Want to extract more value from your customer base by getting more referrals?

A referred lead is a warm lead because the lead knows and trusts the person who is referring your company. Nielsen Research has found that consumers are four times more likely to buy when referred by a friend to a particular business.

Zappos CEO Rony Hsieh said, “We take most of the money that we could have spent on paid advertising and instead put it back into the customer experience. Then we let our customers be our marketing. Historically, our one number-one growth driver has been from repeat customers and word of mouth.”

The best way to get referrals is to do a great job and provide excellent customer service. Said differently, a referral must be earned. Give the customer an amazing experience from the first phone call to the last touch. Do that enough and people will start recommending you to their friends and family who are looking for a contractor.

Here are some ways to drive referrals:

First off, get over the fear of asking for a referral

You’d be surprised how many contractors are sheepish about asking customers for referrals. It’s the fear of rejection we’ve had since junior high school! “I don’t want to seem pushy” or “I don’t want to hurt the relationship” or “I don’t want to look needy” or “I don’t want to put them on the spot” and, of course, “What if they say no?”

But if your business is going to thrive, you must overcome the fear of asking for referrals.

Research from Texas Tech shows that 83% of satisfied customers are willing to refer others, yet only 29% actually do, probably because they were never asked to.

The best way to make this happen is to ask twice, one when they sign the contract and the second time when you finish the job. When you’re signing the contract, tell them, “My goal is to do such an amazing job for you that you’ll be glad to refer me to your family and friends. I wanted to get that out on the table. I’ll ask you again for a referral when we’re done with your project.”

Then—keep asking. Create an item on your calendar to loop back with all your customers. This is an opportunity to create a “touch point” with them. Remind them what an amazing contractor you are.

Secondly, decide on your incentive

With your mindset established and everyone on your team pumped to ask customers for referrals, begin building a referral “system” by figuring out your incentive amount. Most people are “What’s in it for me?” focused, so you’ll increase the chances of them participating in your referral program if you offer something in return for the referral

Research shows that of every 10 satisfied customers, 8 want to tell a friend—but only three do. An attractive referral reward might just nudge them to make the effort to be a spokesperson for your brand.

And it doesn’t have to break the bank. If you’ve provided a great experience, $100 or $200 when the prospect signs a contract might be just the thing.

There are two types of incentives: one-sided and two-sided, depending on whether just one person—the referring customer or the prospect—receives a reward or if both do. The most popular type of incentive is two-sided.

Make your referral system simple for customers

Have you ever purchased something and the sales clerk hands you the receipt and describes the process by which you can enter a raffle for a prize. You go to a particular website and then you type in a code into a special page on the website. Like most of us, you probably just wadded up the receipt and ash-canned it.

Your referral program should be the exact opposite of this. Make sure your website is clear and concise, accessible on both computers and mobile devices, with a clear method of referral button on every page.

There are a number of referral program software packages. Referral Factory is an example.

So, create a landing page for your referral program on your website—a central location where customers can get all the facts on your program. Include the landing page in your main navigation. If possible, include a form on the landing page.

Then decide how you’re going to promote the program. Word of mouth is first, of course. Make sure every employee understands your referral system and its key messages. They need to be able to give their “elevator speech” for the referral program at the drop of a hat.

After that’s in place, consider if you’ll promote the program via your email list and/or social media such as Instagram.

If you’ve put your referral program prominently on your website, you can include a one-click referral link so customers can copy and paste the link to share it in whatever way works best for them.

Wrapping up

When you need a program or service, where do you turn? You probably reach out to friends and family for recommendations. Many contractors leave large sums of money on the table by not having a referral program in place that excites their clients enough to recommend their construction business to others.

Whether you’re a small contractor or a large contractor, starting a referral program is well worth the effort.


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