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So You Want to Build Your Company on Referrals …
Rick Menendez, Contributor and Marketing Consultant / REMODELING / September 4, 2013
Many company owners would love to have what Alure Home Improvement has. The Long Island company, which topped the full-service list in the Remodeling 550, generated about $39 million last year. Some 60% of that $39 million came from referrals or past customers.
Some home improvement companies built their businesses canvassing. Some by mastering advertising and media. Alure built its business with leads from past customers, which cost far less to produce and which close at 60% to 70%.
Set up a System
Much more common, though, is the home improvement company that gets maybe 3% to 5% of its business from past customers, and is stuck there.
How do you get to 60%? It takes work, systems, and managing those systems. Say you get fired up over the weekend and on Monday you call a meeting to announce that you’re offering a bonus for leads that employees bring in or you are setting up a referral reward program that reps must mention on every call. A month later, everyone has forgotten about it. It takes time. One company I worked with has been at it for nine years, but it took two to three years for it to see measurable results for its efforts after putting the plan into action.
How to Get There
• First, be referable. You become referable by committing your organization to outstanding customer service. You become referable at the point where 95% of your customers are satisfied. Naturally, every company owner thinks his operation delivers superior service. But there’s only one way to know and that’s to ask using either a third-party customer survey service such as GuildQuality or by querying customers yourself.