Friday, April 18, 2025
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The Danger with Referrals

contractor referrals

contractor referralsMost contractors can agree that the best way to get new business is through referrals. In fact, I was recently at a contractor event where the speaker indicated that upwards of 70% of his company’s new business comes from referrals, and national statistics back up this statement.

This is huge!

There is nothing more invigorating than when one of your happy customers tells one of their friends about the fine work you do … and a referral is born.

But there is a real danger of being passive about getting referrals.

While word-of-mouth is the top way of getting new business, you cannot be lazy about it. You need to stimulate activity.

If you don’t actively pursue referrals, one day the phone will just stop ringing. Your referrals will dry up … and yes, your business will, too.

This is the danger with referrals. You think the business is in the bag (when it isn’t). Like all other business, you must move that relationship forward bit-by-bit.

The smart way to turn more referrals into business is by nurturing them, and you do this by having a system to stay in touch with them. You need to follow up with your referrals on a regular basis.

(Ugh) That’s what I hear from many contractors who hear the term “follow up.” They think phone calls (that never get returned) and pesky emails. In fact, one home builder from Alberta recently told me that after they talk to an interested party, they “wait for the prospect to be ready to move forward.”

Referral or not, that’s not a smart way to do business.

There are many elements that can go into a follow-up system, but the one element that can’t be ignored is … a newsletter.

A newsletter will turn those past customers into referral agents and often turn those referrals into paying customers someday down the road.

One of my home builder/remodeler clients developed a print newsletter to stay in touch with their past customers, remodeling referrals and inquiries, and after only three issues, they have already seen great success. When I first met with them to develop their newsletter marketing plan, they knew they were losing prospects and future revenue.

Their situation was this: At the time of the consultation, they had a new home development that was about 30 months away from construction. They had signs up at the location and were talking to interested parties who called, but they had absolutely no way of staying in touch with these folks.

Additionally, the remodeling division wasn’t doing nearly as well as it could have been because they weren’t staying in touch with past customers – many of whom “forgot” this company also did remodeling. The last thing you want to hear from your past customer is “I didn’t know you did that!”

They send out their print newsletter every two months, and they have already seen great success. Read their entire story here.

Whether electronic or print, when done right a newsletter is the most effective, non-intrusive way to stay in touch. They nurture leads, referrals and past customers.

So the next time you get a referral, don’t be lazy. Put them into your stay-in-touch system so they can be nurtured and hopefully, over time, you can gain new business.

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