I recently spoke with a durable medical equipment (DME) / home oxygen manager who had just lost his biggest referral source and desperately needed to replace the lost revenue. I was shocked at how naive this DME manager was about why his "marketing" efforts were meeting with so much resistance at Hospital J. I explained that one of his competitors pretty much had Hospital J sewed up and had for years.
"Why? How?" asked the DME manager.
"The same way you pretty much have Hospital C all sewed up,” I said.
"You mean he used to work at Hospital J?" asked the DME manager.
"No, he never worked there but he is socially connected there from the board on down through department heads. He's been 'penetrating this account' socially for years through golf tournaments, sponsorships and serving on boards. In other words", I said, "he hasn't been limiting his contact with Hospital J to sales calls that occur between the hours of 8AM and 5PM like you have. Your competitor built relationships after 5PM and on weekends. Instead of compartmentalizing his life into 'professional' and 'personal' worlds as you have, your competitor merged them, integrated them. Now the people at Hospital J are not just referring business to a DME company, they're referring business to a friend."
My naive DME manager friend had gotten his marketing cart ahead of his relational horse.
People don't do business with strangers if an acceptable non-stranger is available.
Get yourself out of the stranger category fast. You don't have to become the referral source's best friend, but you have to get out of the stranger category fast because any halfway competent non-stranger will get referrals before a competent stranger will.
We buy from people we like, people we trust and people we feel are like us in some way. And we buy from people who were recommended to us or - better yet - introduced to us by friends.
Yes, there are exceptions. I drink Pepsi even though I don't know anybody at Pepsi but they had to spend gazillions of dollars to build a brand, build a distribution network and advertise their brand to even get in my buying decision.
Most of my readers don't have gazillions of dollars to get new business the way Pepsi did it - by skipping relationship building and going straight to sales and marketing.
For readers who don't know, DME companies have few ways to differentiate themselves from their competitors. They can't differentiate themselves on price because most DME is paid for by Medicare and Medicare tells all the DME dealers in a certain market how much they'll get for an oxygen concentrator or a CPAP or a manual hospital bed. They can't differentiate themselves by product because local DME providers don't make the products they provide so they're providing what their competitor down the street provides.
And even if Dealer A carries a wheelchair or a CPM that's marginally better than the one carried by Dealer B, local referral sources won't know or care about these marginal differences. Oxygen is oxygen. A bed is a bed. That's how the referral sources see it. DME has become commoditized.
And I suspect some of my readers - even the ones who aren't in the DME business - are in industries whose products and services tend to be seen as commodities, as well. A few days ago a fellow in the IT business complained to me that his customers will abandon him and sign a contract with another IT company for a $5 monthly savings.
"They don't even understand what I do for them,” he said. They think that when their computers break I fix 'em. They don't know all the stuff I do to prevent their computers from breaking,” he said.
In fact, he told me that when the recession hit he lost so many customers that he tried to behave like Pepsi, putting the marketing cart ahead of the relationship horse. He bought very expensive broadcast media ads.
"Yeah? How'd that work out for you?" I asked.
"I didn't get one new client,” he admitted.
"Instead of trying to market like a consumer brand with a gazillion dollar advertising budget,” I asked, "why don't you leverage what you already have for free or almost free?"
"Start talking to your customers when their computers aren't broken", I said. Make yourself more than an IT vendor. Make yourself a friend. Then over a cup of coffee or lunch you can do something that will stop them from leaving you to save $5: you can explain to them how your services are preventative, not just curative, and how you are already saving them money by keeping their computers running and productive. Do it now while you have the beginnings of a relationship with your clients" I said. He seemed to understand so I went further.
"And after you break down the wall between your 'professional' and 'personal' lives" I said "you can ask them for something that works almost every time and doesn't cost nearly as much as a radio or TV ad: you can ask your existing clients to introduce you to some new prospects.
I'm not saying there is no role for advertising. I'm saying if you're in a business where you have actual access to the people who pay for your services, if you can talk to them on the phone or invite them to golf or meet them for coffee, leverage that access.
If you're in a business where your next source of revenue could be anywhere, could be anybody, buy expensive media like radio or TV. Pepsi's next dollar could be anybody, could be anywhere. Could be everybody. But if you're like most of my readers, the universe of potential revenue sources is small and knowable. In fact, you do know them and you know their phone numbers and their email addresses and you know how to get to their offices and these people you already know can introduce you to your next customer so why are you buying radio and pretending not to know a cheaper way to look for customers?
Most of the people reading my blog already have customers whose professional and social networks have not yet intersected with their own. Why would you spend thousands on radio or TV ads aimed at strangers when you already have access to people who can move you from the stranger category to the non-stranger category with people simply by introducing you?
I'm saying stop trying to segregate your 'professional' contacts from your 'personal' contacts. Don't segregate, integrate. Merge your professional life with your personal life. Want to have more customers? Be friends with more people.
I'm saying don't try to spend marketing dollars like a large business until you've networked like a small, hungry one.
I'm saying don't go on TV or radio and ask strangers to give you money until you have made friends of the people who already give you money. They will, in turn, introduce you to friends and tell them why they should give you money.