referral technique

[huggytree]

i heard a new idea yesterday i think im going to try!

when you leave the job and hand them the bill- offer them 5 business cards to hand out in exchange for $20 off the bill. say "give these cards out to your friends if you are happy with the service i provided"

my electrician friend does this and has good luck with it. giving them the $20 creates an extra desire to work for you!...they become a salesman for you!

yea some will throw the cards in the garbage or toss them in a drawer...but some wont!

[rezzy]

That could be a good idea but could also turn bad. Its almost paying your customers to do business. Or could be seen as a discount on service in the hopes they will give out your cards.

I comes as a good idea if, you are in need of clients and referrals are low or you have extra money to burn. Young businesses cant afford to use such methods in finding new clients.

[Steve B]

I don't think there is anything wrong with that idea. I've heard it several times before and I would guess it would work just fine. Although, I think it would have greater impact if you send it to them a week or two after the work is complete. That way, they would have had a chance to decide if they were happy with the experience or not. It also gives you a good excuse to contact them again.

I personally wouldn't do it or anything like it. For me, I want to know that my customers are referring people to me because they were happy with the service and not because they can make a few dollars. I get TONS of referrals from customers without paying for it and I'm glad that it hasn't been tainted by the possibility some just did it to earn or save some money. I don't mind asking them to refer people to me if they are happy and I give them some business cards to make it easy for them to do - I just don't pay for it and don't offer any discount for it.

I know I'm very rigid about this. One time I refused to accept a $100 referral check from a car dealership for sending someone their way. I loved this car dealership because of the way I was treated and I referred several people to them for free. I sent the check back to them - they earned my referrals without it.

[phanio]

I agree with Steve B. OK to ask for referrals but you should not have to pay for it. Let your service speak for itself.

Don't want to become known as the company that pays you to hand out b-cards. May not say the right thing about your business in the long-run.

[thx4yrtym]

I agree with Steve, don't pay for referrals like this. It will more often that not come across as a negative thing. It's not classy. It's not the kind of attitude you want to portray. I've read enough of your posts to know that that is not what you are about.
There is most certainly an art to obtaining referrals. The timing and how you approach the subject are critical. If done correctly it can be very positive for you and your customer.

Question - do you consider yourself a salesman?

Regards,

Gregg

[huggytree]

my referrals arent where i would think they should be after 2 years in business.

yea i get a couple a month....and turning them into sales dont seem to be any higher % as a cold call....they always pause after i give them a price...

I already know why my business isnt branching out more into the homeowner market...its because the majority of my work is from contractors. in most cases i never meet the homeowner and other cases im not allowed to give a card out....out of the 200-300 projects i did last year maybe 100 -125 met me and got a card.

i also tell myself that this is not a normal market right now and that may be the cause.

i keep statistics on all aspects of my work...at the end of the year i expect to see a increase in homeowner projects as a % of my overall work...id love to be 100% homeowner someday...

[KristineS]

I think asking for referrals is a must for any business. Paying for them is something else. You want your referrals to be because the customers really like your work, not because they can get an amount off their bill.

[thx4yrtym]

"they always pause after i give them a price..."

is this a face to face situation in their home or over the phone?

regards,

Gregg

[Steve B]

My experience with referrals has been the opposite. The sale is pretty much assumed when I get a call and they tell me that so and so sent them to me. A couple times I found myself starting the work and realizing that I forgot to give them a price.

Of course, I'm dealing 100% with homeowners - so I'm sure it's different. I would guess your contractors that are happy with you might keep you a secret so you'll be available the next time they need you.

[huggytree]

this getting 1/2 the referral jobs maybe just a current trend...i seem to remember only the past 4 or 5 calls....this is over the phone..2 were water heaters(which i flat rate price).

i almost always give a rough price over the phone. i can give a starting(base) price for almost every project to get them in the 'zone' . this base price has cut my bidding time in 1/2 and weeded out 2/3rd's of the time wasters.....i now get 1/2 the jobs i bid on instead of 1/5th to 1/10th

so many people have no idea a plumber charges $100 per hour...being 50% off the 'real' price is very common...sometimes they are 75% off.

alot of contractors of mine give me leads for homeowners..friends or past customers...they never pass my name onto other contractors...why help the competition.....the contractor leads are almost 100% a sure thing...these are customers who pay full price for remodeling and are willing to spend the extra $ for a real plumber...

my homeowner to homeowner referrals are what im talking about.....i still believe 50% of all homeowner will never hire a real plumber...this is the factor im fighting against....they wont pay $200 to reset a toilet or $900 for a new water heater.....their friend refers me to them and they think a new water heater is $400....when i say $900 I lost the job...doesnt matter if its a referral or not...they will find someone who charges $600...it wont be a plumber and it wont be a good brand name water heater....but they are the 50% of customers who wont pay for a plumber.

i am 100% positive of this fact..50% of people will never hire a real plumber - they are middle to lower income- they live in a blue collar working class only neighborhood - they know 10 people who can throw that water heater in for them for a case of beer.

the 50% who do use a plumber are middle to upper income. they live in a mixed blue/white collar neighborhood - they work in an office environment and dont know anyone who can install that waterheater or theyve been burned a few times hiring sidejob guys and are willing to pay for a quality install.

there are suburbs around Milwaukee ive never worked in once in 10 years of being a plumber. those suburbs have 1 think in common....middle/lower class blue collar only...

of course nothing is 100%....its 99.9%

i never get calls in these suburbs....the few ive gotten have 1 thing in common...my price is 4x what they think it will be...i had a guy with a whole house remodel which was $12,000 he had $2,000 for it....fixtures alone were $4,000