Marketing for Referrals

It’s often said that the best customer is the one you already have. If that’s true, the next best customer surely comes by way of your existing customers.

Indeed, when KBDN surveyed the kitchen and bath industry last fall to get a feel for how marketing dollars are spent, the results showed 37% were spending money specifically to target referral customers. Additionally, 67.6% of dealers attributed closing sales to referral customers. At 184%, the return on investment was the highest of any marketing expenditure cited.

In a soft economy, where every dollar should be stretched as far as possible, a 184% return on investment is noteworthy. In addition to offering a great return, marketing for referrals is typically more cost effective than many traditional advertising venues.

Know Your Client

Advertising works when you reach the right person, at the right time, with the right message, in the right context. Achieving that goal begins with a quality database. Making this an ongoing priority is the key to not only knowing your customers, but understanding them, their families, their lifestyles, their desires, their design preferences and what moves them to act, among other things. Once you understand the subtleties, it’s easier to make the advertising work.

Dennis D. Gehman, CR, CLC, CKBR, president of Gehman Custom Remodeling in Harleysville, PA, attributes 65% of his business to referrals. “We maintain a detailed database including the ‘usual information’, but we also capture data about children, pets, birthdays and anniversaries. This helps us refine our target market, allows us to match each client with the ‘right’ staff person and, as a bonus, every client gets holiday cards from us – a great reminder that we are still ‘out there.’”

Bill Borchert, CAPS, CGR, and Denise Borchert of Borchert Building Company in Washington, MI maintain an extensive database as well. “We try to capture as much information as possible – we jot down information about hobbies and even how they take their coffee. Think about how you would feel if you came in for an appointment and I greeted you with a cup of coffee the way you like it! It truly starts a meeting off on the right foot,” says Denise Borchert.

“Our database is absolute gold!” exclaims Larry Andersen, marketing and showroom manager of Sea Pointe Construction in Irvine, CA. “I wish we had begun collecting e-mail addresses sooner.”

Jim Daniel, president of Daniel Kitchen & Bath and Daniel Lumber in Savannah, GA developed his initial database with eNewsletters in mind. “To gather e-mail addresses at our last home show, we decided to give away a high definition television through a free raffle. To qualify, each person had to fill out an entry blank, complete with their e-mail address, along with the type of project they were considering.

A week or so after the show, we sent out e-mail newsletters to everyone, and plan to continue on a regular basis.”

“With today’s desktop technology and a robust database, you can easily market directly to the individual. Your message to the couple making a decision about a new kitchen and the single woman considering a bathroom remodel can be based on the same document,” according to Kevin Telaak, v.p. of Artisan Kitchens and Baths in Buffalo, NY.

Keeping in Touch

Maintaining regular contact with past customers keeps a company’s name in the mind of the consumer, design professionals agree. Denise Borchert uses the advertising term “TOMA” to describe this. “Top Of Mind Awareness,” she says, “is critical, so when someone asks a former client about remodeling, without hesitation your name is immediately given out – and hopefully your Web address, too.”

Often, kitchen and bath professionals don’t take the time to plan and execute the steps necessary to market for referrals.

Sometimes the problem is they are unsure of effective ways to reach the level of TOMA they desire.

Emily Smith, marketing communications manager for Advanced Kitchens in Marietta, GA, attributes about 60% of her firm’s business to referrals, and is charged with maintaining communications. “One of our primary objectives is to market to past customers. Some of our efforts include hosting VIP parties in our showroom, sponsoring ‘Open Houses’ at clients’ newly remodeled kitchens, offering generous ‘rewards’ to referring clients and regularly sending out quarterly eNewsletters. Even something as mundane, yet vital, as a warranty check is an incredible marketing and referral tool. The fact that we care gives us a competitive advantage in a crowded marketplace.”

Gehman Custom Remodeling initiates an annual anniversary walk-through as part of the firm’s five-year warranty. “Past customers love to hear from us and are always open to our anniversary walk-throughs. It gives us an unprecedented opportunity to catch up with clients in their home. It is a time to listen to them. You will be amazed at what you hear and how it can lead to additional projects or referrals. We also mail full-color newsletters four times a year, send eNewsletters monthly, send holiday cards and always send out a hand-written thank you note for referrals,” Gehman says.

“Keeping in touch with past clients is a priority at Sea Pointe Construction,” says Andersen. “We are in touch with them at least four to six times during the course of the year. We send full-color newsletters, invitations to company workshops and seminars and letters from the owner.”

In the same vein, industry fixture manufacturer Herbeau in Naples, FL, places a priority on referral marketing, according to marketing director Marion Hendricks. “Although we work with showrooms rather than directly with the consumer, we find keeping in touch regularly with our dealers by sending promotional items, birthday greetings, notices of special pricing and the like keeps Herbeau in the front of the dealers’ minds. We have found dealers and consumers alike utilize our Web site to maintain a connection primarily through press releases and the interactive showroom locator.”

Join the Team

Dictionary.com defines referral as “a person recommended to someone for something.” A referral could be a friend, an acquaintance or someone who has heard about you through work on a committee, a board, a social networking event or even an online networking site.

Richard T. Terry, president of Accolade Kitchen & Bath in St. Louis, MO, is a huge proponent of networking events.

“Accolade is relatively new, and so far most of our business is a result of networking. We belong to Business Network International, as well as three other local organizations: Yellow Tie, Gateway Networking Group and the Business Breakfast Club. The contacts I have made have resulted in clients, as well as business associates for Accolade. It is a tremendous opportunity.”

“Memberships in professional organizations have been invaluable,” agrees Smith “but so have trips to the grocery store. It is amazing how, for example, a chance meeting in the supermarket with an acquaintance from a Better Business Bureau meeting can turn into a new project for Advanced Kitchens. Each one of us is encouraged to follow our interests in the local community, remembering we are representatives of Advanced Kitchens. It works.”

Kevin Telaak and other Artisan Kitchens and Baths’ staff members participate in local business networking groups, as well.

According to Telaak, “Word of mouth can be one of the most successful and cost-effective ways of attracting new customers. In networking settings, it may not even be the person you’re talking to; in fact, it’s likely an associate or friend of theirs who becomes the eventual client.”

Only Online

The Internet is fast becoming a viable, although still underused, opportunity for referrals. A variety of sites offer an array of opportunities, from paid sites to those that offer free membership.

Among the pay sites are those that charge a set per-referral fee for each lead they send to you. These companies market themselves with dozens of different Web addresses, and are optimized to come up among first in search engines. The sites themselves offer consumers information, photos and resources. The hope is the consumer will complete an online form, providing a name, address, type of project, etc. If you are contracted with the referral site, they will contact you with each lead they receive that matches the criteria for which you are contracted.

“This would be a great concept – if it worked,” responds Andersen. “However, in our experience, we tried one of the established Web-based referral services and only received a handful of unqualified leads with unrealistic expectations and budgets. This might not have been a match for our mid- to high-end client range, though [it might work well] for painters or window replacement contractors.”

Other design professionals, however, have had some success with such services.

In some cities, entrepreneurs have set up similar lead retrieval sites that charge a monthly retainer. These tend to be more personal in nature, with the Web site acting as the initiator, the firm as the sales team and the kitchen and bath dealer or designer as the recipient of a new project.

Most kitchen and bath professionals are familiar with Angie’s List.com, which is a city-by-city referral site. It is a site supported by membership fees and is, according to the Web site, “a word-of-mouth network for consumers. Angie’s List is a growing collection of homeowners’ real-life experiences with local service companies. The people who join Angie’s List are like you – looking for a way to find trustworthy companies that perform high-quality work.”

A word of caution to industry professionals who think they have devised ways to use Angie’s List to their advantage. Be careful. In relating a recent conversation with an Angie’s List representative, Angie’s List is determined to maintain integrity.

Therefore, each reference – good or bad – is followed up with a personal phone call to the member. If it is determined the consumer was prodded, coerced, encouraged or had their membership fees paid by the service provider they are recommending, the service provider receives a negative rating.

Purchasing search engine advertising is a viable way to capture potential customers searching for the services you provide.

With technology that allows you to define your geographic region, customize your keywords and even set your demographics, you have the opportunity to hone in directly on your customers at the time they are searching for you. Search engine advertising also allows you to determine your own budget, stop and start the campaign at will and track each lead as it comes to you.

At the free end of the online spectrum are networking sites such as LinkedIn.com. This professional networking site is based on the three degrees of separation theory, and is focused on the business community. The site provides areas for recommendations, questions, job postings, etc. In an online environment where many of your potential, past and current clients are networking, maintaining a profile, complete with recommendations of your work, is utilizing new technology to make referrals for you.

Additional online referrals are available to members of NKBA, BKBG and the SEN Design Group, as well as those affiliated with Kitchens.com and other kitchen and bath organizations and Web sites.

Beyond the Refferral

Beyond the referral, don’t forget about traditional advertising. Especially in a soft economy, it is still a necessity. In an Internet article by Tony D. Baker of Xeal Internet Marketing, the author relates: “A series of six studies conducted by the research firm of Meldrum & Fewsmith showed conclusively that advertising aggressively during recessions not only increases sales but increases profits. This fact has held true for all post-World War II recessions studied by American Business Press starting in 1949.”

Mike Stockin, CKD, owner of Kuntriset Kitchen and Bath Design Center in Norwich, NY, states, “We get referral business, but our marketing efforts are focused to the general public, rather than only referral business. We spend the bulk of our marketing dollars on local radio and newspapers – and even in this economy, we are booked deep into the fall.”

Hendricks adds: “The most important thing is to keep your name in front of customers and remind them why they bought from you in the first place. An eye-catching ad can remind them of this and generate a lot of leads and referrals. Once the people are in the showroom, it’s all about creating a meaningful customer experience, inspiring them not only to buy the product, but to tell all of their friends about your personalized service, attention to detail and everything else that makes you the right choice.”

“In today’s economic climate, I find it hard to conceive why any business would not market for referrals. It is less expensive for a referral lead than from any other source,” advises Andersen.

Regardless of how you maintain your database, what sort of message you disseminate, whether you’re networking in person or online, Smith provides the ultimate tip when marketing for referrals: “Always ask for the referral!”

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