The sales force clamors for leads, but leads — good leads, at least — have sharply escalated in cost. Wonder why? There are lots of reasons. Telemarketing, once your least expensive source other than repeat, referral, or self-generated leads, has become difficult to manage in the face of regulation. Companies that once depended on it now use media, S/F/I, direct mail, marriage mail, and event marketing. When more home improvement companies use these methods, it dilutes their effectiveness as lead sources for your company.

The long-term solution — to get your customers to supply you with leads by recommending their friends, relatives, and neighbors — is obvious. Why, then, do so many companies find it difficult to achieve?

Referrals aren't just there for the asking. Of course you have to ask, because customers will rarely just volunteer a referral. At the very least, that means having a program in place. Your program might consist of stamped, self-addressed post cards to make the referral as easy as possible, a system whereby sales or marketing personnel follow up for referrals, and specific customer rewards for jobs sold or prospects referred.

None of this will be worth much, however, if your company's name evokes emotions similar to those produced by, say, a car accident or a tax audit. To earn a referral, you have to start with a pleased, or preferably an enthusiastic, customer.

Design/build remodelers are more advanced in this area than specialty contractors. Many have systems in place to ensure customer satisfaction. Take the preconstruction conference. The contractor sits down for an hour or so with his client to go through the contract, explaining who will do what, when, and why. The meeting establishes clear lines of communication between the customer and the company. It also sets expectations. Only when expectations are established can production people exceed them. Exceeding them makes customers enthusiastic about referring the company to others.

Many design/build companies also use a post-production walk-through, documenting customer approval, and follow up with a satisfaction survey, either on the phone or via mail.

If you're thinking all this takes time, you're right. It also creates opportunities to ask for referrals and makes your chances of getting them a lot better.

It's what has to happen if you want to make referrals a substantial part of new business.