Introduction
Relying on referrals is not a way to grow your home services business. This is especially true if you’re just starting out or don’t have a big customer base.
Read on to find out why and what you can do about it.
Referrals Easily Become Customers
You probably have some great clients and some of those great clients will refer others to you. Referrals are a handy source of plumbing customers.
- They are easy to convert from a lead to a customer.
- They know what to expect from your business, and they have a trust factor.
- They are not as price sensitive.
Why is that?
It’s because they come with a recommendation from the person who has referred them. This additional power of the social proof effectively converts the customer for you.
And on top of that, they’re less likely to argue about price especially if they’re the type of person who just wants the job done properly.
You should encourage referrals from clients as much as possible because it is a good source of customers. Sadly for many businesses, it’s the only source of customers.
You Can’t Start And Build A Home Services Business On Referrals
You can’t start and build a home services business on the back of referrals as your only source of customers.
Referrals Are Unreliable
First of all you have no control over your lead flow given that you’re entirely in the hands of your customers. They may not meet anybody who needs the services you provide in the next 6 months. Or they may just forget to refer when somebody mentions that they’re getting a home services job done.
You can’t rely on it as a source of customers. You might get two or three in one month, 10-20 in another month and none for three months because it’s totally at the whim of the customer and you have no control over gearing this up or scaling it down.
That means you can’t expand to a second truck and more staff on the back of this sort of marketing referral program.
Referral Sources Dry Up
About 1 and 10 people move every year, so 10% of a customer base is potentially leaving your service area every year and the referral that you were getting from them and then just gone.
Customers move on. You can’t be sure that someone who used and loved your service, didn’t then go on and hire another contractor for their next related job.
You Have No Control Over The Quality Of The Referral
On top of that, you have no control over the quality of the referral either. The referred customer could be expecting a service you don’t normally do. And you may not want to disappoint the customer who has directed the business to you, so you do the work – with a sub-optimal outcome.
And doing the job less than 100% could reflect badly on you with the customer who did the referring.
Referrals Don’t Build An Asset
When you get referrals, they are invisible as well as being uncontrollable, and they, like goodwill, are not really a tangible asset that keeps working for you. In contrast, building up online reviews, building a customer database or building an online presence creates a long time asset that works for your business over the long term.
What To Do Instead Of Relying On Referrals
Understand I’m not saying you don’t ask for and leverage referrals as a source of business. There are other things you could be doing as well
Controllable Marketing
You need a controllable marketing activity that you can scale up and down depending on what you’re doing. For example:
- Getting a website ranked via local SEO
- Running Google Ads search campaigns.
- Doing local letterbox drops.
- Running Facebook advertising and social media activity.
If you want to grow reliably, you need one or more of these channels in place as well as leveraging referrals.
Referral Program
The second thing you can do is to formalise your referral program more fully so that you get the right referrals from customers and strategic partners. A referral program is the fifth R of our 5R marketing system. You can find out more about it by contacting us.
Build Your Online Reputation
Online reviews are the new word of mouth. 88% of people trust online reviews as much as referrals from friends and family. So you can build a more significant and long-lasting asset by building up your online reputation on Google My Business, Facebook and True Local as a starting point. Find out more about reputation marketing.
Wrapping Up
Referrals from happy clients are great but inconsistent. To grow your home services business reliably, you need to use other marketing tactics as well.