Tommy Lee-Zmuda, installer and founder of The Boiler Business, explains the importance of having an effective referral strategy in place for your business.

Do you have a referral strategy, or are you solely relying on word of mouth?

Investing time and money into encouraging your existing customers to work for your business will take some planning, some action, and a small amount of cash but, lead-generating websites aside, a good referral strategy will give better return on investment (ROI) than most other marketing strategies. 

But what is the ROI for a lead generating website, an advert in a local area magazine, or your simple and low-cost referral strategy? Many plumbing businesses fall short by not seeing the importance of collecting data, followed by taking the time to calculate basic data such as win rates, cost per lead, and cost per acquisition. 

Knowing these basic numbers will allow you to focus on the marketing strategies working for you and cut out any and all wasted expenditure.

The year following the introduction of our referral strategy, we found that 17% of new customers had been referred to us by existing customers; up 10% from the previous year. The data also showed that the win ratio was much better for a referred customer than a new customer who had found our details elsewhere.

Build your strategy

Here I’m going to outline the five steps to getting more customer referrals, giving you more profit, in less time.

• Step 1: Approach every job in the future with a priority of collecting another five-star review. Wowing your customers with an unexpected level of customer service will make it much easier for them to tell others about the service they experienced with your company.
• Step 2: Plan, write, and perhaps create a video for your referral incentive. Years ago, we offered a complimentary boiler service for successful referrals. What can you offer that would be of interest to all customers? Maybe £50/£100 of Love2shop vouchers would be easier to market to all customers?
• Step 3: Ask for a referral. I understand that asking somebody face to face might seem a tad pushy. So, maybe being a little more subtle in the approach would be better. Include the referral offer with the documents you hand over after work is complete, via printed flyers or as part of email communication, always pointing to the incentive. Your mindset should be that you are not bribing them for something, you are thanking them for making an effort to pass your details to their friends, family, and work colleagues.
• Step 4: Keep in touch via email, SMS, and social media. As some customers will find you and use your services at short notice, they may not necessarily know how much of an expert in your field you are, so try to keep in touch with your customers after the deal/service is complete. From time to time, give advice and helpful content, positioning you and your team as experts that your customers can trust, and when possible, refer to friends and family. The odd offer for new products is ok, but try to send help and support rather than sales messages.
• Step 5: Be helpful when needed. Repeat your five-star service at every contact. 

Hopefully, you are getting the idea. You have to aim at excellent and friendly customer service every time they make contact with you. If you can’t help them, find somebody who can. 

Create a network of people who also serve your customer base with different products and services. By linking with other engineers and other trades, you could be there to save the day.