smaller than a one-man operation, which Spiro became four years ago when he started his business.
Spiro’s business model is simple: when you have problems, he’ll come to you. He fits all of his tools and test equipment into his car, and doesn’t have to maintain the expense of owning a shop.
His entire advertising strategy was originally to set some business cards on the counters of various coffee shops and convenience stores. By his own admission this strategy didn’t get him any business. And why would it? Transactional shoppers didn’t see any “great deal” on his card. Relational shoppers had never heard of him.
But when he made friends at the parts counter of the local automotive parts store, the personal recommendation of the parts man, accompanied by handing the customer Spiro’s card, did slowly begin to pay off for Mobile Mechanical.
Then Spiro implemented the strategy that has become his signature, as well as his primary source of new work: about two weeks after he finishes working on a customer’s car, or tractor, or outboard motor, he phones to ask if it’s still working well.
It is amazing how many times he hangs up with another job for the same customer, or a phone number of the customer’s friend or neighbor who needs the services of a good all around mechanic.
By his own admission, for the first year and a half he needed a part-time job to augment his income as a mechanic, but as Spiro’s reputation has grown so has the demand for his services. For the last two and a half years Mobile Mechanical has been booked a full month in advance, and the work shows no sign of letting up.
And as you might expect, Spiro gets calls from people who are price shopping. He simply quotes them a rate, and refuses to negotiate. Spiro knows the difference between the price shopping, non-loyal transactional shopper, and the more loyal relational customer who isn’t going to quibble over the last few dollars.
Not that he seems overly concerned about charging everything the market will bear. He tells the story of arriving at a customer’s home, and having to clean the garage to create enough space to work on the car. He didn’t charge for the time he was rearranging the garage.
He’s been known to inform customers that the problem they’ve called him to repair is covered under their factory warrantee, pack up his tools, and move on to the next job.
When Spiro finds a faulty sensor at a cost of $25, and doesn’t repair or replace the transmission, stories of his integrity spread quickly, and contribute to the word of mouth which drives his current success.
Former customers who’ve moved out of the area are willing to pay a serious mileage charge for him to continue to come to them in their new communities. (Once you’ve earned their trust, relational customers don’t easily give up their relationships).
Life is good for Spiro Dendrinos.
Can we take some lessons from Mobile Mechanical’s success?
1) Spiro’s business can easily be differentiated from his competitors. He comes to his customers – a valuable service that none of his competitors offer.
2) Business cards and flyers left indiscriminately around the community accomplish nothing. If you’re trying to attract transactional business make an attractive offer to sell something, now. If you wish to attract relational business, use another strategy.
3) Spiro does no “dollars off” promotions. They would attract transactional customers, which he’s already decided are not as profitable. He sees price promotions as temporarily boosts to volume while simultaneously sacrificing profit.
4) He prices his service not as low as possible to attract more business; not as high as the market will bear to maximize revenue; but rather to earn a fair profit based on the value of his time. He does not deviate from his pricing philosophy.
5) He recognizes that every time he deals with a customer, he’s contributing to his own word of mouth. Therefore, he treats every customer as if they’re his most important customer.
6) He actively solicits additional business from his current clients, and referrals for future business.
7) And most importantly, Spiro has a clearly defined definition of his relational customer. His attention isn’t diverted by trying to work with potential transactional customers who don’t match that profile.
Given enough time customers will become aware of a lack in their lives that can only be satisfied by owning what your business sells. Then, having heard positive word of mouth about your business, those customers will come to your business and buy. Advertising only speeds up this process.
Are you consciously directing word of mouth about your company? Relational shoppers will only be drawn by relational word of mouth. Likewise, transactional shoppers will ignore relational word of mouth and focus instead on the transactional word on the street.
Which type of shopper are you building your business around? Do you know exactly who your customers are? Even more importantly, do you know who they are not?
Do you have the courage to avoid those who don’t fit your customer profile?