Are you getting your fair share of referrals?
Referrals are the best leads a building company can get.
Because apart from the fact they cost very little to generate, they convert into sales at a much higher ratio than any other marketing channel…
And for builders, there is an added bonus.
Referred leads also convert at higher margins than any other opportunity in your sales funnel.
So the question is, are you getting your fair share of referrals and more importantly, how do you get more of them?
For the majority of building companies, luck plays a much larger part in this ratio than it should do.
And that is because most builders use a passive approach to get referrals, rather than an active approach.
The passive approach is when a company gladly accepts and services any new referrals that come their way.
However, the active approach requires tenacity, which is a key trait for a successful professional builder operating a profitable and growing building company.
So what are the tenacious builders doing differently in order to generate more than their fair share of referrals?
3 Components To Getting More Referrals
There are three essential components of a successful referral strategy that have consistently produced quality opportunities that have converted into high margin contracts for our members.
The first component is the channels, because without opening up the right channels you will never generate opportunities.
Strategic partners are an example of a channel and they are typically connected to the building industry without being direct competitors like other builders.
Normally the first type of strategic partner that comes to mind is an architect or a building designer.
However, the problem with working with those types of businesses is that you simply become another builder on their list who will provide a free quote to their clients which is not the recommended sales process for a professional builder.
There are exceptions to this rule, and the builders that have been able to build solid relationships with architects—to the extent they become the only builder the architect recommends—have been able to make this strategy work without being viewed as a commodity.
What that means is that they do not compete on price and their margins are extremely high.
However, those examples are few and far between, which means architects are generally not the best place to start.
Better strategic partners are your accountant, lawyer or engineer.
All these people are professionals which means their recommendations carry a lot of weight.
Utilise Your Outer Circle
Outside of your immediate circle are real estate agents.
Real estate agents that are selling land or old properties on prime blocks of land are excellent strategic partners and it’s a scalable strategy.
It’s also a great strategy for remodellers who can become a great resource and a vital part of a real estate agent’s network when they are selling properties that need fixing up.
Another channel, and a rich source of referral opportunities is non-clients.
A lot of builders make the mistake of only asking their clients at the end of a project if they know of anyone else looking to build.
However, a far bigger pool of potential opportunities exists higher up the funnel when you follow the proven sales process for builders.
Because the proven sales process involves charging prospects for quotes, which means you no longer have a prospect, you have a customer.
And happy customers refer other people to you!
There are many different channels available to builders and most of them will depend on your existing network and your personality, so take some time to look at your own unique situation and come up with three different channels you can start working on today.
Don't Leave Money On The Table
However, when you activate your referral channels, don’t make the mistake of asking them if they know of anyone who may be looking to build!
Because while this approach does work to a certain extent, it also leaves a lot of money on the table in terms of missed opportunities.
When you take the lazy approach of asking for referrals, you are simply looking at the world around you from your own perspective.
However, when you look at things from your referrer's perspective, the question changes.
Accountants, real estate agents and customers all know other people that are looking to build, the question is, why would they refer their friends and family to you?
Some people are what’s known as ‘super connectors’.
These are people that have massive networks and are always connecting buyers and sellers without any direct benefit to themselves.
If that’s you, then you’ll probably receive referrals back from your channels just by asking for them due to the law of reciprocity.
For the rest of us, we need to demonstrate expertise, authority and trust as well as value.
Your accountant would happily refer people to you once you take the time to explain the predicament most building companies find themselves in, with low margins and tight cash flow leading to all of the building company failures we hear about in the news.
And because your accountant has access to your company’s financial information, they can recommend their clients, family and friends to you with confidence knowing full well that you have the financial reserves in place to ensure your company will be around to finish its projects rather than leaving its clients in the lurch.
A real estate agent will be happy to refer people to you when they have seen case studies of your clients that have been in a similar situation to their potential buyers.
That coupled with responsive communication will give them the confidence that you are the only builder their clients should be talking to.
Referrals Rely On A Bank Of Channels
Past customers that went through the design process with you and had a great experience regardless of whether they progressed to a build contract or not, would happily recommend your design services when you provide their friends and family with an exclusive special discount.
In summary, a great referral strategy requires a bank of channels that can produce an abundance of referral opportunities but it also requires a reason for those channels to actually start talking about your building company to other people.
However, there is also a third component a builder needs to implement in order to maximise the number of referrals they receive and that is consistency.
Recently I responded to an advert on Facebook for an event.
My initial enquiry led to me having a phone conversation with the owner of the company. During that 15 minute conversation I gave my verbal commitment to attend the event.
What really struck me though wasn't the fact that I was asked to share the event with my network, it was the fact that I was asked three times during that phone call to share the event with anyone else I felt may be interested!
Did it sound sales-y or disingenuous? Not all! The way the request was delivered was genuine and sincere.
It was along the lines of, “We need to make as many people aware of this as we can so that they don’t miss out on the opportunity to join us.”
Rather than feeling pressured or awkwardness, I was impressed at the passion the owner had for his business.
Give People A Reason To Refer
Over the next week I had two more phone calls with the same person and on each call he asked me again if I could share the event with other like minded people in my network… So I did.
It was a great lesson in consistency.
Asking for referrals should be top of mind for everyone in your company because there are opportunities to generate quality leads at almost zero cost everyday.
It could be when a client experiences ‘a win’ or ‘a high’ in the build process, ask them…
Or when you pay your accountant's annual, or even monthly invoice, ask them…
Or maybe when a real estate agent shares the fact they've made a big sale, congratulate them, ask them!
The bottom line is that after investing time building relationships, we do not ask enough and when we do, we generally do not ask with enough conviction.
So be proud of your building company, work those channels and give them a reason to refer your building company over every other builder.
And then, keep reminding them!
If you’d like to follow the APB step-by-step process for creating a successful referral strategy, then click on the link below and take a look behind the curtain in order to see the templates and tools we are providing to our members.
This video will reveal how you can generate more quality leads and more sales at higher margins while improving the building experience for your clients.
Just click the special link below!