Instead, show salespeople that they can make more money selling five or six jobs in 10 homes than they can make selling two or three. If they master the art of getting referrals, they’ll work less and make more money. You’ll see that once they buy in, they’ll tend to be more involved in the job because they want to be sure that installers are delivering on the company’s promises.
Installers are key. Again, money is the manager. You can take money away if they don’t do what they’re supposed to. That’s a negative. Or, you can offer them, say, $75 per crew per referral, which will come right out of your budgeted cost. Let them know that if they do a great job the neighborhood will come over and talk, and that if they get three or four referrals off the job, they’re going to make $300. Then give them tools, such as door hangers, with a blank space where the crew leader’s name can be penciled in and copy that reads: Please mention my name when you call for the appointment.
A REAL REFERRAL People define referrals in different ways. Some consider a name and contact information a referral. To me a referral is when the prospect contacts you. A real referral calls because his or her neighbor just got through telling them about you, or because they saw a great comment about you and your work on Facebook, posted to 200 friends. Start setting monthly and annual goals and track them to grade your effectiveness. Challenge yourself and your co-workers to make it part of your company’s culture. People need to know you, know who you are, and know what you do. Get involved in community events such as those organized by Habitat for Humanity. There you’ll find yourself working side by side with your future customers. Not only will it be great for business, it also creates a far better work environment in the office and in the home.
—Dennis Schaefer is a business consultant and former home improvement company owner who sold his $3.5 million Michigan deck company to his employees. He is currently regional business development director for Archadeck.
EASY DOES IT Some argue that contractors shouldn’t need to reward the customers who recommend them to others. Your company did a great job, why shouldn’t they want to tell people?
The other side of that argument says that an excellent customer experience is a given. The glow only lasts so long. To turn it into new work you must take it a step further by offering some kind of incentive that rewards people for suggesting your company. Generally, the easier the rewards are to use, the more effective in generating new business they are. Here are some examples.
- Leave the selling to us. Last year Mark Kaufman Roofing, in north Central Florida, installed 417 roofing jobs. The majority came by referral. Company owner Mark Kaufman says he sends a $50 gift card to customers for any referral, regardless of whether it becomes an appointment or a sale, for two reasons: it’s not up to the customer to convert the referral into an appointment or the appointment into a lead; and because, he says, “I want them to continue to refer me.”
Referrals have become the biggest source of leads at the company, and the number of referrals has grown every year for the last five years because, Kaufman says, he does all he can to encourage them — including personally inspecting all jobs.
- Non-stop reminders. Energy Swing Windows, a Pittsburgh-area window, siding, and roofing company, pays $150 for any referral that becomes a sold job of more than $4,000.
Referral rewards generate 76% of the company’s nearly $2 million in revenue, so the company’s marketing department misses no opportunity to remind customers that Energy Swing rewards referrals. Every mailing is “all about referrals,” owner Steve Rennekamp says.
The company measures customer satisfaction on every job, and if customers are willing, a letter goes out to everyone else in the neighborhood recommending Energy Swing for exterior jobs. The Energy Swing warranty package contains a postage-paid card with the customer’s name on it, so that incoming cards are easily tracked (in MarketSharp) and paid. Energy Swing will also sometimes increase the referral amount (to as much as $275) or, in the fall for instance, make customers referring new business eligible for prizes such as a flat-screen TV. “The other thing we do is tell people that they can refer themselves,” Rennekamp says. A third to a half of the referral business consists of previous customers. “It’s all about keeping after and reminding them. It’s not like a restaurant that they go to every day.”
- Lead magnet. Atlanta home improvement company Exovations pays 2% for referrals that become jobs, and its 2% referral reward program has its own logo, reproduced as a refrigerator magnet that salespeople and project managers leave behind to remind customers that they can go online and fill out a referral form. Year-to-date, says owner Roone Unger, the company has generated 24 leads that way, its sixth most productive lead source, and at a lead cost way below others. Exovations set up the program two years ago. “Maybe I’m capturing some people there who otherwise might not have referred us,” Unger says.
- Going batty. Walter “Reds” Ferris and his wife are softball fans. His company, Ferris Home Improvements, a roofing, siding, and window operation in New Castle, Del., sponsors a team, and both Ferrises play on it. Ferris Home Improvement offers a three-tier referral reward program based on job size. If you refer and the company lands that roof-repair job, for instance, you get a gift card for $25. Refer a job of more than $3,500, and you get $150. (See www.ferrishomeimprovements.com for more about the rewards program.)
But softball league members and players who refer Ferris Home Improvement get something else for their trouble too: a bat. “They’re good bats,” Ferris says, “worth about $200 each.” He has given away nine in the last year. The referral reward program, bats included, which Ferris put in place three or four years ago, has increased referral business by 10% to 15%.
Be aware that if you’re considering offering a referral reward program, the first thing to think about is whether or not the state you do business in allows it. Several states — Washington and California, for instance — have passed rules or legislation restricting or making referral rewards illegal. If you’re considering creating a program, the first thing to do is check with an attorney in your state to determine what sort of restrictions, if any, there may be.
—Jim Cory, editor, REPLACEMENT CONTRACTOR.