A Referal base is going to take time

[Steve]

A Referal base is going to take time. Don't expect to live off of just referral customers for a long time. Here is an article that talks about how a company in business for 20 years can now rely on referrals.

How many years have you been in business and what percentage of your new clients come from referals?

Exterior Motives (http://www.timescommunity.com/site/tab5.cfm?newsid=16969559&BRD=2553&PAG=461&dept_id=507238&rfi=6) - It's Sunday afternoon, and James Carlson, owner of Carlson Design Build, is driving down a back street in McLean. He stops and points to a house with beautiful wrought iron entrance gates, elaborate stone columns, and lush landscaping-one of his past projects. Then he drives about four houses down and nods at another former project, this one with a custom stone retaining wall surrounding a beautiful garden.

"They saw what we did up the street and got our name that way," Carlson said. "Most of our business is referrals, as close to 100 percent as can be. We don't advertise."

"I like to show up every day or every other day to meet with the clients and discuss issues with the job," he said. "After 20 years in the business, that's where my strength is, making decisions in the field and interacting with clients and designers."


http://images.zwire.com/local/Z/Zwire2553/zwire/images/2006/07/story/MREcarlson2c-072606_story.jpg

[tiedeman]

I personally am not advertising at all though next year. *I am going strictly referrals.

I was just talking with my mother tonight, whom handles most of my legal stuff (she has been doing legal work for like 30+years), about customers that don't pay bills or are past due. *I told her that I found that referral customers never pay bills late, while 75% of new customers that get your name from advertising, always pay bills late. *Go figure!

[Steve]

Quote[/b] ]I said told her that I found that referral customers never pay bills late, while 75% of new customers that get your name from advertising, always pay bills late. Go figure!
Now that is a very interesting statistic. It should also push a company to want to get more referrals.

[tiedeman]

Perfect example, today I am having problems with another customer that got my name out of the phone book.

[Steve]

What happened with them and how did you resolve it?

[tiedeman]

Well, with this particular customer I had a problem with her about 2 months ago of not paying a bill on time and I caught her in a lie about how she said that she didn't receive the bill, but she actually did because when I received payment from her for the bill, she used the invoice that she claimed she never received.

So when she called up to complain about crabgrass in her lawn I in a nutshell told her to find someone that can service her. I didn't want to deal with her anymore.

[kc2006]

I was thinking of this today and pretty much all of my current customers are great, they look out for me even (all of them that were home were coming out offering me ice water the past few days when its been real hot). I've been trying to get them to refer me to more people but it just isn't happening.

So I thought what if I offer an insane bonus for referrals? Something like $100 if they refer a next door neighbor for weekly mowing or over X amount of dollars in services. That would be almost free mowing for a month but it would also generate roughly $1000 in sales from the average referral. It would keep the route extremely tight and as Troy said the customer base would most likely stay consistant for payment and easy to deal with as they are now.

Thoughts?

[Steve]

I think its a good idea, I wonder if a 'free cut card' would be cheaper for you and do just as well. Give a few out to your customers and see if they will hand them out to neighbors.

You could try both as an experiment and see which one works better then go with that one.

I am guessing they would need to sign up on a contract to do this?

[kc2006]

Yea they'd have to be under a service agreement with a minimum amount of cuts.

The card would be a good idea too. So far I've just been leaving notes and business cards in the invoices. But with a card or even a magnet I think the odds of them hanging onto them and actually passing them on would be better.

[Steve]

Keep us posted to what you finally decide and how it works out.