I understand that referrals are what keeps the business going, but how do you justify your current rates if you give stuff away? Do you figure that into your expenses?

I am just trying to come up with rates, so far I have $XX.XX/hr in order to keep me at the similar rate of pay that I make for my current job, and pay expenses. But with this thought, now I am thinking....can I afford to do this? Will anyone be willing to pay for my services? I don't think I can afford to use that form of marketing at this time. Maybe after a year when I have a little extra socked away.

~Brandy

Man...don't you hate it when you write a long post and then it goes poof!?!

Brandy, don't be short sighted about rewarding your clients for referrals. Think of it as part of your marketing budget.

Some quick math:

Say it takes you 5 hours of networking/marketing effort to secure a new client (this is low IMO). That means you've just spent $125 worth of your time to get one client. (I'm rounding your rate to $25 for easy math).

Now, say that client you got (client A) LOVES you and refers you to his friend B. As a thank you, you send him a $25 gift card. You just got a new client for 1/5 of the cost of marketing for one on your own. AND, now client A loves you even more because you give him free treats. So, to feed his coffee addiction, he keeps sending you clients so you keep sending him coffee money. By doing this, he's saving you time and money and effort in marketing to get new clients.

Don't underestimate how much time networking takes. When I moved to my new city and started marketing my business, I was at a different networking event every night (literally) spending hours at each one. Then I'd have to follow-up with notes to each person I met. Then I'd call a week or so later to set up coffee/lunch/whatever. Then I'd go to the coffee/lunch/whatever. Then I'd send a follow-up note for that. It's a very time consuming process and it probably averaged 20-30 hours of effort for each new client.

BUT, once I got those clients and they started referring new clients the time spent on networking/marketing dropped drastically. That means I had more time available to actually MAKE money instead of just talking to people.

If you can't afford 10%, that's fine. But do something. At the VERY least, you should be sending a nice, hand written thank you card. And if someone sends you more than one referral you should definitely buy them a little something, even if it's a $10 gift card or a small box of on-sale truffles.

The more thinking of you gives people a warm fuzzy the more often they're likely to think of you which means you'll likely be in their head just when it's most important.

Vagabondette,

Thanks for the info. Well put when you look at it that way. Are you already working as a VA? I am just getting my business plan compiled. I am working on "niche" and target market but my self esteem is getting in the way again. I keep doubting my ability I guess.

I guess my question to you would be do you want to "advertise" that marketing ploy to your customers or just kind of "surprise" them so the send you truly interested leads because they respect your work? I think I would want to market it as a surprise and have the customer go "hey, that was really nice". I don't know, you have definitely changed my way of thinking, I will be doing this now...do you work for the coffee and chocolate industry?

~Brandy

I'm just starting into the VA game but I've been running a different business for the last 3+ years. I completely understand the self-esteem thing...trust me. We can be our own worst enemies. For months I was shocked when someone would hire me for a seminar, even though I knew intellectually that I was very good at what I did. But then I'd look up and see 50 people frantically writing down every word that was coming out of my mouth and that helped.

Once my site is up and running, I will have a "referral program" tab which will outline my referral plan. It will also be at the bottom of my email signature, at the bottom of my invoices and on the back of my business card (something along the lines of "Ask me how you can make $40"). People like making/saving money and I want to let them know they can do that with me. I had one guy with my last company who never actually used my services but made hundreds off of me in referral bonuses. Best money I've ever spent! He sent me one client that gave me $25k in business and I sent him and his wife on a cruise to the Bahamas.

Also keep in mind that it's an operating expense so you can write it off.

A cruise? Wow! I'm gonna start sending all of my potential clients to you. Oh, wait, I actually need to make an income, don't I...lol

I love your breakdown explanation about the true costs of marketing. It makes little things like this seem so much more viable (I already know that it's worthwhile). Even though no one really talks about it too much, people appreciate little surprises and others who go that extra mile to make you feel special and appreciated. Honestly, you don't see it very often.

I know I've said this many times over, but I live in a very small town, so everyone pretty much knows everyone else. There's a little restaraunt that I go to quite often that I just love and, even though the owner can be a bit of a curmudgeon at times (If you want the special, your butt had BETTER be there by 8pm, NO EXCUSES...lol) he's also a really good friend. He asked me to show him how to use his scanner and to make some small changes to his menu. I did it as a friendly favor and it really didn't take me that long. The next time I came in for dinner, he picked up my tab. Also, the bartender keeps us all stocked in candy and even has special candy "just for the girls". On Valentines Day, she gave each of her regulars a little V'Day card, a cup cake (homemade), a piece of chocolate and a pencil. It's these little special things that really keep me coming back, although the company alone is nice too.

__________________
Stephanie
New VA in the research phase :daisy:

Vagabondette,

Thanks for the wonderful marketing ideas. You have really opened my eyes to a rewards system, and made it seem affordable...not to mention necessary for any new business. Especially one that works off referrals.

Just one more question. In your referral system is there a miniumum requirement? 10 hrs purchased by the referred client...etc? I was thinking this would be a good idea for me.

~Brandy

Originally Posted by StephanieP

A cruise? Wow! I'm gonna start sending all of my potential clients to you.

You send me a $25k client and I'll send you on a cruise too!

I think a lot of people don't think of their marketing/networking time as money lost when really it is... and when you break it down giving referral bonuses is *so* much cheaper.

Quote:

Just one more question. In your referral system is there a miniumum requirement? 10 hrs purchased by the referred client...etc? I was thinking this would be a good idea for me.

Yes, I'll have a minimum requirement. Probably 10 hours, the bonus sent upon payment by client. But even if people send me just a 2-3 hour project I'll probably at least do a $5 Starbucks cert or something as a thanks. That way they'll still keep me in mind when bigger projects come their way.

ETA - don't forget that when you send your thank you card or gift you should throw in 2-3 of your business cards. Actually, any time you send anything you should throw in some business cards.

Originally Posted by VagabondetteVA

ETA - don't forget that when you send your thank you card or gift you should throw in 2-3 of your business cards. Actually, any time you send anything you should throw in some business cards.

GREAT! And you know that was such a simple thought I would have forgotten it! But it was totally not in my thought process right now.

...can I put you in my pocket for reference?....

~Brandy

I highly recommend reading the book titled Endless Referrals by Bob Burg. It gives some great ideas that anyone who runs a referral based business can use.

Great great ideas. As I'm sitting here trying to come up with things for my new client packet, I think that outlining the referral program might be something I want to add.. Thanks for the discussion and the book reference.

__________________
Tamika R. Johnson, MBA, Principal
administrative partners, llc
www.administrativepartners.net | http://adminpartners.blogspot.com