Remodelers swear by repeat and referral business. For most, it’s their lifeblood, with nearly half reporting that repeat business constitutes more 40 to 60 percent of their business. A slightly smaller percentage (44 percent) holds true for referrals.
A third of those responding report that both repeat and referral business has increased 5 to 10 percent in the last 12 months, while another third report that it has increased more than that, according to a survey conducted by Qualified Remodeler.
For all of its importance, more than 50 percent of those surveyed say they have no formal program in place to cultivate repeat and referral business.
For many, their repeat and referral numbers are a point of pride tied directly to quality work and customer satisfaction. In fact, comments from a number of respondents indicate a belief that repeat business flows naturally from satisfied customers and word-of-mouth without extensive sales and marketing efforts.
“We do great work and have fantastic customer relations. Take care of your employees, customers and subs and you get great results. It is called caring,” said one survey respondent.
The other side of that view is that customer goodwill and reputation are assets to be leveraged and there is no dishonor in doing so honestly.
Most remodelers accept that passively waiting for repeat and referral business may be a luxury whose time has passed. At the very least, communicating in a variety of ways and on a regular basis with past customers is an essential ingredient to many of their business plans.
Referrals shouldn’t be an afterthought
For Charlie Allen of Charlie Allen Restorations in Cambridge, Mass., referrals are a priority, not an afterthought. “We approach it differently,” he says. “The world referral is in our vocabulary all the way from potential customers through design and development through construction and forevermore.
“I am very likely to say that even after I have collected considerable sums of money to remodel your home that I am actually not done; what I really want is a referral,” he says.
“We start every development meeting and every production meeting by asking how we are doing and inviting customers’ candor so that we can learn from and can head issues off at the pass,” he explains.
“It keeps very much alive the idea that we’re trying to do well by them in order that they would help us with a referral,” he says.
Allen doesn’t have an incentive program, but instead acknowledges referrals with a handwritten note and a personal gift. “These are our customers and we know them. We try to send a very specific and personal gift that they’d appreciate,” he says.
Allen will sometimes ask customers to hold an open house or party to showcase a finished job to friends and neighbors. In fact, he recently organized a walking tour of four projects that were in close proximity to each other and to his office. That event, he says, resulted in a significant amount of business during what otherwise might have been a difficult time.
Keeping in touch with customers is a priority and although newsletters are widely used and recommended by remodelers, Allen says he resisted them as “too corny and a little too obvious.” Now, however, he says he’s working really hard on newsletters that people will be glad to get.
To do it right, Allen is not above hiring outside help. “We know what we do well and most of our staff time and energy has to go into producing good old-house remodels on time and on budget,” he says. Newsletters, organizing walking tours and other marketing endeavors are areas where specialized help is employed.
You can’t have a “do a good job and the rest will take care of itself” mind-set and effectively get referrals, Allen concludes. “You have to talk about it,” he says.
Everything we do ...
Neil Kristianson of Crimson Design and Construction in Naperville, Ill., echoes Allen’s emphasis on prioritizing referrals. “Really everything we do, from the first meeting to last, is designed to get us referrals. I believe that if done right the clients will go out of their way to help and you don’t need to offer incentives to get referrals. If you have to pay, how heartfelt is it anyway?” he says.
“Sometimes I don’t feel like we have a formal process, but there are many things we do to keep in front of past clients. While we don’t offer incentives, we are not passively relying on our work [to generate business], either,” he adds.
We currently have the following in place, he says:
- Monthly e-newsletter to all past clients and prospects.
- A client thank you party/remodeling “expo” at our model.
- We use Guild Quality to survey all clients six weeks after end of project and again 13 months after end of project.
- We call all clients at six months after end of project and 12 months after end of project to ask about any possible warranty issues and, of course, ask for referrals.
- We ask clients to host a “wrap party” to invite neighbors and friends to view the finished project. We don’t get many people that do this, but many times they feel bad for not wanting to and therefore work extra hard to get other work for us.
- We hold a final walk-through with the client and all staff from Crimson to discuss any punch list items, give the client a thank you gift (bottle of wine) and to ask for referrals. If all went well with the project, it is usually a “lovefest” where the client goes on and on about how happy they are. This a good time to ask for help in finding work.
Other suggestions come from Brock Patterson of Blue Ribbon Construction LLC, Wichita, Kan., who suggests Christmas cards to past customers every year and a phone call on the anniversary date of their warranty conclusion.
Patterson also advises using a contact and customer relationship management software to generate reminders to make calls and send cards. He also suggests social networking sites such as LinkedIn and Facebook to maintain contact with customers.
The personal touch is important to many remodelers. Dennis Gehman, president of Gehman Custom Remodeling in Harleysville, Pa., makes it a point to call and thank clients, meet face-to-face with past customers and send handwritten thank you notes for referrals. Birthday and anniversary cards (weddings and remodeling projects) are on his list of things to do, as are hard-copy and e-mail newsletters.
He also suggests asking permission to enter clients’ projects in award competitions and to use photos of the projects on Web sites, portfolios and brochures.
In addition to quality work and customer satisfaction, relationships are key to repeat and referral business, but those relationships may be different depending on the size and the structure of the company, points out Rick Kazmierczak, president of The Kaz Companies in West Seneca, N.Y.
Smaller companies have the advantage of more personal contact between the owner and customers, a luxury not always possible for larger enterprises like The Kaz Companies. Nevertheless, that doesn’t stop Kaz from building relationships from the first phone call. Kaz sends out biographical information on the project team member who is scheduled to make the first sales call, then that person makes a phone call prior to the appointment just to introduce himself and ask if there is anything he should bring — such as product samples and specific information.
After the job sells, project managers are expected to keep in touch with their clients. “It’s really more about being their friend today more than just being their salesman,” says Kazmierczak. “What we’re seeing is people really need to have their hands held,” he notes.
When the job is completed, the salesperson calls the client to make sure everything went well, and the lead person gives them a quality audit to fill out.
The Kaz Companies employ approximately 60 people and may have as many as 15 projects going on at one time, so “it’s hard for an owner to have a personal relationship with all of his customers, but the company can have [a more personal relationship]. We’re a customer service company that happens to do home improvements,” says Kazmierczak.
“I know what those days were like — being small — and when we really sat down and thought about some of the things we wanted to do, we had it already in place; we’d just lost track of it, and now we’re just getting ourselves back on track with it,” he says.
Another reason to keeping in touch with past customers is to remind them of other services your firm might offer. “Our biggest challenge is people don’t realize all of the services we provide,” Kazmierczak notes. The Kaz Companies, in addition to offering full-service remodeling, has a garage door and roofing division as well as a consulting service for home buyers.
Quantify your performance
Doing good work and creating customer satisfaction may be the cornerstone of repeat and referral business, but just assuming you’ve done a good job and your clients like you could be a serious mistake.
That’s where a customer satisfaction survey comes in. An increasingly popular tactic used by remodelers, it can be administered by a third-party service provider or done in-house. Either way, it shows customers their opinions counts and allows a remodeler to quantify and tabulate his performance. Just taking a survey — and doing a follow-up in six months to a year — gives the remodeler a rationale to contact former clients and keep his name in front of them.
Are the scores really meaningful? Geoff Graham of Guild Quality, a firm that provides customer satisfaction survey services, has no doubts. “We see a huge correlation between customer satisfaction, business failure and business growth,” he says.
Graham notes that a large number of remodelers approach repeat and referral business passively, depending on the fact the quality work will naturally generate the customer satisfaction necessary for recurring business and recommendations.
On the other hand, there are those who are very strategic about it and “who are building the expectation of delivering a great customer experience into their whole culture and the way they talk to customers,” he says.
They outline to customers, from a service perspective, what they are going to do in terms of keeping those customers informed and what will happen from day to day. The remodeler makes it clear that he will survey the customer at the end of the process because he’s committed to providing the best possible customer experience.
“How else could we expect you to be comfortable referring your friends and family to us?” is the ultimate sentiment communicated to each client.
Graham attributes that thought to Douglas Chuhran of Master Marketing Concepts, who uses it as a key element in his Proactive Friends and Family Referral Program. For Chuhran, it all starts with creating expectations with prospects and culminates with an emphasis on the law of reciprocity. The latter principle simply holds that if you do something to benefit someone, they’ll likely be inclined to return the favor.
For Chuhran, that means starting with expectations, following with good work and providing a “delightful experience” for the client. That is followed by a survey and then a customer package that includes high-quality before and after photos of the project, a gift card of appreciable value and a request for referrals.
In addition to keeping the remodeler at the top of his customer’s mind, surveys can perform another important function related to customer satisfaction, Graham says. The results of the surveys should be delivered to all the pertinent people in the company, he advises, from the project manager and the salesperson to the administrative team.
“When that starts to happen with a business — without even really putting any strategy into place — you end up creating a culture of quality,” Graham says. “Employees get in tune with what their customers are thinking, and they begin to think about the job in terms of how it is impacting their customers’ perspective. We tend to see a huge jump in performance when companies start to survey customers,” he adds.
Surveys make it “so much easier to quantify what it means to do a good job,” Graham says.
Graham notes that among the top priorities reported by his clients, second only to managing expenses, is keeping a strong connection to their past customers. “They are not being passive about getting repeat business,” he says.
Like Graham, Les Cunningham of Business Networks is a believer in measuring and quantifying data. Remodelers should know what their close rate is for past clients and for referrals. Establish benchmarks for your company, he advises, and once you set them take a look at what it’s going to take to increase the close rates.
Unless a remodeler can quantify customer satisfaction — and tabulating leads and referrals from past customers that are converted to sales is one way — remodelers can’t be sure whether they’re doing a good job or only think they are, Cunningham warns.
“Remodelers,” he says, “make very smart decisions when they have good data; they make dumb decisions when they have bad data or none at all.”
“There’s business out there, but it doesn’t come to you like it used to; you’ve got to aggressively go out and get it,” Cunningham says. “The mother lode is your past clients,” he adds.