Media >Crain's Cleveland Business
Small Business
9/8/08
|
Referrals, networking jump-start firm growth
By Judy Stringer
Few Northeast Ohio residents had heard of Pamela Bayer when the interior designer and general contractor from the New York metropolitan area relocated her business to Hudson four years ago.
So, Ms. Bayer did what any savvy entrepreneur would. She hit the pavement with a stack of good business cards and a referral list in search of local small business owners who could use and later recommend her decorating services.
"Having worked in the trades out east before starting my interior design company, I had a built-in network of architects and contractors that could refer clients to me," Ms. Bayer said. "Here, I had to build my network almost from scratch."
Today, Ms. Bayer counts dozens of Northeastern Ohioans among her client base and has become recognized as a local expert in the field, appearing regularly on WKYC-TV, Channel 3's "Good Company Today." She credits much of her company's growth with understanding the importance of making connections within the community.
"People like to buy services from companies or people that someone they know and trust has recommended," she says. "Recently, a tile contractor referred me to a client who wanted a color recommendation for a room. Now, she's hired me for the rest of the house."
Most business owners know word of mouth is one of the fastest and easiest ways to guarantee a steady stream of business. Small companies that flourish often do so through a flood of referrals from noncompeting businesses in the same field.
The model works particularly well in the service industry. Vendors associated with weddings, for example, rely heavily on referrals within local industry networks. Natalie Rossi, owner of Cupid's Grandeur Wedding Service in Cleveland, said the majority of her clients are engaged couples who hear about her service from other wedding vendors.
Technology service companies also say referrals are a critical element in growing their businesses.
Evosolutions in Independence has a handful of what president Erich Leipold refers to as "informal partnerships" aimed at driving revenues. One example is CyGem, a Copley computer networking company that routinely refers Evosolutions to customers who inquire about programming services.
"We do not have a big marketing budget for things like mailing lists, so getting a referral is huge for us," Mr. Leipold said. "I'd estimate that we derive as much as 60% of our revenue from partner referrals."
These business owners say they made their connections by seeking out like-minded companies and vendors and by networking at local industry events. They also say maintaining and monitoring a list of businesses and independent service providers you can recommend is as important as being on someone else's list.
Ms. Rossi said she keeps a database of photographers, bands, limousine drivers, caterers and other wedding vendors whom she can confidently refer her clients. Likewise, Ms. Bayer has a network of contractors that can do everything from drapes to roofing.
"The people you recommend are a reflection of you," Ms. Bayer said. "You have to know they are not only going to do a good job, but are the type of person who returns phone calls, for instance, and treats customers well."
While word-of-mouth marketing is a powerful marketing mechanism for successful small businesses, many entrepreneurs fail to place a high emphasis on networking in their business plan, said Phil Bessler, an associate professor of business at Baldwin-Wallace College.
"This is clearly not as obvious to all entrepreneurs as it should be," he said.
Few Northeast Ohio residents had heard of Pamela Bayer when the interior designer and general contractor from the New York metropolitan area relocated her business to Hudson four years ago.
So, Ms. Bayer did what any savvy entrepreneur would. She hit the pavement with a stack of good business cards and a referral list in search of local small business owners who could use and later recommend her decorating services.
"Having worked in the trades out east before starting my interior design company, I had a built-in network of architects and contractors that could refer clients to me," Ms. Bayer said. "Here, I had to build my network almost from scratch."
Today, Ms. Bayer counts dozens of Northeastern Ohioans among her client base and has become recognized as a local expert in the field, appearing regularly on WKYC-TV, Channel 3's "Good Company Today." She credits much of her company's growth with understanding the importance of making connections within the community.
"People like to buy services from companies or people that someone they know and trust has recommended," she says. "Recently, a tile contractor referred me to a client who wanted a color recommendation for a room. Now, she's hired me for the rest of the house."
Most business owners know word of mouth is one of the fastest and easiest ways to guarantee a steady stream of business. Small companies that flourish often do so through a flood of referrals from noncompeting businesses in the same field.
The model works particularly well in the service industry. Vendors associated with weddings, for example, rely heavily on referrals within local industry networks. Natalie Rossi, owner of Cupid's Grandeur Wedding Service in Cleveland, said the majority of her clients are engaged couples who hear about her service from other wedding vendors.
Technology service companies also say referrals are a critical element in growing their businesses.
Evosolutions in Independence has a handful of what president Erich Leipold refers to as "informal partnerships" aimed at driving revenues. One example is CyGem, a Copley computer networking company that routinely refers Evosolutions to customers who inquire about programming services.
"We do not have a big marketing budget for things like mailing lists, so getting a referral is huge for us," Mr. Leipold said. "I'd estimate that we derive as much as 60% of our revenue from partner referrals."
These business owners say they made their connections by seeking out like-minded companies and vendors and by networking at local industry events. They also say maintaining and monitoring a list of businesses and independent service providers you can recommend is as important as being on someone else's list.
Ms. Rossi said she keeps a database of photographers, bands, limousine drivers, caterers and other wedding vendors whom she can confidently refer her clients. Likewise, Ms. Bayer has a network of contractors that can do everything from drapes to roofing.
"The people you recommend are a reflection of you," Ms. Bayer said. "You have to know they are not only going to do a good job, but are the type of person who returns phone calls, for instance, and treats customers well."
While word-of-mouth marketing is a powerful marketing mechanism for successful small businesses, many entrepreneurs fail to place a high emphasis on networking in their business plan, said Phil Bessler, an associate professor of business at Baldwin-Wallace College.
"This is clearly not as obvious to all entrepreneurs as it should be," he said.
CommentsNo comments currently. Be the first to comment! |
|