One of the cheapest forms of advertising is a referral program, but it is one of the most difficult programs to carry out. Why? Because it takes time to create it, implement it, and ensure that it continues. It is much easier to place an ad in the newspaper, on the radio, or television. However, the results of that newspaper ad, television commercial or radio spot are significantly worse than those results you gain from referral programs. One contractor cut his media budget by over $80,000 when he implemented his program. It took a little more management time, but the increase in results and decrease in media costs more than made up for it. Below are some easy-to-implement referral programs:

    1. Get the word out. Put a referral statement on your Web site, service tickets, proposals, and business cards. I’ve seen many statements that say something like, “If we provided good service tell your friends. Occasionally we make a mistake. In the rare case that you are dissatisfied, tell us and we’ll make it right.”

    2. Offer a cash incentive. There are two ways to do this. First, your sales person should mention that the company gives each person a $50 thank you for referring their friends and colleagues to the company. Second, thank you notes should be sent to all clients when jobs are completed. Include two business cards in the thank you note and let the client know that they will receive a $50 thank you for each referral. Some contractors think that it is impolite to solicit referrals. Some clients would give them to you without being paid. They like spreading the good word when they receive good work. (Keep in mind, they spread the word when they receive rotten work too.)     
    Does this produce results? Yes. Several years ago I taught a four-part class. At the end of the first class I challenged each participant just to mention his referral program to clients at the end of jobs. A month later, one contractor was beaming when he came to class. One customer had given him eight referrals in a month. He closed six of the eight proposals. That $400 was a pittance compared to the work that it generated. He admits that the work was at higher margins, which were easier to sell because of the trust that had already been established through the referral. All of the class participants who mentioned the referrals got additional work that they might not have gotten.

    3. Give the same $50 to your employees who refer work to your company. Your employees should be your ambassadors. If their friends and colleagues need your company’s services, they should receive the same compensation as a client who refers a friend or colleague to your company. They appreciate the $50 too. 

    4. If the woman works outside the home, send flowers to her office. There is nothing like receiving a nice bouquet of flowers to stir up a conversation. If you’ve already told the homeowners about your referral program, this conversation will likely produce several referrals for your company.

    5. Call 30 days after the job is complete. Human nature says that we communicate about what is going on in our lives. No one spends thousands of dollars without telling someone. During that telephone call, first make sure that the client is satisfied with the job and that everything is working right. Then ask, “Who have you talked to about your new ________?”  Your client will have told someone. Then ask whether that person might be interested in receiving __________  (mention the benefits, not the features of the new parts and equipment). You won’t get a referral from every telephone call, but you will get many.

    6. Be sure to leave contact information for appropriate areas of the home. You have to make it easy for your client to find your telephone number. Refrigerator magnets, calendars, stickers, and business cards can serve as periodic reminders. Your clients will soon forget about your company and their job. However, if you have let them know about your referral program, a conversation several months later might produce a referral.

    7. “I saw your truck.”  This is the most common response to “How did you hear about us?” after the Yellow Pages. It is imperative that your field labor drive clean trucks with your Web site and your telephone number on it. Your trucks are a continuous, 24/7 referral possibility. Many potential clients will see your truck in a neighbor’s driveway.  They’ll ask about your company. Make sure your field labor leave a good impression.

    Referral programs are easy to create. Implement one for 90 days. Make sure everyone follows through. I think you’ll find that you’ll sell more work with lower advertising costs and at higher margins to more satisfied clients…and continue the program indefinitely.