Referral Topic

Remodel Bud

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Publisher1

In a poll of 165 readers (so far), 35 per cent say they find most of their business from repeat clients, and 40 per cent say they rely on word of mouth and recommendations. That's 75 per cent.
Only eight per cent obtain most new business through advertising.
(Six per cent rely on telemarketing/canvassing, and 11 per cent find business through leads services and RFPs).
In other words, most businesses get most of their business through word of mouth and repeat clients, and advertising is a distant fourth!
Here, I'll agree with Remodel Bud that your marketing efforts will achieve greatest results if (a) you do your work so well that you earn repeat and referral business and (b) you focus your marketing to encourage and expand these areas. Remember, just a 10 per cent increase in your referral volume will have a much higher impact than a 10 per cent increase in useful advertising response, if your business is like the ones in the poll.
Advertising, of course, still has its place in the picture. My business earns 99 per cent of its revenue from selling advertising, after all! But we put it in context of the referral/relationship business priorities, and so should you.

Remodel Bud

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Carport King

Man you need to be kidding me? Who in there right mind in the construction business would not build a referral based company.

Marketing 101 teaches the cost of getting new customers vs working your existing client base.

I have friends in the business that do nothing but work there existing client base. They spend no money looking for new clients! Even our company sells to 46% to existing clients.

I believe within the next 3-5 years we will be 100% existing client based. We have a 100% client satisfaction report. Yes this is hard to do. But as you can see it will pay off very soon.

If contractors are not working to get referrals this should be there number one goal. Good Luck

Willybeen

+1 agree 100%

Carport King

Remodel Buddy I respect all your post here but I think you have left one thing out for all our readers here. Please explain in your words...

What the difference between a customer vs a client?

I know Jay Abraham said it best to me years ago and I took it to heart and have spread the word but with you being the selling guru you are it might come best from you.

Thanks

Willybeen

A customer shops around for the cheapest price. Customers are very transactional based. I dislike customers.
A client shops around for the best service. I prefer clients over customers everyday of the week.

Remodel Bud

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WarnerConstInc.

ohhhhhhhhh I cant take it anymore

Remodel Bud

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CornerstoneGC

Until making my recent move to a new area, referrals were the one and only method of income for the past 11 years. I know it seems foolish now, never to have advertised to increase business, but for many years I was very happy doing what I was doing without the worry of huge overhead expenses and monitoring several crews. It was always me and a few guys and at times (twice), a dreadful attempt at partnership. Although I was running a very small company, I managed to stay busy and yield healthy profits and I think it was for just one reason: Quality. I can't tell you how many times I have lost clients because of competitor's prices, only to have to clients call me in a couple of months to re-do the job that was either botched or left unfinished once the previous contractor bit more than he could chew. But anyways......back to the topic....

I can't imagine someone believing that referrals would stall company's progress. Who better to vouch for your service than that happy customer?

After reading tons of posts here and even being a "pet project" , I have understood the nature of my (our) business in a new way. I have chewed on some marketing strategies I've learned, and even the heated debate on "negotiating", and realized that not only was I lucky to just get by on those referrals, but I did not treat those clients in a most appropriate way. I never sent out thank you letters or cards, never had a referral gift or anything like that. Sooo....that will change now...now that I have been "guided" by you guys...

Grumpyplumber

You reap what you sow.

Spend a year building business by offering discounts, they refer you to more of the same.

Spend a year losing more jobs over price but being patient and getting the better jobs, they refer you the same.

Over time you built a reputation as one or the other, eventually you're booked full time with one, or the other.

Just my .02

Publisher1

Grumpyplumber raises an important issue in his last posting. He is talking, in effect, about brand development. Big marketing words, eh, but important. Your business culture and practices permeate the way your current/potential clients perceive you -- how you behave consistently (or if you are sloppy, inconsistently) will almost mould their behaviour and you'll end up over time with exactly the business you want, or don't.

This is why brand changing is so difficult -- when everyone perceives you one way suddenly shifting tactics can seem jarring, inconsistent, and risky -- and your current and potential clients (and employees) won't often get it. So you either draw back to your original ways, or fail, or push through the changes. More gradual and subtle changes are less stressful, but of course these often again seem to falter as they are lost in the midst of your regular operations.

A good scare or crisis, like near business collapse, can do the trick. So if things are really going wrong, you may actually have an opportunity to fix your underlying circumstances. This is where hard times separate the survivors from the failures.

Sheesh...I think I'll lift this stuff for a blog posting.

Remodel Bud

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Remodel Bud

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SethHoldren

Obviously referrals are "100% USDA Prime" when it comes to getting new business.

If you are getting a high level of referrals, right now, while the market is stagnant...awesome! That is what we love to see.

When you ask the question, "Will high referrals hurt your business in a "flat" economy?" I think the wording is misleading.

Nobody in their right mind would ever say "referrals" would "hurt" a business. Referrals have the highest closing percentage of all leads!

To ask, "Referrals: Yes or No" misses the point. The real question to ask yourself is:

Are you getting enough referrals to fill your pipeline with as much work as you want?

If the answer is yes, then you are doing very well. Good job. Will you share your tips on how you get referrals with the group?

If your answer is no, then we look at what you can work on next. Here is my opinion on what you should do:

1. Develop a referral plan. If you don't already have one in place, then you should be able to maximize the amount of referrals you get from your clients and associates.

Note: Jay Abraham's book "Getting Everything You Can Out of All You've Got" will give you great advice on starting a formal referral system.

So, I like to think like this: OK, we are maximizing our referrals. What else can we do to market our business?

And THAT is when you...

2. Focus on the other effective marketing strategies. In addition to your referral system.

Michael Stone's perspective of achieving balance in construction marketing is right on the money in my opinion. (I think that's where the 25% number quoted in this thread came from.)

If you aren't looking for work because you're swamped with referrals, no one should ever tell you to cut back on going after them. It's about ADDING marketing tools to your marketing system, so you are diversified.

Does that make sense?

In other words...get all the referrals you can get! And systematize it! Then, to make sure a dry period with no referrals doesn't sink your ship...have some other marketing methods in place.

What we're really trying to avoid is the all-too-popular system of "lucking into" referrals when times are good, then seeing your only source of new clients dry up when times get tough.

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Remodel Bud

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Willybeen

Great Thread. Anybody who thinks referals are a bad thing, needs to introduce me to their marketing plan. Because without referals, I would have a lot less business.

Remodel Bud

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Willybeen

Although, I whole-heartedly agree with that, When you're just starting out, YOU NEED TO MARKET EFFECTIVELY! because if you don't, you wont have the income needed to fund your marketing plan and you won't have the business needed to grow your initial client referal base.

Me being the new guy on here, I imagine that nobody knows who I am, etc etc.... Given time, I'm certain more of you will.