With referrals being the No. 1 source of new business, it is crucial that restoration firms have a solid referral strategy in place to survive the slower months. This involves first having a business that is referable, which means having a commitment to outstanding customer service. Repeat and referral business also should be a goal and a company priority, and results should be tracked on a weekly and monthly basis.
Firms should consider setting quotas and creating rewards for those who provide new customer contacts, and in developing a referral rewards program, they would be wise to check the laws in their state(s). It is important to note that referrals are not free, as firms must spend money to ensure that every customer is satisfied, and on follow-up marketing to keep their business in front of customers on a regular basis.
Ask for Referrals
Experts say the main reason firms don’t get referrals is that they don’t ask for them. While it is crucial, it is not enough for firms to ensure customers are satisfied. In addition to performing a quality audit or conducting satisfaction surveys, they must ask customers for referrals, even making it part of the sales script.
Putting someone in charge of getting referrals could prove fruitful. Creating a full-time position for an on-staff customer satisfaction specialist likely will generate enough referrals to justify the cost, according to experts. This staff member should serve as a point person between the company and its customers, and follow up to seek recommendations and referrals.
Even if firms offer referral rewards programs, experts stress that customers make referrals because they are asked — not because of the reward. By staying in front of the customer long after the job is done and keeping in constant communication via mailed or electronic newsletters or social media, for instance, the customer will remember them and refer them when someone in their circle is in need of their services.
Tips to Increase Repeat and Referral Business
- Communicate clearly and set expectations about the project or service.
- Use third-party survey and feedback services to monitor existing client relationships.
- Establish clear processes for handling referrals.
- Commit to surpassing client expectations for service.
- Consider referral rewards programs.
- Ask for feedback from clients.
- Use this feedback to improve the business.
- Make service providers the face of the company to make the customer relationship more personal.
- Stay in front of customers via social media.
- Respond to questions and/or requests from non-customers.
- Establish and maintain good client relationships.
Should You Offer Referral Rewards?
Induce-to-buy referral sales, or offers to buyers in exchange for referrals, are prohibited in most states under home improvement, door-to-door statutes, or consumer protection or unfair and deceptive practices statutes. Generally, referral fees are prohibited when the sale itself is contingent on the referral aspect.
However, after a deal has closed, offering the customer some type of compensation for referring new customers to the business generally is acceptable under most state laws. It is important to note that most states place dollar limits on the value of these inducements. Firms should consider having customers sign something to prove that the referral fee is being given after the sale has been made, and it is important that they understand the rules (including required disclosures) of the specific states in which they operate.
Some experts suggest setting a baseline for the amount to offer a referral source, such as 4 percent to 5 percent of sales, and advertising that you pay referral fees to ease customers’ concerns that such fees increase the costs of their projects. Experts stress that referrals don’t have to be money and could be a discount on the service, for instance. During the slow season, firms could consider increasing referral rewards to drive new business.
This article was shared in C&R with the permission of the Restoration Industry Association.