Monday, March 4, 2024
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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.

16 thoughts on “The Danger with Referrals

  1. I never met a contractor who was busy enough just from word of mouth. Referrals are the result of a job well done, but you have to get the job in the first place. That’s why advertising and staying in touch with prospects and site visitors with a newsletter or email campaign is a great way to catch shoppers when they are ready to buy.

    I get about 20 new clients a year who say “I’ve been reading your stuff for a few months”. I never knew they existed…At all. Till one day THEY were ready to buy, then the phone rang. Good post Tess.

      1. Darren and Carmen – absolutely! I hear from past customers or prospects years after I initially talked to them or completed their project … all because they continue to read my newsletter. Referrals may just be “window shopping” when you intially talk to them, but by adding them to your newsletter list (always ask!), you can nurture that referral along.

        Thank you both for commenting!

  2. Couldn’t agree more Tess I’m a huge fan and believer of print marketing to my existing customers. Newsletters are the way to go and your the person to have on any contractors team to help them do it. People love newsletters great post and job as always..

  3. Referrals in my company are special we take very good care of them as They always seem to be a domino effect with other customers. Referrals are a compliment also to me knowing we did a great job some where for that customer to refer us.

  4. A well written and very informative post. I’ve considered sending out a newsletter before, but never realized how useful it might be in getting referrals. Thanks for the excellent advice!

  5. Great article, Tess! You mention that a “speaker indicated that upwards of 70% of his company’s new business comes from referrals, and national statistics back up this statement”. Where could I access those statistics? Thank you!!

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