I consistently advocate contractors which “rely” on referrals and repeat business to become much more proactive in attracting this valuable business. You don’t need to wait for your phone to ring — you can use some simple and surprisingly inexpensive resources to attract this vital business. In fact, structured referral and repeat business programs should be your first marketing priority before you consider any conventional advertising.
How inexpensive and simple can the process be? Consider this posting in Michael Stone’s Markup and Profit Blog:
“Michael,
I have to tell you about an amazing marketing tool that we have started using and it works really well. We call it our ‘Referral Bonus Program’. We offer all our previous customers their choice of either a 1% cash bonus on any referral they give us that turns into a contract – or – 15 min of free remodeling on their home for every $1000 of contract sales they refer.
I realized 1) People want to work for someone referred to them because there is some accountability built into it. 2) Previous customers who think of us as a partner will tend to remember us when they need new things. 3) Our previous customers will put on a new positive mind set about us. While we have had virtually no disgruntled customers in the last 4 years (minus one woman who difficult to please), it is easy for people to think negatively about everything they deal with. If they are trying to sell our services to their friends that automatically puts them in a positive mood about us. 4) The cash back is insignificant to the total cost of a project for us but in a household economy even 1% is nice. (We just sold a $6500 job and the referrer was so excited to get a check for $65.) 5) If the customer opts for the free remodeling time (retail of twice the cash value), we get to come back into their house and cement the notion that we are ‘their’ remodeler.
I have sent out 12 letters and have already received 3 referrals from them. It is virtually free marketing.
What do you think?
Alan W. Gray
Principal Managing Member
Northwest Woodcrafters LLC“ (Northwestwoodcrafters.com)
Stone says in his posting: ” If you want a copy of his letter, send us a note and we’ll forward it to you.”
Note that the referral compensation is modest, indeed, and far less than you would normally pay for a lead (and the lead conversion is guaranteed!)