If you’re in the housing industry, then no doubt referrals are a key part of your marketing strategy. That’s because word-of-mouth referral leads are THE BEST converting lead source and the key to any successful builder. But what are the reasons your customers refer you to friends, family, and co-workers AND retain you for additional projects?
And how do you take that one step further- get more of your happy customers to send you referral leads – without coming off as pushy or over-eager?
In this episode of Conversations that Convert we show you the 3 keys to making your referral program actually deliver:
- Common referral mistakes. Are you making them?
- Direct vs. Indirect Referrals. What are they and what’s the difference?
- 3 Steps to making referrals work. It’s as easy as 1-2-3!
Watch the video below to find out how to get more referral leads and repeat business from your happy clients.
Try Builder Lead Converter right now and see how we help builders & remodelers grow sales revenue & margins while navigating supply chain and labor market issues. Stop losing high-revenue, high-profit sales today.
Transcript:
Rick: Welcome to Conversations that Convert. Today, we’re gonna talk and continue in our are you missing sales series? And the top of our program is called the ultimate guide to making referrals really work for your business. Let’s get started.
Welcome to Conversations that Convert. Every week we’ll spend about 10 to 15 minutes tackling relevant lead generation marketing and sales topics for remodelers, home improvement companies, and home builders. Conversations that Convert is brought to you by builder lead converter, your perfect sales assistant. And now here’s Rick and Daiana.
Rick: Diana.
Diana: Hi. Hello.
Rick: You’re alive.
Diana: Yes.
Rick: You wanna, you wanna share your news?
Diana: Well, I, I’ve got COVID so now I’m, I’m in the recovering mood. So you can see in my voice that I’m here and happy to be here with you.
Rick: We are happy to have you here too, and you’re a trooper for coming out even when you were recovering from COVID. So the good news is, is that you’re on the rotary recovery and the even better news is, is anybody watching this video or the recording? You can’t get it. So that’s great news. So, if you are watching the recording or joining this live, please type hi in the comment box here. Thank you for joining us. And if you have a question, you have a comment, put it in there and if we use it in a future episode, we’ll make sure that you get credit for it. So what are we talking about today, Daiana?
Diana: So we have episode 18 and we’ll talk about the ultimate guide to making referrers really work for your business.
Rick: Absolutely. This is part of our, are you missing sales series? Say that three times fast but are you missing sales series? And we’re looking at some of the things that we deal with typically where we look at, we look at opportunity leaks. And referrals are definitely a big one. So let’s just jump in and let’s talk about what are the mistakes, and the common mistakes that builders make with referrals. Well, there are really three big ones and that, the first one is clients are a lead source. So all the people that you have done work with, all of the people that you are currently doing work for, are your best source of leads.
So you’ve gotta be thinking of your clients as a lead source. And the mistake I see people make is that they don’t keep accurate records and don’t properly utilize this really invaluable resource for future business. So, what usually happens is if I’m talking to a client and they say, well, geez, we wanna grow the business and we just, we need more leads. We need more opportunities. And so the first question I’ll ask them is like, okay well, What have you done with referrals? And usually, the answer is nothing but they’re ready and willing or maybe have already been spending dollars on ads. So what we have to first and foremost take into consideration is, is that we don’t wanna start spending money on ads before we create a referral program.
That’s a big no-no. And, why is that? Well, your referral lead is your best type of lead. Not only from a conversion standpoint but from a profit profitability standpoint, referral leads come to you with this inherent trust that they have from one of your clients who’s already done business with you. So trust gets transferred. So they’re really gonna, not only convert into a sale for you but more often than not. It’s a very high margin sale because they not trying to, you know, put you up against a competitor and trying to work against one another, you know, and it’s, it’s typically just an easier, and easier sale now with, with that being said there.
Let’s talk about direct versus indirect referrals. So, a direct referral is somebody that comes to you organically. So you performed a service, built a home, did a remodeling project, or some sort of specialty remodeling project for a client. They tell their friends, family, neighbors, and coworker, and they say, wow, ABC builders was the best. You should really use them if you want to get this sort of project done. And so that friends, family, or coworker says, yeah, Hey, you did a job for so and so, and they said you were great. Can you help me out? Okay. It’s an, it’s a direct referral. It’s organic. And for most of you that are watching this, this happens to you all the time.
And some of you maybe have business models where 30, 40, or 50% of your work is referral related. Now. Let’s shift gears a little bit and let’s talk about indirect referrals. So an indirect referral is making sure that all your clients are happy and then we give them a reason to refer you. Okay. So important definition of indirect referrals is indirect referrals including reviews and testimonials. And this was what was really important. It is rare. And it’s it. It’s asking someone a lot to say, Hey, Daiana, we did a great job for you. Will you go out and tell three of your friends, family, and you know, coworkers, you know about us and see if they are in considering a project?
That’s a very low conversion type of offer. But if I were to say, Daiana, are you happy? You know, with the project you did for you and Diane says, Hey. Yeah, you’re the best. That’s great. Say, Hey, would you share your experience, you know, with others here’s a way to do it. So we give them an outlet to share that so that outlet then can turn into an online review and or testimonial. So then any other new leads that I have coming into my funnel sees that review and testimonial and says, wow if they did that great of a job for Daiana, they should be able to do a great job for me. And Daiana, I know with your project. This kind of happened, to you, right?
Diana: Yes. That’s, that’s correct. I actually used a, a direct and also an indirect referral and it, it, it worked very well, so yeah, And,
Rick: Establishes that trust, right? That, I think was your neighbor. You said across the street that had some work done by your builder.
Diana: Yeah. Had some work done? And, I, I went and I saw the work and I said, okay, I want that too. So that’s, that’s, that’s how it worked. And, and then, and then he came and he introduced me to some other, some other work and he invited me to the showroom and he explains some, some technicalities and yeah. Close deal.
Rick: Close the deal. We love it. So the third thing we gotta remember with direct versus indirect referrals is repeat business. So I mentioned that your database, your list of people that you are doing business for right now, you’re completing a project or you have done a project for when they become a second or third or fourth time. In other words, you resell them to fourth-time buyers which is repeat business. That is another form of referral. They refer to themselves, essentially. They were so happy with the work you did on the first project. Now they have another project and they go back to you first. It’s the difference between them looking at you as a builder or a remodeler versus their advisor.
So you, you see some of these people out there they say, well, my attorney, my accountant, my financial planner, my doctor, those are trusted advisors. When somebody calls you their builder, their remodeler, you know, you become a trusted advisor and when they have a need, they’re gonna go to you first. So that’s another form of an indirect referral is getting that repeat business. So that’s why this is just a gold mine. Is to take advantage of these opportunities that you already have in your database. So the most important thing you can do, if you’re, if you’re looking at for an action item here to take away from this call, is to make sure you’ve got a good set of contact information, meaning you’ve got a cell phone, an email address, first name, last name, all that good stuff. And you keep a good database of the people you’ve done business with because this is how you’re going to leverage your business in the future and be able to resell them and get indirect and direct referrals.
Diana: All right, what’s next?
Rick: Well, let’s talk about how we make it all work. And, you know, there are really three steps that we, we, we outlined here. So the first step in getting really a referral program set up is number one you have to create an outlet. This sounds kind of weird, but when you sell maybe you design, and then you actually build or fulfill and then warranty a project for one of your clients. There are opportunities for you to create outlets throughout that process. And an outlet is simply a way to ask your client, how did we do? Or how are we doing? And you can break it down to the sales process. You can break it down to say the design and selection process, the fulfillment, or the construction process, and then the warranty process if you offer warranties.
How are we doing with that? So we give them an outlet. And when somebody is happy with how you’re doing this next thing we look at is we give them an incentive to tell us how they’re, how they’re doing. So that incentive is usually in the form of a rewards program. So we can reward people for not only sending someone your way but also reward them for leaving a review for providing a testimonial. And it doesn’t have to be a huge reward. In fact, usually, the thing that works best for us is that we do contests. So each quarter, if somebody leaves a review, we simply do a contest and that contest is for a drawing.
Let’s say it’s for a hundred dollars, $200, maybe a local restaurant and people have an opportunity to win. This leads us to step three is that your rewards program should include an incentive for both the referrer and the referee. So the referrer is your client who is telling their friend, coworker or neighbor to say, Hey, we used so and so builder, they were great. You should go talk to Joe or Beth or whoever it is here. And so they say wonderful. I’ll call ’em up. They call ’em up and say, Hey, you did work for so and so. They refer, they said he did a great job. Can you help me? So in other words, when that happens, we reward the person that gave them the referral. Maybe we give ’em another gift card.
We also reward the person that was referred and that’s usually gonna be in the form of a discounted optional service or additional service you provide. So most often than not, when you have an optional service that you provide, there’s a high margin there. And so you can offer a discount or free aspect of that service. You can build that cost into your pricing. And it’s a win-win they see a high perceived value for it. It’s a low-cost or no-cost item for you. And everybody’s happy cuz there was a referral. The thing you wanna avoid is for the referrer to feel guilty because a lot of referral programs say, Hey if you refer your friend to us, we will give you this.
And if they, they’ve been thinking like, oh, well I get this. Well, then the person that’s being referred doesn’t get anything. So they feel kind of guilty. So you wanna be very clear in your reward program to say, not only will we give you this gift but your friend to who you’re referring will get this. So it’s a win-win for them. So then they’re more than happy to say, Hey, by the way. Yeah. And if you, if you get referred to them, make sure you tell them I referred you because then you’ll get this incentive. And so it’s a, we create a win-win, not animosity or a sort of a competing situation but it’s a win-win situation.
Diana: Very.
Rick: So there are three steps to making referrals work.
Diana: Right. Smart, smart steps. All right.
Rick: Smart steps. Yeah. Ab-absolutely. And so, but the takeaway here today, guys are simple to make sure you got a referral program. Make sure you, it, it, it needs to be automated because if you get busy, you’re doing jobs. So you’ve gotta automate these surveys, automate getting them onto your social media platforms, getting your testimonials done, giving people the opportunity to send you, refer ease. And then making sure you have a rewards program that is a compelling reason for them to, to wanna refer you.
So, you can jump in and try this today, you know, and check out builder lead converter, you know, take our 30-day lead booking challenge, and start selling an extra one to three jobs every month. You don’t have to lift a finger for that. So please take, take advantage of that. We would love to disprove to you what we can do at absolutely no charge to you. The guarantee is on us. So what’s next week, Daiana?
Diana: Next week is episode 19 and the free step formula for getting prospects to commit to you in 30 minutes or less. That’s it.
Rick: Yeah, we’re gonna continue in our-
Diana: Exciting.
Rick: Are you missing the sales process talk a little bit about sales, sales, your sales role, and how you can get that commitment right away from one a year lead. So until then, thank you very much for joining us and for my brothers and sisters in Christ. May the Grace of Jesus, the love of God, and the fellowship of the holy spirit be with you all. See you next time. Bye-bye.
Diana: Bye-bye.
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