Word of mouth is one of the most effective advertising methods for a rural lifestyle dealer. When Rural Lifestyle Dealer interviewed 2008 Dealership of the Year winner Little Tractor & Equipment, James Little talked about a referral program the dealership developed to encourage happy customers to tell their friends.
When Dave Kanicki, the magazine's executive editor, interviewed James Little, he said that while he would invest 1.5% of gross sales in advertising and other promotions, his most effective marketing tool remains his customers – both through word of mouth and direct referrals. At the time of the award, the dealership had a 33% market share within a 50 mile radius of the store.
Little's referral program is simple. If someone refers a customer who buys a tractor, they're sent a check for $100 or, if they don't want cash, they're given a $100 credit when the purchase is completed.
"Customers love it," Little says. "I've got one customer who's received over $2,000 from us. Several others have $400 and $500 credits on the books that they can use for parts or service."
And he's seen the power of word of mouth advertising and a loyal customer base. Little likes to tell a story of how he was working with a potential customer but needed to respond to another situation. Rather than make the customer sit and wait until he could get back to him, Little asked other customers in the store if they could talk to him for a few minutes.
"In a couple of minutes, he was surrounded by other customers. By the time I got back, he said, 'I don't need you. They just sold me a tractor.'"
The territory manager for the dealership's tractor line likened the customer loyalty created by the dealer to compound interest.
"When you start out in the business and sell your first tractors and those people are taken care of 100%, they go out and tell 60 people and that just compounds year after year," he said.