Referral management is not just about data management,” says Terry Parker, marketing and event coordinator for HomeCraft, a Lenexa, Kan., design/build company that derives 90% of its business from referrals. “If we're not managing referrals properly, we're not managing our company properly.” Strong words, maybe, but referrals are your strongest leads.

Common Courtesy Successful marketing often is built on satisfying emotional needs. “Within 48 to 72 hours of getting a referral,” says Adrienne Zoble, a Fort Collins, Colo.-based marketing consultant and speaker, “send an e-mail to the person who referred you. Let the referrer know you've taken action; it's common courtesy.” Later, let them know how the project is coming along.

Zoble, who conducts monthly marketing teleseminars for the National Association of the Remodeling Industry, suggests a graduated thank-you system: first referral, send a thank-you note; second referral, offer a dining invitation; third referral, present a gift certificate. “Schmooze constantly with your key referrers; they are your advocates,” she says.

Also, remember that your referrer's credibility is on the line, so promptly contact the referral. “You'll come across as someone who pays attention to detail and who does what he says he's going to do,” Zoble says.

Forever Relationships “Our main goal is to cultivate relationships,” says Helen Canfield, co-owner with her husband of Home Tailors, St. Paul, Minn. Canfield pursues relationships with architects, vendors, realtors, bankers, subs, and employees, as well as with past clients as possible referral sources.

She sees architects as a particularly good source. She attends events at the Minnesota Society of Architects, and sends congratulatory notes to members who win awards or who have a baby. She also takes members to lunch about once a quarter. Several months ago, Canfield and her husband, both gourmet cooks, invited the clients, their project architect and his wife, and the project's lead carpenter and his wife to their home for dinner. The architect has been throwing leads their way ever since.

Canfield also spurs referrals from employees and past clients. If an employee referral turns into a contract, the employee gets a bonus. Clients who are multiple referrers receive small gifts.

More Than Marketing Get everyone onboard about the importance of referrals. “We want to set the tone that the bulk of our work is referral,” says Dave Bryan of Blackdog Builders, Salem, N.H. When his director of first impressions, as the company's receptionist and office administrator is called, answers the phone, she used to say, “How did you hear of us?” Now she says, “Who referred you to Blackdog?” She then tracks referrals and lead sources in a simple database used for sales and marketing planning. “The real goal,” Bryan says, “is to take ‘colder' leads and make them warm-hot. As with all growth-oriented companies, it is impossible to survive only on referrals. But referrals have a much higher closing ratio. The change in language, however subtle, is designed to plant the seed that ‘these guys must get most their work from referral.' This is nothing that we can really quantify, but we feel it's another small piece of the puzzle that sets up our sales staff to succeed.”

Stacey Freed is a senior editor for REMODELING.