A consistent flow of referrals can be one of the most powerful ways to grow your business. Even with many online options for leads, such as review services and business websites, many contractors find that word-of-mouth leads often result in the biggest impact on the company. While it is important to create an online presence for your company and diversify your lead sources, don’t underestimate the power of customer referrals.
Customer Referrals: Effective Leads for Your Business
According to the National Association of Home Builders, professional remodelers attribute 37 percent of their leads to “referrals from clients.” Another 37 percent came from “existing and returning clients,” with no other sources bringing in more than 8 percent of their leads. These numbers show the importance of two details in your business:
- Maintaining strong relationships with current and past customers
- Bringing in referrals through your customer base
The same survey shows another insightful point: Contractors reported a 45 percent close rate for referrals. In comparison, close rates for other lead sources range from 3-12 percent. Not only are referrals an effective way to bring in new leads, but the likelihood of landing the project is much higher than other lead sources.
At Modernize, we have seen similar trends. To increase homeowner insight for contractors, we survey our homeowners on a weekly basis to learn more about their home improvement preferences and pain points. In our most recent survey, 42 homeowners of homeowners, across trades, listed friends or family as a primary source for finding a contractor.
Shifting with the Times to Support Self-Directed Buyers
In recent years, you have likely noticed a shift in consumer behavior. To stay relevant in a changing business world, it is important to be proactive and stay ahead of current trends. One important shift is how the internet and social media create an environment of “self-directed buyers.” Customers are empowered to research online before reaching out to a contractor.
It’s common for a potential customer to ask friends for referrals and read online reviews. Then, they select a contractor based on the provider that promises the best service, value, and quality. This remains consistent with our Modernize survey findings. After price, 26 percent of homeowners said expertise was most important to their contractor selection. An additional 26 percent said online ratings and reviews.
Personal referrals play a significant role in the buyer’s decision. Since this organic process begins with the satisfaction of your current customers, it is important to show these homeowners why people prefer your company over competitors. When you communicate this message effectively, it shifts your focus from outbound lead generation to inbound leads that come from current customers and their referrals.
How to Get More Customer Referrals
Long-term relationships with your current customers provide a strong foundation that increases the likelihood of referrals. How are you fostering business relationships with your current customer list?
In many situations, contractors specialize in replacements— which can be a great way to offer valuable services and boost your bottom line at the same time. Another way to leverage your existing base is by prioritizing customer care for home improvement repairs as well.
Even though repair service visits are not as profitable as replacements, the small points of contact give you a valuable opportunity to build rapport with your customers. Every time you visit someone’s home, you create more trust. This builds toward a solid relationship that can last for years. These clients will continue seeking your expertise when they need services, and won’t hesitate to offer your name as a recommendation to friends and family.
Each touchpoint with a customer builds credibility. Focus on the overall outcome of this service and prioritize customer satisfaction, and your customers will be happy to send referrals your way.
Maintaining a Long-Term Perspective
So many aspects of our modern world provide instant results, with shopping options available 24/7 online. It is essential to maintain a long-term perspective on how customer relationships can lead to bigger business successes in the future.
The initial interaction with a new customer is just an introduction point. If the person has a good experience and is happy with the services, it increases the likelihood that they will call again when your services are needed in the future. Their confidence in the quality of your services also lends to a good outcome when the customer has friends and family looking for local recommendations.
Ask for the Referral
Ultimately, customers send referrals when they are comfortable and confident in your services. When you are proactive about building this solid relationship with each customer, then you have a strong enough connection to ask for referrals when the time is right.
The process of providing quality services through repairs and replacements gives you the chance to increase customer satisfaction– which eventually results in ongoing referrals that help your company grow.