There's no better feeling than getting a call from a potential client that starts with: “I was told you do great work.” Gold, right? But even though you feel your company delivers consistently excellent work, you won't get referrals unless you ask for them. And even then, you won't get them unless clients truly believe that your company does what few others will do.
START AT SIGNING Salespeople typically ask for referrals when they come to inspect the job and collect the check. To get quality referrals, you need to start sooner — at signing.
At signing I explain to the client what we are going to do. I explain that the crew will be there on time. I promise that the jobsite will be clean. I don't give a start date but rather a date by which they can expect their job to be completed. And usually that completion date is 30 days beyond the date I think it will actually be done. That's how I set expectations.
I outline those practices associated with competent, well-managed companies. I explain all this at signing because I want them to know that a lot of my work comes from referrals and that my No. 1 goal is to make sure they are pleased. And then I say, “If I exceed your expectations, would you be willing to refer me to your friends and family?” From the point at which the contract is signed, and going forward throughout the project, I let them know the ways that we're exceeding expectations. I remind them again when we come to collect. When the check's collected, not only will they know that we've earned their referral, but chances are good that they'll be happy to refer us.
COST OF A REFERRAL Apart from ensuring that your crews are trained to communicate, clean up, show up on time, etc., there's a way that will help ensure someone recommends you. That's to add something to the job that they weren't expecting. If you're building a deck, for instance, have the crew put together a planter out of extra materials and leave it with a card on the deck thanking the home owners for their business. If you're doing a kitchen remodel, have your plumber install that hundred-dollar drinking water filter that you discussed but never agreed to install on the faucet. Some companies choose to invest in rewards for clients when the job they referred is complete. I reward the client with something unexpected so as to get the referral.
What's the cost? While most companies use their marketing reports to determine the cost per lead and cost per sale, they often put a zero dollar amount by referrals. No lead is 100% free, and the more time and money you invest in generating referral leads, the more likely you are to get them.
Referrals have a cost. Generally, it's about half the cost of your other leads. For budgeting purposes, if your leads — defined here as set appointments — cost $150, expect referral leads to run $75 apiece. That includes not just the cost of admin, the salesperson's time, etc., but the expense of doing that something extra to help gain the goodwill that creates referrals. Track these costs and include them in your marketing report so as to track your return on investment. You can fund this kind of stepped-up referral system by moving your dollars from less-effective kinds of marketing. Doesn't it make sense to invest them where they're most likely to generate a return?
MENTION MY NAME The chances of selling a referral lead are two to three times greater than would be the case for, say, an event or canvassing lead. So a change of strategy to get more referrals is worth it. But to step up referrals as a percentage of business requires more than wishful thinking. Your marketing person is the one who should take charge of this.
First, develop a plan with a target. If referrals right now provide 10% of your business, where would you like that target to be? A good long-term benchmark is 50%. When half your business comes from referrals or previous customers, you can start dropping your marketing budget from 12% or 10% or 8% to 6%, 5%, or 4% because your clients are filling your docket.
To double your referral rate, let alone get half your business from referrals or repeat customers, you need buy-in at every level of your organization. Here's where money is the manager. You can script and coach salespeople to mention and ask for referrals. Edicts won't work. Demanding that each salesperson produce a certain number in a certain time only produces stress.