Referrals

[Tegrey 121]

Just wondering how many are relying on referrals for their business. Our goal would be to get 100% of our business from referrals. That is a challenge, but look at the benefits. Less advertising, less work to close a job, pretty good posibility of getting each job. We are about 80%+ for referrals now and hope to raise the %. When someone says they were refered, I try to Thank the person who refered us. This helps to keep it going. What % of your business is referral and what do you do to promote referrals? Thank you.

[James 624]

Terry, My business is predicated on referrals, networking and future maintenance. Yesterday and today(this morning) I have gotten 4 jobs over the phone from referrals. Superior knowledge on the subject matter , problem solving and an understanding of what to expect down the road concerning maintenance and most important being Handsome !! LOL... I let the work and the experience of dealing with my company speak for it's self ....

Edited May 17, 2009 by James

[RPetry 564]

Terry,

Very good points. I would "guesstimate" that ~ 50% of our new customers are due to referrals/recommendations from existing customers. Far and away, the most effective marketing tool out there. Closing ratio is about 80%.

Can't say we formally promote this technique. It is more a matter of being prompt for the estimate, showing up to do the work on the date and time scheduled, billing final charges close to or below the original estimate (dependent on material use), and performing superior work.

Most good customers appreciate this service. Many home improvement contractors leave their customers with a bad experience, so if you can distinguish your services beyond what is too often typical, your company will be remembered and passed on to others.

I try and get to know my customers. I spend an inordinate of time just conversing, being friendly, and joking around. If the customer likes you personally, and the work your company performs, you have hit a veritable home run.

[Beth n Rod 1,279]

Quite a bit of our work is from referrals, but we will never give up the advertising entirely, although we have cut back quite a bit over the years.

Beth

[Camelot 68]

Can't say we formally promote this technique. It is more a matter of being prompt for the estimate, showing up to do the work on the date and time scheduled, billing final charges close to or below the original estimate (dependent on material use), and performing superior work.

Couldn't have said it better myself...Referral work is the backbone of our business and we love getting it! At this point, a majority of our work comes from referrals and I consider it a culmination of years of good service and reliability.

[Tegrey 121]

Sounds like all the responses are based on the same criteria. Work ethics and what we do = Customer Satisfaction. They cannot wait to refer companys like ours! We need to be the company more then ever, based on our economy. Great response.

[RPetry 564]

... We need to be the company more then ever, based on our economy. ...

This is most likely true. In tough economic times, the strong, established companies adjust and mostly survive, the weak often perish.

We are part of the service economy. That is, service performed with a capital S.

[Ron Musgraves 240]

Reality is that people don’t. People often will tell 1000 people if you suck.

Now so no one goes off half cocked here, referrals are huge to my business as well. With each new and sometimes old customer we ask them if they know someone who they can send us to or someone that they know that might like our service.

Every new customer gets asked do you have a friends or colleague that might want this service also. (It’s about 50/50 they will send us to a friend.)

We always ask everyone if they would recommend us if we have someone call them.

I believe in the referral thing more this year than I ever have, I will not rely on referrals alone.

It’s a tool in my marketing campaign. Referrals are very important to a mature business, this is something that a new business should certainly work into the growth of there business.

[plainpainter 217]

Guys tooting their own horns once again. Ron has given the most realistic response. Guys could read into this thread thinking all they have to do is do a good job and wait by the phone - and it will ring off the hook. That's just more B/S. What people label 'referals' is not really what a referal system use to mean. It use to mean folks asking other folks who painted their home or what not - and you getting a phone call. That's just not realistic these days.

Now if you chase folks for testimonials - put them on a 'points' system if they refer - blatantly ask them outright anyone they know. This is actually a form of direct target marketing - that most folks on these forums lazily label as 'referrals'. Networking with other groups such as BNI and PDCA - although tempting to refer as 'referral' customers, is actually the result of hitting the pavement and networking with other contractors.

I get 'pure' referrals from time to time - I got an interior painting job worth 2k+ a few weeks ago. Got a $350 house washing job from a referral from a customer of two years ago. But that represents perhaps 10% of all my business this year in terms of percentages of customers, not gross $$.

Here is a good example - yesterday was talking to a guy about washing his home - and we were talking about the ice damns over the winter - and what the new roofers did to prevent it etc. I was admiring how they put a 'soldier' course of shingles up the rake side of the roof {something you see rarely done anymore} and how they pushed the soldier courses both on the rakes and on the eaves a full inch past the drip edge{ again even rarer}

So I asked the homeowner who was the company because I liked their work. And he told me they were really great - he got a bunch of estimates, yada yada, worked from sunset to sundown - very hard working brazilian team - yada yada yada - but for the life of him couldn't remember who they were. And it was only 2 years ago.

How do you get referrals if folks don't even remember you? This is most typical.

[RPetry 564]

Daniel,

Your positive, sunny outlook on business and life never ceases to amaze me.

Every discussion needs a foil. Tag, you are it.

[plainpainter 217]

Daniel,

Your positive, sunny outlook on business and life never ceases to amaze me.

Every discussion needs a foil. Tag, you are it.

You know, Rick, this comment blows my mind. You can even ask Fenner about my positivity about business lately - he'll tell you I am extremely positive.

But you couldn't resist jumping on the Dan is a negative ******* train. I am just giving my synopsis of something that is very fundamentally misunderstood on these boards. If I get ten deck jobs from my classified ad - is that considered a referral customer? Wouldn't you try and correct me if I said such a statement? I could argue the newspaper referred me - therefore they are referral customers, right?

Too many guys labeling all their networking connections and folks outright trying to promote business by asking customers for referrals or asking them to participate in referral points systems....These aren't Referrals with a capital R!!!!!!!! This is something you have to work hard for, business relationships that need to be maintained.

A True referral is one in which you didn't pay any money to acquire, you didn't ask someone to participate in a prize/point system, nor is a referral from contractors tossing you work from a BNI group - all of the preceeding which either requires time/money/effort on your part to acquire.

A true referral is one in which all you did was a good job that someone liked - and you got a job as a result of said work. This doesn't require any work on top of meeting with a homeowner and delivering an estimate. This is what doesn't happen much anymore and certainly not enough to keep most folks busy. True referrals are great when you get them - but they aren't something you can wait by the phone for. The only exception to this rule, there are some guys that keep busy by this method even to this day, but it's because they are extremely dirt cheap!

Without exception - any contractor that stays busy by word-o'-mouth - and doesn't advertize whatsoever, doesn't network, it's because they're cheap.

[RPetry 564]

... True referrals are great when you get them - but they aren't something you can wait by the phone for. The only exception to this rule, there are some guys that keep busy by this method even to this day, but it's because they are extremely dirt cheap!

Without exception - any contractor that stays busy by word-o'-mouth - and doesn't advertize whatsoever, doesn't network, it's because they're cheap.

Daniel,

Read the thread. Recall all the posts on marketing from the past on TGS. No one relies 100% on referral business, at least no one that has been in this business for any length of time.

Not one of us in the wood restoration business waits around for the phone to ring from referrals. Ask Ken Fenner, Jim Foley, Beth & Rod and others. We are too busy actually getting dirty on jobs or out doing estimates.

Referral business is great business. Contrary to your contention that referral business is cheap business, it is the best business. Not one of us that has been here for any length of time is cheap. We are worthwhile value.

Our customers know it, our local competition knows it, and most importantly, our track record proves the worth of our service and work.

[plainpainter 217]

Rick - I am saying guys who say they are 'busy' due to referrals - it's only possible if you are cheap. I am not referring to you, Foley, B&R, nor Fenner. What you guys have in place is networking, history of being in business in an area with a known name, staying in contact with previous customers, etc, etc, etc.

Terry says his business is 80% referrals - and that makes me suspicious. I've been in business for myself now 5 completed years this month. True referrals I would say comprise about 10-15% of my business. Chasing after past customers for 'maintenance' deck work - or going back to a deck resto client and now nabbing 'over the winter' interior paint work is not a referral!

Referrals are great, I agree, but I can't stand when guys come on these boards and make ridiculous claims. I am in the 'trenches' everyday - I've done 3 estimates this weekend - where the homeowner were collecting multiple estimates once again for their bi-annual house cleaning. Imagine that! Unsuspecting guys reading what Terry says - think that the road of success is doing good quality work and you will have referrals power your business. When the reality is that you do good quality work - and 2,3 years later the homeowners once again set forth getting multiple estimates again. They've forgotten who washed their home the last time. People forget constantly.

Only by being in place in front of the customer, by maintaining a communique is what generates customer loyalty/retension - and perhaps you will be able to get a few more true referrals along the way.

Of all my deck work - I have pretty much retained all my prior clients - but as an example I have not gotten one referral deck restoration job from my deck clients - I haven't even gotten an inquiry. Deck work is roughly 50% of my yearly gross - and not one referral client in 5 years. It's all customer retention and acquiring new homeowners. And that's not to say I haven't gotten tons of adulation and folks saying how much their friends loved the deck - but not one referral deck job in 5 years.

[Ron Musgraves 240]

Hey guys i think there's a medium here. Some rely and working harder at this than some. i just couldnt rely on them, does that mean I do bad work? No it means i can't know all my customers like some you do.

I also see it from a new guys stance, he doesnt have customers. I on the other hand will admit I have to many to know to get refferals all the time.

Plus the business world in residential is different. The residential consumer likes using the same guy there sister used or freind.

In my world people are affraid of tarnishing there relations to the person they reffered you too. If you do a bad job they might loose business.

I know thats why i rarley reffer people. ( thats another subject)

I'm sorry sometimes I give my honest opionion, sometimes i think people jsut want you to think the way they do. I can't, won't and never will.

Is my way right? for me...yours may be right for you.

In the end its just a thought, thoughts shouldnt upset everyone so much.

All in all its a good thread, I too am very scepticle about such a large refferal number. But hey if they are real keep up the good work and maybe one day i will to figure out how you guys stay busy onjust refferals.

[Beth n Rod 1,279]

Daniel,

Read the thread. Recall all the posts on marketing from the past on TGS. No one relies 100% on referral business, at least no one that has been in this business for any length of time.

Not one of us in the wood restoration business waits around for the phone to ring from referrals. Ask Ken Fenner, Jim Foley, Beth & Rod and others. We are too busy actually getting dirty on jobs or out doing estimates.

Referral business is great business. Contrary to your contention that referral business is cheap business, it is the best business. Not one of us that has been here for any length of time is cheap. We are worthwhile value.

Our customers know it, our local competition knows it, and most importantly, our track record proves the worth of our service and work.

Yeah, last year we had a homeowner that referred us to a job that was a $15,000.00 job. I'll take that "cheap" any day. Referrals are golden. Typically a good referral is sold because of the job you did for their friend, family, co-worker, neighbor or whatever. Many don't get other quotes, some do, but not all. Saying it is only possible if you are cheap, is a crock. Referrals hire because you are excellent too you know, not just because you are cheap.

Beth

p.s. you should also be asking for referrals....

Edited May 17, 2009 by Beth n Rod
added PS

[RPetry 564]

Rick - I am saying guys who say they are 'busy' due to referrals - it's only possible if you are cheap. I am not referring to you, Foley, B&R, nor Fenner. What you guys have in place is networking, history of being in business in an area with a known name, staying in contact with previous customers, etc, etc, etc.

Daniel,

You really need a different mindset. Good business leads to good business. It is a specific geometric model of a market. I only do business with customers that fit my business. When on a estimate, I evaluate the customer probably more than they judge our services. If closed, that leads eventually to other pre-qualified business.

Terry says his business is 80% referrals - and that makes me suspicious.

I met Terry at Albany, NY this spring. I have no doubt of his veracity.

I do not have a clue about washing houses, we do not do that. But on 2nd thought, it should be not that different than restoring wood decks.

Of all my deck work - I have pretty much retained all my prior clients - but as an example I have not gotten one referral deck restoration job from my deck clients - I haven't even gotten an inquiry. Deck work is roughly 50% of my yearly gross - and not one referral client in 5 years. It's all customer retention and acquiring new homeowners. And that's not to say I haven't gotten tons of adulation and folks saying how much their friends loved the deck - but not one referral deck job in 5 years.

Not one referral in 5 years of deck work? Daniel, something is very wrong. I have no idea what, but something is, how can I say it, something is very wrong.

[Beth n Rod 1,279]

Rick - I am saying guys who say they are 'busy' due to referrals - it's only possible if you are cheap. I am not referring to you, Foley, B&R, nor Fenner. What you guys have in place is networking, history of being in business in an area with a known name, staying in contact with previous customers, etc, etc, etc.

Terry says his business is 80% referrals - and that makes me suspicious. I've been in business for myself now 5 completed years this month. True referrals I would say comprise about 10-15% of my business. Chasing after past customers for 'maintenance' deck work - or going back to a deck resto client and now nabbing 'over the winter' interior paint work is not a referral!

Referrals are great, I agree, but I can't stand when guys come on these boards and make ridiculous claims. I am in the 'trenches' everyday - I've done 3 estimates this weekend - where the homeowner were collecting multiple estimates once again for their bi-annual house cleaning. Imagine that! Unsuspecting guys reading what Terry says - think that the road of success is doing good quality work and you will have referrals power your business. When the reality is that you do good quality work - and 2,3 years later the homeowners once again set forth getting multiple estimates again. They've forgotten who washed their home the last time. People forget constantly.

Only by being in place in front of the customer, by maintaining a communique is what generates customer loyalty/retension - and perhaps you will be able to get a few more true referrals along the way.

Of all my deck work - I have pretty much retained all my prior clients - but as an example I have not gotten one referral deck restoration job from my deck clients - I haven't even gotten an inquiry. Deck work is roughly 50% of my yearly gross - and not one referral client in 5 years. It's all customer retention and acquiring new homeowners. And that's not to say I haven't gotten tons of adulation and folks saying how much their friends loved the deck - but not one referral deck job in 5 years.

How many of then have you said thank you to, shook their hand, given them a couple extra business cards and ASKED them to please refer you business? People will....but asking helps! We are VERY well entrenched in this one specific neighborhood because one of the homeowners we asked, has made it a point to refer us every season. We have gotten at least a dozen jobs in that neighborhood due to his kind words, and his continued satisfaction with our services.

Beth

[plainpainter 217]

Not one referral in 5 years of deck work? Daniel, something is very wrong. I have no idea what, but something is, how can I say it, something is very wrong.

Where do you come off saying something is very wrong Rick? That's a judgement you made with no credible evidence! You guys live in a certain world and can't imagine anything else. Like I said deck work is 50% of my business and growing each year in total sales. I am keeping prior years customers now for maintenance work - and I am selling new to homeonwers each and every year.

But what I said is very true - that's my experience - not one 'golden' referral customer from deck work in 5 years. That's perhaps stretching the meaning. I only did one deck in year #1. None in year #2. Repeat in year #3 - first woodtux deck resto. Wasn't until year #4 did I advertize and start acquiring real deck restos. Did the same last year in year #5. Now we're in year #6.

I only really started house washing in year #4 as well - remember getting two referrals in the same season. And I got another referral this year as well - all from the same homeowner!!!!!!!!!! But no other referrals that I know of. I've gotten a bunch of referral interior painting work.

Beth I always say thank you and shake hands.

But what I find incredible is that I was the king of referrals back in the mid-90's. I am much business oriented and service oriented these days. And yet I am questioned about something being severely wrong? I have a friend who is a designer interior painting contractor and she did over 50k in gross last year juggling her business between her husband's work hours and picking up kids in daycare. And she says the exact same thing - referrals just aren't the same anymore - and the few she does get, they are still shopping quite a bit.

[RPetry 564]

Where do you come off saying something is very wrong Rick? ...

But what I said is very true - that's my experience - not one 'golden' referral customer from deck work in 5 years. That's perhaps stretching the meaning. I only did one deck in year #1. None in year #2. Repeat in year #3 - first woodtux deck resto. Wasn't until year #4 did I advertize and start acquiring real deck restos. Did the same last year in year #5. Now we're in year #6.

Daniel,

My bad. I do not know a thing about house washes, roofs, concrete etc. I do know a bit about wood.

3 jobs in the first 3 years does not make a customer base. You do not cite numbers for year 4 and 5. This is not a base to rely on for referral business.

I will repeat. Something is very wrong. Even in a bad area, in a bad economy, with minimal effort and marketing dollars, the wood restoration jobs should be way much higher.

Hang in there.

[Beth n Rod 1,279]

Daniel,

It may be your area and the economy. It may also be that referrals increase as the economy turns around. We have had several this year already, one within a family that uses us, two from deck builders, a landscaper, and another from a friend of the person who had work done...those are just the ones I know of.

If you do not actively give out a few extra card and ask for referrals, try it and see if it helps.

Beth

[plainpainter 217]

Rick - this time last year I had already completed 3 wood jobs. Nothing so far. My paper advertizing - which was my only form of advertizing last year that got me any business - hasn't even netted me a penny at this point in the year. My sales for house washing has skyrocketed through the roof - but not due to any one of the 4 advertizing mediums I used last year and into this year. All my business this year has been from my own marketing through guerrilla methods. And each year my painting sales falls further and further behind.

Again you make statements - perhaps in your area living next door to Rockefeller a 'bad' year is relative.

[James 624]

Is this a Vaudeville act or Slap Stick comedy ?

[RPetry 564]

Is this a Vaudeville act or Slap Stick comedy ?

Hah! James, please be nice. After all, you are a moderator on this board!

Daniel,

I spent 1K this year in local paper advertising for the season, that of date has translated in 5K of signed contracts. And this is the middle of May. Advertisements go through October.

I do not know what to say. I do not live in the best demographics of the Northeast but the area is good. We only do a few jobs for Rockefeller class customers.

[plainpainter 217]

Maybe it's the weather - has still been kind of funky - but 2 out of 3 estimate calls for deck jobs have been folks with a for sale sign in the front yard. I just called a former customer of mine for a deck maintenance from a job I did 2 years ago this coming september - and she literally thought I was there just last year! We'll see how that goes. Most painting contractors I know have closed up shop - I know a high end landscaper that wants to refer me for a mahogany deck - I can't believe it if that happens.

[RPetry 564]

... - but 2 out of 3 estimate calls for deck jobs have been folks with a for sale sign in the front yard. ...

Daniel,

There you go! Last season we did more work for homeowners fixing up their properties for sale than in the previous 7 yrs. in business. We did not target this market, but kind of fell in our net.

Stop by a few active realtors in your area with a 6 pack of good coffee. Make friends, kiss their babies, smile and tell the 40 something's how great they look. Personal contact pays dividends.

But only if you are a geriatric stud like Diamond Jim and I!

[plainpainter 217]

Rick - these are precisely not the folks interested in spending any money. I have to come up with a 'splash 'n dash' deck staining for a cheapo price to get these folks to bite. They want to sell their home - and the fact that their home value has fallen a 100k does not have them enthused to spend money on a luxury deck resto.