Using Referrals to Increase Business

I had lunch with a friend of mine the other day who specializes in customized kitchens. He told me that business for him has been absolutely great, but he's starting to see a trend that it might be getting a little soft. He didn't have as many customers in his queue coming up as before. I asked him why. He believes it has to do with a lot of things.

The economy is beginning to soften.

  • We have a new president and people are waiting to see how things will shake out.
  • The car business is way off, and there's a saying: "How GM goes, so goes the nation."
  • The dot.com freefall has cost a lot of people a lot of money.
  • With interest rates so low, people would rather move than remodel.
  • The banks and finance companies are starting to tighten up their credit policies.
  • People are worried about a possible recession.
  • Summer is coming and families are saving for a vacation.
  • There's a lot more competition out there.
  • People are starting to shop more on price. They're becoming more interested in getting the best "deal."

Wow! If "Making Excuses" was an Olympic event, this guy could be a gold-medal contender. I asked him exactly what he was doing to try to turn things around, and he said he hadn't really thought about it. After all, customers are still calling and coming through the door, just not like they used to.

So, then I asked him if he thought about asking for, or following up on, past referrals. He said he didn't like to ask for referrals doesn't want "bird dogs," and doesn't want to impose on people. And therein lies the problem. He "doesn't want to." Asking for and following up referrals won't work if you don't want it to work.

Stepping up
Referrals are a great source of new customers. The problem is that we don't think about them when we're writing up a contract. The first thing we usually think about when writing up a deal is how much we're going to make. Then, we worry about whether the check is going to clear or if the contract is going to go through. We don't say, "Jack, I've been meaning to ask you something. I could really use your help. You see, we get a lot of new referrals from people like yourself people who are very excited to be getting a new kitchen or bath. Who do you know who also might really enjoy a quality kitchen like this?"'

Asking for a referral is step one. You have to ask, and you have to use a little personality at the same time. Believe it or not, most of the time you'll get a name. Sometimes you'll get two. Then just let it go. Don't start with "I'll give you a check if they buy," or "If they buy from me, I'll give you a commission." That puts them in an awkward position.

Friends help out their friends. If you've made each customers your friend first, it's easy to ask for the name of a referral.

Step two is a little different. You have to follow up the referral. That's tougher. It's almost like a cold call, but just a tad warmer. However, the reality of the situation is that if you really want more business, you simply have to do it. Just pick up the phone and call.'

If you get an answering machine, just leave your name, phone number and a message that you have "good news" for them. Nothing more. People love good news. They will probably return your call.'

When you finally get a chance to speak to them (either by you calling them, or when they call you back), explain to them that you got their name from the customer who referred them. Explain that you are just doing your job. It's how you earn your living. Be nice. Joke with them. Get them to be your friend on the phone. Don't try to sell them anything. Just try to get an appointment for them to come in to meet you personally. Maybe you could tell them you would like their opinion on a new product that just arrived. Offer them something of perceived value for stopping in (lottery tickets, ceramic coffee mugs and T-shirts work great).

There's a very good chance that if they have even the remotest amount of interest, they'll come in to see you. If they don't, and you have established some rapport with them over the phone, ask them if they know somebody who would be interested in a new kitchen or bathroom. Tell them again that you're just doing your job. It's how you make a living, and you appreciate anything they can do to help. Again, being nice pays off.

Asking for referrals takes a little bit of skill. You have to ask at the right time. Ask when they are at their most excited right after they sign the contract, when they realize they are finally the owner of new kitchen or bath, and can't wait to have it installed. A day later will be too late. Do it before they leave your place of business.

Think about the last time you bought a new car. You took delivery and drove it carefully all the way home. You took your friends for a ride in it. Washed it the next day. Then all of a sudden you weren't looking for people to show your new car to. The "new car smell" started to wear off. Excitement waned.'

You have to ask for a referral when your customer is the most excited. And that's when they make that final decision to sign the contract and can't wait for the work to get started. What's nice about the kitchen and bath business is that you can ask then, and also ask again when the job is completed.

If they say that they don't know anybody, don't worry about it. You tried. Let them think about it. They might even call you back in a day or two with a name. Or a month later they may mention your name in a conversation and suggest someone come in to see you.'
It just takes that first step of letting them know that referrals are an important part of your business. They could provide you with an endless stream of customers to get you over the slow periods.

Bob Popyk is publisher of Creative Selling, a monthly newsletter on sales and marketing strategies. He is the author of the book, "How to Increase Your Kitchen & Bath Business by 25% Starting Next Week!" available through the National Kitchen and Bath Association, and is a speaker at various industry events, including the National Kitchen & Bath Conference. For a free sample of his newsletter, call 800-724-9700 or visit his Web site at www.creativeselling.com.

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