References and Referrals: Professional Contractors Need Both

Five D's of Home Improvement ultra referral program: Define, decide, design, develop, and delegate

References and Referrals

Details make the difference, and there is a difference between referrals and references.  By definition, a reference is a person who will validate your claims as a past customer or trusted friend. Everyone you know knows someone you don’t!  A referral, however, is a person who recommends one to another.  The difference is one assists in producing new opportunities; the other assists in increasing the closing percentage…YOU NEED BOTH!

Let’s talk about Lead Cultivation first… when I work with contractors in my consulting role, one of the questions I ask is, what is your primary source of leads? Most contractors quickly answer well, that’s easy. I get tons of referrals because I have a great reputation (haven’t heard that before). Few have answers when further pressed on the number of leads, closing percentages, or a formalized process to obtain more referrals. But I knew that – that’s why we get subjective words like tons and great.

Everything about Sales is a process, so we use objective language to describe our process, not ify-wishy subjective words. Everyone in the room will agree that the most affordable, highest-quality opportunity we can receive in any organization, industry, or vertical comes from a satisfied customer (or someone who knows what we do). If we all know that to be true objectively, why are there so few of us contractors taking the time to formalize a referral program offering a reasonable incentive and then strategically create awareness among the satisfied clients and people you know to earn these coveted high-quality high-close probability opportunities?

If your answer is well, I don’t know how to do it. Stay tuned because you will in a few minutes. If it’s because you have predetermined there are other fires hotter in your business as it relates to lead cultivating, then you cannot complain anymore about the rising cost of leads and the diminishing quality because you’re not taking control of one of the things inside of your business that you can control.
Need to start your formalized REFERRAL Program?

Five D’s of a Home Improvement Ultra Referral Program

Define referral: (Pick one)
  • Anyone who agrees to allow you to perform an inspection and estimate.
  • Anyone who completes a project.
Decide your Incentive: (Pick one. Keep it simple and specific, i.e., $35.00 gift card per referral, max $500.00 per year)
  • Discounts or Rebates: Offer a discount or rebate on future services for homeowners who refer new clients. This could be a percentage off their next project or a cash rebate for successful referrals.
  • Gift Cards or Vouchers: Provide gift cards or vouchers to popular local businesses or home improvement stores as a thank-you for successful referrals. This adds value to the referral incentive and can be appealing to homeowners.
  • Free Upgrades or Add-Ons: Offer free upgrades or additional services for homeowners who refer new clients. This could include upgraded materials, other rooms, or special features added to their project at no extra cost.
  • Loyalty Programs: Implement a loyalty program where homeowners earn points or rewards for each successful referral. These points can be redeemed for discounts, free services, or exclusive perks.
Design a Promo Piece to highlight the referral Program.  RBS WILL HELP WITH THIS
  • Such as a Flyer that can be mailed, handed out, emailed, and posted on your website.
  • Create an online form for ease of use.
Develop your system: RBS WILL HELP WITH THIS.
Number and type of touches.
  • (6) Per year (example)
  • (1) On final walk-through in person
  • (2) Mailers (spring and fall) – Use Video to promote
  • (3) emails/texts – Use Video to promote
Delegate responsibilities:
  • Who is sending the information out and tracking the results?
  • Gather data for CPL and CPA (scalability)
  • Minimum expectations of “asking for referrals” by sales associates.

Now, let's talk closing percentages…

The average closing rate in our industry is between 25% and 30%. Those numbers can fluctuate by a few percentage points based on the quality of leads, the experience of the sales professional, and their ability to uncover latent needs in the sales process. 

The primary factor in substantially increasing the closing percentage outside of being an owner-salesperson is sitting in front of someone who has been referred to you.

The second lever to dramatically increase the probability of getting a yes is using references from previously satisfied clients for life who will recommend you to everyone, including their own mother. 

These references often close jobs for you before you even ask for the signature. This truth is also objective in our industry and many others, so again, I ask if we have a lever that, when pulled, substantially increases the probability of getting a yes inside of your in-home selling situation; why would you not use that lever every single time?

The answer might be, I’m not sure how to do that. We’ll stay tuned because I’m about to teach you.

The other answer to that question is maybe there are other fires hotter in my business than increasing my closing percentage, selling at a higher margin, and selling more jobs per year so that I can make more money, have less stress, and take a little extra time off – yes, I’m being obnoxious on purpose.  If you are not using references to help you close, you are not leveraging the most valuable piece of your business, which is those who will gladly vouch for your claims of being GREAT😊.

Need to start your formalized REFERENCE Program?

Four P's of a Home Improvement Ultra Reference Program

Presume your clients will help with this.
So, ask assumptively. Failure to ask questions is still an epidemic issue among professional sellers. A close second is – if you do ask, you ask sheepishly as if you’re imposing or being a nuisance. Stop that right now and ask your clients to be a reference for you all the time, every time, without fail. Their experience will motivate others to take action, and the more authentic, the better.

Provide the framework.
Make this simple and guide your clients through a specific process of information you will gather; type it for them if need be. Include three items: (1) a Photo of you both, (2) a typed statement, and (3) a video testimonial. I recently met an incredibly successful in-home seller who built in getting references on his final checklist: Final walkthrough, final payment, lien waivers, warranty paperwork, reference statements, and referrals. Brilliant!

Post these testimonials (with permission)
Get the text, photo, and video posted on all social media platforms you currently use to build your business. Create a page on your website that says references and organize the information on that page. You may even consider organizing them by categories or by target audience.

Present references at closing (during inspection)
Present key references to every prospect before inspecting and presenting your results through a printed handout or the landing page described in the previous point. Include the photo, the contact information, and a QR code to take them to the video testimonial. Encourage the prospect to call each of the references and ask them three to four questions (give them the questions). Consider offering an incentive to do this, but at minimum, present the handout and encourage your prospect to call any or all other references.

Will this step ensure that you get every single deal? No, nothing will, and that’s not the claim. However, we know that statistically, when someone speaks to a satisfied customer and hears authentic and transparent experiences using emotive words the hearer is compelled to think differently about you and the situation, thus increasing the probability of getting a yes (providing you solve their problem).

There’s only one downside to this: developing this process will require a little more work on your part. You have to stop and think through how this will work, do the work in advance so that it is seamless, and then insist that every sales professional gets references (and referrals) after every sale, no matter what.

You’ve already made a substantial investment to earn a new client, so why would you not ask them to help you earn more clients? Believe me, they will be delighted to help you if you’ve delighted them!

It’s not hard to be successful as a professional contractor. You must do the simple, seemingly boring things that others are unwilling to do. Develop a process, insist that they’re applied unwaveringly, and you will see your business soar.

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Richards Building Supply

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