6 Ways to Grow Your Business Through Repeat Customers and Referrals
There’s nothing like a familiar face, especially when it comes to your business. Nothing against new customers, but there are a lot of reasons to appreciate your existing clients. For one thing, they’re a lot cheaper than new ones. In fact, increasing customer retention rates by just 5% can boost profits by anywhere between 25 and 95%. And according to at least one marketing expert, a customer who is satisfied with your work is 14 times more likely to buy from you than a brand-new lead.
However, existing customers are also a coveted source of unpaid advertising. Nielsen surveys show that friends, family members, and acquaintances are customers’ most credible source of brand recommendations. Eighty-three percent of survey respondents say they trust in-person reviews more than any other form of recommendation. Industry-specific surveys turn up similar results. When internet marketing agency Contractor Nation asked homeowners where they get recommendations for home contractors, the majority—42%—said they ask friends for a name, while another 28% said they query home contractors they know.
It’s easy to understand how pivotal the customer referral becomes when you view the issue through the context of the home remodeling industry’s reputation. Home contractors shared notoriously low trust among customers, a fact that has been documented both anecdotally and statistically throughout the years. That makes loyal customers all the more valuable—these clients have already established a trusting relationship with you, making them more willing to pull the trigger on various projects. However, bolstering repeat projects and referrals takes some work on your part. Here’s how you can leverage existing clients to boost profit margins.
Jump to content:
- Deliver Top Tier Service
- Follow Up After a Project Completes
- Create a Referral Program
- Provide Discounts on Additional Home Remodeling Projects
- Stay in Touch
- Build Your Relationships with Other Contractors
Deliver Top Tier Service
Repeat business starts with superior customer service. For contractors, that means setting expectations early, before customer assumptions and misunderstandings can tank your project. Keep the communication coming with regular check-ins—with texting as popular as it is, it’s incredibly easy to catch homeowners up every day. Report issues promptly and keep your work as unobtrusive as possible to customers’ everyday lives. Chat with customers in-person when available because there’s nothing like talking face-to-face.
It may seem basic, but these are the nuts and bolts of customer relationship building. In one comparative analysis, customers rated competence, completeness, and frequent, effective communication as the most important factors in establishing contractor trust. And that trust is integral for capturing repeat business and referrals.
Follow Up After a Project Completes
Most contractors follow up with clients after projects conclude as a matter of course—so if you’re not doing it yet, it’s time to start. A follow-up call is a great chance to settle any issues that might have popped up after the job wrapped, allowing you to solidify your reputation for great service. It’s also an opportunity to discuss future projects that might be on your clients’ horizons and to remind customers about your referral program if you have one.
Create a Referral Program
Everyone loves a discount. Initiating a referral program for customers is a double bonus: a chance to seal the deal with an existing prospect while gaining advertising in return. Some contractors offer free upgrades or maintenance if a referral comes through, and others give discounts on the next project or even gift cards to popular retailers nearby. However you decide to reward customers, make sure to remind them occasionally throughout the project.
Provide Discounts on Additional Home Remodeling Projects
This is a technique many contractors employ without really thinking about it. Offering customers a discount if they agree to add on additional work is a sales tactic that’s about as old as it is effective. But you can add velocity to your retention rates if you institute a formal discount program. Many homeowners have more than one project in mind when they contact a contractor, so even shaving a small percentage off additional job may be enough incentive to encourage a second project.
You can even create discount packages for follow-up work. For instance, many HVAC professionals offer discounted maintenance packages for newly installed units. Study your customers and look for trends in the buying process. For instance, a homeowner who installs a new roof may start thinking about re-siding their home to match. A homeowner who’s just built a new deck off their back exit may suddenly get an itch for a new patio. Think about these kinds of common pairings when you create your discount strategy.
Stay in Touch
The more you are able to stay in front of your clients, the more likely it is that you’ll land those repeat jobs. A quarterly newsletter with seasonal sales or discounts is a wonderful way to make sure your name sticks in your clients’ minds. Personalized birthday or holiday cards are another strategy and are always welcome—particularly if they come with a coupon included. Ideally, you want to be the one person homeowners call when they need work done, so be sure to keep your presence alive in your customers’ memories.
Build Your Relationships with Other Contractors
Given that other contractors are homeowners’ second pick for contractor recommendations, it makes sense to build your relationships with your peers. No doubt you work with many different tradesmen day-to-day—for instance, a kitchen remodeling business may regularly subcontract out to electricians, plumbers or HVAC technicians and probably also works closely with architects, interior designers and perhaps even realtors. Networking with these agents can reap big profits.
However, if you don’t typically interface with other contractors or professionals, it’s time to develop these kinds of relationships. Consider joining a professional trade organization or attending an event at your local chamber of commerce. Local conferences are another way to make valuable contacts—these connections can lead to informal partnerships and more referrals, if you play your cards right.
Ultimately, tapping past clients is all about engaging soft skills in customer service. Strive to empathize with clients, listening to their concerns and noticing the types of problems they have with their homes. Work towards 100% transparency and polite, friendly, frequent communication. Hone these abilities and you’ll find yourself booked solid for months on end.