For most home improvement companies, referrals are the best leads. But most owners would say they don't get as many referrals as they'd like, or even as many as they deserve given the high-quality work they do. Satisfied customers are essential but not enough.
Contractors such as Greg Williams, general manager at Cal-Tec Construction, Fresno, Calif., have found that generating referral leads must form part of an overall sales strategy. For years, Williams says, “we'd talk about referrals at every meeting, but we never made it a huge focus until recently.”
Prompted by information picked up at a sales seminar, management at Cal-Tec began not only to stress the need for referrals but also to teach salespeople how to get them. “It's just like you would teach a guy how to warm up to someone, or close, or do the product demonstration,” Williams points out. “He's got to have a technique, something he can memorize.”
From the Top Cal-Tec salespeople are taught to introduce the subject of referrals at the start of every sale and make opportunities to mention them again throughout. They ask, “Were you a referral?” even when they know the prospect wasn't. That will “spark the thought,” Williams explains.
When they make a sale, salespeople ask the customer to commit himself to suggesting referrals when the job's done. “That's a really good approach,” Williams says. “The salespeople can go back and say, ‘You told me you'd suggest a few names.'” Sale or no sale, they ask for referrals at the end of the presentation.
These techniques plus 3% more commission on self-generated leads had an immediate impact at Cal-Tec. “My most reluctant guy made one referral sale last month,” Williams says. “Which means he got three or four names. Another sold three or four referrals [out of 13 to 15 average monthly sales].”
Inventive Incentive Incentives for customers have long been a great way to generate referrals for Invincible Associates, Largo, Fla., says Steven Field, president. “At the time of purchase, we give the customer a significant discount for each referral they give us,” he says. The discount and the referrals are an integral part of Invincible's sales presentation. The referral offer is also part of continuing customer communication.
“We send a package along with the customer's warranty,” Field explains. “The package contains a number of referral cards that explain the program again,” Field says, adding, “That's been unbelievably successful.”
Field also maintains a large customer list — more than 20,000 names — that he periodically mails to. “We offer $100 for any person they refer us to who buys a product. This has been a tremendous source of referrals.”
Most contractors want more referrals, but just wanting them won't do it. Systems, on the other hand, will. “It really turned around when we could say: Don't wing it. Do this and you'll get referrals,” Williams says.