TL; DR
- 75% of new business comes through word-of-mouth (WOM) but less than half of home service businesses have a formalized referral program
- Home service business skip setting up a referral program because of 3 hurdles: lack of automated/systemized approach; inability to work with their workflow; no flexibility
- A tool can blow out hurdles and kill friction points like tracking referrals plus provide other perks.
- Tools should have fast signup, business benefits that outweigh their cost, and quantify their results.
SNAPSHOT: Wasted Time + Losing Out on Potential Referrals
Even though 75% of new business comes from WOM less than half of home service businesses have a formalized referral program.
- So they spend money and time on trying to acquire customers in other ways. E.g. ads, cold outreach, etc.
- And they lose out on potential referrals, aka a lot of new business, than if they had a referral program set up.
But the clear line to revenue growth isn’t the only thing to think about when setting up a referral program. As a home service business owner you’ve got to work on getting the jobs, get the job done and figure out when you can spend more revenue on new trucks, tools and people. So where do you pull time to setup a referral program? You need to dedicate time and/or resources to setting up a referral program. And you've got to overcome three hurdles: lack of automated/systemized approach; inability to work with their workflow; no flexibility.
3 BIG HURDLES
On top of the time factor, referral programs fall short for home service businesses. We found that there are three big hurdles to setting up a referral program:
Lack of an automated or systemized approach
There’s a heavy administrative burden on the business owner without a 1-click or zero-click mechanism for referrals, eg an automated process, or a workflow that triggers events with 1-click or zero-click, a systemized approach.If you want your customer referral program to consistently bring you new clients, you need an idea to drive it and a system to track it.
Jobber
To build your systemized approach, you need to consider things like:
- When do you ask customers for referrals?
- What customers do you ask for referrals?
- How do you remember or keep track of who you’ve asked for what and when?
- How do your customers share the information about your referral program?
- How do you track what new leads are referrals, and who sent you the referral?
- How do you setup the rewards for referrals and customers sending you the referral? And how do you account for the referral rewards?
2. Can't work with your workflow
You’ve setup your business processes and systems to work based on your customers’ and your business’ needs. And your workflows are customized to your business. You don’t want to have to learn a new workflow or force-fit yourself into one.
So you’ll want to be able to:
- Trigger referral asks based on your booking, scheduling or invoicing process, ie you set when to ask customers for referrals
- Decide when to reconcile reward credits with your accounting process
- Consistently recognize the referral based on the same action, e.g. when they contact you
- Process the referral like an inbound lead, the same workflow as any other lead/new business opportunity
- Incorporate the referral into your scheduling to booking/job to invoice workflow
3. No flexibility
Not all your jobs or customers are the same, neither are all locations or job types. Plus, seasonality impacts your pricing and the types of jobs you want. These are a few examples of different scenarios and characteristics that need flexibility.
You’ll want to have flexibility in your referral program about:
- Medium used to ask for the referral, eg email, phone, etc.
- Messaging used to ask for the referral, and how you might ask for a referral from one set of customers or another
- What type of reward to provide (e.g. credit vs swag)
- How much of a reward to provide whether it’s the customer referring or the referred customer
- When you ask for referrals, and how often you ask for referrals
- If there are certain times of years, certain zip codes, or even job types that you want more of and so ask for referrals more often or exclusively from these customers
TOOL: GETS RID of HURDLES, GIVES YOU EXTRA PERKS
A third-party tool can eliminate the hurdles outlined above. But you don’t want to end up buried in using a bunch of different tools that can add a lot of admin overhead. You want a set-it and forget it approach and peace of mind that the tool works with your critical business tools.
Since not all tools are created equal, here’s a quick checklist to consider when you’re vetting tools to handle your referrals.
- Easy setup - > the setup time is low, and the knowledge needed to setup is low
- Low cost -> the cost to use should be negligible compared to the new business it will bring in, e.g. value of new referrals greater than annual cost of software
- Results -> should perform closer to WOM than cold leads, WOM close rate is 75-85%, cold leads can be 1-10%
- Efficient -> it should automate a lot of the referral process, namely the tracking of the referrals and reward credits
- Metrics -> should quantify results, you can easily see how much new revenue earned, how much was earned and who referred the most revenue
PRO TIP
Do a comparison of how much each of your other tactics/tools cost vs the amount of business the tactic brings in. You may find you’ll eliminate some tactics and repurpose the related spend.
LoyalAs is referral software that gets and tracks referrals automatically. You can signup at loyalas.com, 7-day trial with no credit card required!