Michael Klein

  Carpet cleaning companies, gyms, and cable companies do it. Even your dentist does it: $25 off the price of your next teeth cleaning for each new patient you refer.

Five years ago, it might not have mattered if you rewarded those who refer you, says Beverly Koehn, author of Loyalty is Love, a book on customer satisfaction in residential construction. Today, she says, you need to give them a reason to want to. “It’s not their job to build your business,” Koehn says. “If you do an exceptional job and ask, you’ll get referrals. But if you just do an exceptional job and never make the effort [to ask for referrals], you may get some but not many.”

What you’re asking for is a favor, and a reward acknowledges the favor. What the reward consists of depends on you, your company, its resources, your clients, and what you’re comfortable with. Whatever the incentive, it should be consistent.

It takes work to create a system and work to sustain it. But the experience of many contractors shows that a well-designed and consistently managed system regularly yields leads. And the more referral business you get, the less you’ll need to spend on your overall marketing.


[Step 1]

Gatekeeper

Michael Klein

Before you put your program together, a few essentials must be in place: a database of past customers with contact information and some assurance that the work your company does is so consistently good that just about every client would want to recommend you. Close out every job with a customer satisfaction survey that ends with a question about whether or not the client would use your company again or would recommend you to others. Make someone — a marketing manager, office manager, or you the owner — accountable for managing your referral system.

Key to success: Track clients who refer and the outcome of those referrals (Lead? Appointment? Sale?) as well as rewards issued.


[Step 2] 

Size matters

Michael Klein

Are you rewarding clients who provide you with a customer contact (lead), an appointment, a sale, or a job that’s officially closed out? Size matters. If your business model calls for lots of small jobs — say window or roof replacement or handyman work — and you have others selling for you, you may want to reward just for leads. Mark Kaufman, of Mark Kaufman Roofing, in Englewood, Fla., issues $50 gift certificates to clients who refer new business, regardless of whether or not those prospects buy. “It’s up to me whether or not I sell it,” Kaufman says. “And I want them to keep referring me.”

“You can have customers, you can have clients, or you can have advocates. In today’s economy, you need advocates.” —Steve Rennekamp, owner, EnergySwing Windows

On the other hand, if you’re a full-service remodeler or design/build company set up for big multi-trade projects, you’re not looking for hundreds of leads but for a handful of high-quality prospects. Rewarding for jobs that are actually sold will help ensure that clients steer that kind of lead your way.

Key to success: Set a target in leads or in percentage of revenue, and a time for achieving that goal.


[Step 3]

Something suitable

Michael Klein

Cash, check, gift cards, gift baskets, baseball tickets, restaurant vouchers — remodeling companies reward in many ways. Remember that beyond saying thanks, the goal is to motivate clients to refer again. The point is not to just give something away but to create a feeling. You can increase the likelihood that people will talk you up by making the reward something memorable that clients wouldn’t ordinarily buy or do on their own. Jackson Design & Remodeling, in San Diego, rewards not leads but appointments, and offers clients who refer the company a multi-tiered “Client Adventures Program.” Accessible by password through the company website, program rewards include balloon rides or a limousine tour of the California wine country. The program “solidifies the relationship,” JDR marketing director Coco Harper says.

Ed Cholfin, of House Doctor, in Atlanta, advises a gift that “shows you’re thinking of the client on an individual basis.” As a thank you for the large job they referred, he sent a couple fond of golfing to the well-known golf resort Reynolds Plantation, in Greensboro, Ga.

Key to success: Personalize the reward with a note or a follow-up phone call.


[Step 4]

Broadcast it

Michael Klein

Standard industry practice is to discuss referral rewards when the job is closed out. That’s the optimum time — when excitement and enthusiasm are at a pitch — but not the only one. Bob Sturgeon, at Westside Remodeling, in Thousand Oaks, Calif., talks referral before, during, and acknowledges referrals with movie tickets or a Starbucks card, more if a job results. A good reward system should make you and your company top-of-mind to any client who knows anyone interested in remodeling. The more you publicize it, the more likely clients are to refer. All Pro Builders, of Fullerton, Calif., discusses its referral reward program in a thank-you letter to clients when the job is closed out, regularly mentions it in an e-newsletter and on its website, reminds yet again in a leave-behind packet, and spells it all out on a special business-card–size card distributed at networking functions, according to vice president Lisa Paniagua.

George Cleary, owner of The Cleary Co., in Columbus, Ohio, announces it from the get-go: “I tell people in my sales presentation: ‘I guarantee you somebody you know is going to become a client of ours,’” and 88% of the time, they do.

Key to success: Make your reward program part of the ongoing customer conversation.

"A Clarification on Referrals".