Boost Your Referrals

“You cannot escape word of mouth these days,” pronounces Andy Sernovitz, CEO of the Word of Mouth Marketing Association (WOMMA) and author of Word of Mouth Marketing: How Smart Companies Get People Talking. Unfortunately, though, word of mouth also can damage a business that does not understand how to manage it. However, when properly used, customer referrals and other kinds of word of mouth can beef up a contractor’s profits rapidly.

And because you are positioned to put referrals to work for you because most people invite family and friends to come see their home once it is remodeled. This is the time to harness word of mouth.

The beauty of referrals is that they are free essentially—but, more importantly, they are persuasive. When a neighbor or friend sings high praises of a contractor, we are ready to listen and believe.

There now are so many ways for customers to provide word-of-mouth referrals: blogs, message boards and even Web sites—all can be powerful. “There’s so much more interest in word of mouth now because there are so many more forms of it,” Sernovitz says.

So why aren’t you getting more referrals? The answer may be that you are not asking for them. “You cannot assume your clients will give you referrals; you’ve got to ask them,” advises Wendy Barlin, Marina del Rey, Calif.-based CPA and small business advisor. Don’t be shy. Tell every client that you appreciate when they pass your name on to others. San Diego-based marketing consultant Sadie Peterson advises handing out what she calls referral cards, which are business card-sized, provide all your business details, and they also provide a place for the referring customer to insert their name. They pass that card to friends and a referral is complete.

Despite all your best efforts, this process can be circumvented by competitors inviting relatives or friends to post on their Web sites glowing reports about their work. Sernovitz provides this bit of advice: Don’t follow their lead. “Fake word of mouth will backfire. People see right through it,” he says. Today’s customer is sophisticated and there is an obvious difference between a real buyer’s word of mouth and the fakes.

Probably the only area of debate regarding referrals is whether you should or shouldn’t reward those who refer you. Experts are split. Some worry that in effect paying for referrals may dilute their sincerity and power. Others see small gifts going to those who make referrals as a shrewd way to reinforce the behavior, which leads to more of it. Think of the age-old psychology maxim: What gets rewarded gets done. This is a judgment call, and the right answer probably depends on exactly who your customers are. Regardless, customers who give referrals appreciate a heartfelt thank-you note, which often is every bit as effective as a small gift. Whatever you do, don’t scrimp on the thanks for customers who put their own reputations on the line in endorsing you.

Which brings up a crucial point: “Never burn your referrers. Make sure they look good,” warns Sernovitz, adding that a scorned referrer can become a source of plentiful bad word of mouth. Don’t forget that, and don’t ever let them down.

Word of mouth increasingly has become something we need to attempt to actively manage, Sernovitz says. That means taking steps to get more of it and to get more customers offering glowing referrals. “Word of mouth definitely works. It helps businesses grow,” Sernovitz says. “That is why everybody now wants more of it.”