3 steps to increase client referrals for your construction business
Did you know that the average company drives up to 50% of their revenue with referrals from previous clients?
For some builders and remodelers, it can often be much higher than that — even up to 100%.
Have you ever stopped to consider how truly incredible that is? Or, just how much time and money that saves your business?
To bring this into perspective, those new clients being sent your way from referrals means that you don’t need to spend half of your day ... week … year, marketing your business and hunting for new revenue. That’s extra time you can spend completing more projects and money saved that can be added to your bottom line.
Now, it’s important to acknowledge the role you play in all of this. If you’ve earned even just ONE new client from a referral, it’s because you did something to deserve it. I mean, it’s not like people just randomly endorse a company without a good reason.
In fact, in order for someone to recommend you or your company to another person, their experience has to be exceptional. In other words, in one way or another, you exceeded their expectations.
And, this isn’t always easy to do. Amirite?
So, before we go any further, take a moment to give yourself a pat on the back if a client has ever been referred your way. You’ve earned it.
Ok, let’s talk about what this all means for your business.
Let’s say that you had 100 projects last year, 50% came from referrals and 50% came from advertising and sales. Your goal for next year is to double it.
So, how are we going to do that?
The most logical thing that comes to mind for most is usually, I need to run more Facebook ads, or I need to make more sales calls, or I need to double whatever tactic that worked before.
Those approaches aren’t wrong per se, but there is a better (and much less expensive) way to double the size of your business.
Your biggest opportunity for growth is with your existing clients!
And, not only is it the biggest … but it’s also the most effective and profitable way to get new clients.
But, don’t just take my word for it:
- The Word of Mouth Marketing Association (WOMMA) has found that one word-of-mouth impression drives sales at least 5 times more than one paid impression.
In other words, the free endorsement from your happy customer just outperformed that expensive Facebook ad by a ratio of 5 to 1.
- A study done by the Wharton School of Business found that the lifetime value of a referred customer is 25% higher than that of other customers.
Regardless of whether you’re an independent contractor or national home builder, word-of-mouth recommendations and referrals are the key to building a highly-profitable and sustainable business. Plain and simple.
How to Increase Your Client Referrals
As I mentioned previously, referrals are not just given, they are earned. It’s important to understand that when someone recommends you to another person, it’s more than just a referral they’re offering — it’s also their reputation.
So, before you begin working on increasing client referrals, you first need to see if you’re doing what it takes to earn them. The easiest way to figure that out is by looking at how much of your revenue today is driven by client referral. If it’s minimal, you may need to take a hard look at what’s missing and make the changes required to improve client happiness.
If client referrals are already a part of your business today, increasing them to grow your business is just a matter of knowing what to do. There are three core areas to focus on:
- Client Experience: Make it your priority to provide EVERY client with an exceptional experience. Exceed their expectations wherever you can: deliver an estimate faster than anyone else, always arrive early, invoice them slightly lower than your estimate, leave a handwritten thank you, etc.
There are a million ways to go above and beyond, just find the ones that work best for you and make it part of your process.
- Engagement: Be proactive. Check in with previous clients. Send surveys. Ask for feedback and, yes, even referrals. Only 20% of those that are willing to endorse you will do it without being asked. Accessing the other 80% is sometimes as simple as just asking.
Inspire clients with an occasional email featuring your last projects, or simply reach out to remind them that you’re available if they need you. Staying top of mind is an effort well spent.
- Communication: ABC (Always Be Communicating). Have you ever heard someone say they hated how informed they were kept during a project? Obviously not, because that would be silly. In fact, our recent survey found that 81% of homeowners said good communication with their contractor was vital to the success of their project.
Ahem … hello BuildBook. 👋
There you have it — the same principles used by some of the most successful businesses in the world today. The great part is, focusing your attention inwardly in this manner not only helps grow your revenue, but you end up building a brand strong enough to span generations.
It’s said that up to 50% of all buying decisions that people make are made based off of word-of-mouth recommendations. What are you going to do to capture them for your business?