It is widely taken for granted that the most concrete remodeling leads come from past clients’ recommendations and word of mouth. This is a notion I rarely challenged. That is, until I read Mike Weiss’ recent piece for Qualified Remodeler magazine. To his credit, he is the first writer I’ve seen really form a challenge to referrals, naming them, and their status as lead numero uno, a myth of remodeling.

Photo Credit: billjacobus

Assumptions

His dissection of referrals utilizes several assumptions that remodelers too often make in regard to referred clients. These include assuming that:

• Friends of clients are always as easy to work for as the original client.
• Referrals will accept responsibility and make selections on time.
• Referrals will have the same sense of cost vs. value as clients.
• Referrals will be patient.

Indeed, making assumptions about any aspect of lead generation is not a good idea. Such a notion can breed complacency, which will usually lead to an end of referrals in general. Understanding that each client is unique, with their own sense of taste and process, is the backbone of any successful remodeling company. Yet personal inconsistencies seem hardly a reason to disqualify the referral as a quality, if not the best, lead. A contractor is measured by his or her ability to communicate and troubleshoot with any client. In terms of how an acquaintance with a client is generated, what could be a better foot-in-the-door than a personal reference?

Photo Credit: Midtown Crossing at Turner Park
What Are Your Aspirations?

The fifth and final myth, as well as the heart of the anti-referral argument, is that a contractor can build and sustain a business solely from client referrals. Referrals are inconsistent, and a successful remodeling company will create a dynamic lead generation process including advertising, community involvement, and other available resources.

Much depends on company goals or aspirations. I personally have seen contractors succeed without a stitch of advertising (one used only his church bulletin), relying solely on word of mouth and performance (although community involvement was always present). Yet these contractors did not aspire to grow into a large, several-crew outfit. They were happy with keeping it small, keeping it local, and keeping it personal. I also watched their companies wax and wane with the local economy and business cycles. They understood that business would be slow from time to time and adjusted their business plan to accommodate that fact.

Now, for a company wishing to grow and expand to its maximum potential and beyond, the idea that you can rely on referrals alone is indeed false, especially when you are trying to expand into new markets. On the other hand, maintaining a quality of service that will garner referrals when they are there to be had is still crucial. One might even say that advertising, newsletters, and others are a way to penetrate a given market, but it is referrals that will truly entrench the company.

Furthermore, remember that the work will always speak for itself (and then get clients to speak for you). One could almost include in the “referral” category a lack of negative discussion about your company. That is, a poor reputation will trump most lead generation strategies, especially when the Internet is so easily available for clients to voice their opinion for all to see. So while much depends on your aspirations, referrals, which are always based on service, are still the backbone of any company, whether they are, in their traditional definition, your main source of leads or not.

Referrals Are Tantamount to Success

So while referrals may not be numero uno for your company, they will always have an effect on your business. I maintain that referrals are still top quality leads because it is never bad to have a positive review, regardless of what it leads to. This is the very reason why online referrals are gaining in popularity. Despite their relative impersonal nature, they allow homeowners to get not just one but several referrals from past clients with just the click of a mouse.

In closing, the quality and consistency of referral leads varies widely depending on contractor and community. To assume that referrals will always be there to support your business is a certain mistake, although assuming that any lead generation strategy will be perfect is also a mistake. Yet at the heart of any company are always dedication, communication, and a quality of service. These are the characteristics that generate referrals.

As the digital age continues to expand, more and more homeowners are using the Internet to research remodeling projects and potential contractors. Now it’s no secret that business isn’t exactly booming at present, yet many homeowners want to remodel. Homes still need repair and while the slumped housing market is discouraging selling, it is encouraging home improvement.

So we have a market that encourages remodeling, however hesitant consumers are to spend, and an Internet that is fast becoming a home improvement tool in its own right. This combination has spawned a major rise in online referral services. These companies, such as CalFinder, offer homeowners an online resource on a smorgasbord of home improvement topics and an easy-to-use link to contractors in a given area. You, the contractor, pay to have these homeowners connected to your company, in the form of their contact information.

Working with these Internet leads can be a bit tricky, requiring more work on your part than traditional leads. As Dave Lupberger pointed out in a related post for Qualified Remodeler, an Internet lead will likely fall short, in terms of information provided, when compared with traditional referrals. Unless you work with a service like CalFinder that pre-qualifies every lead, you generally won’t have a personal view of the homeowner, you won’t know how serious they are, you won’t know their budget situation, and you won’t know when they want to start.

What you will have is their contact information, which is something to work with. Homeowners are generally serious about wanting to remodel, but they may be very hesitant, given today’s economy, to jump right in. Therefore Internet leads may require a little work on your part, some more aggressive marketing. Lupberger put it very nicely when he stressed the importance of developing “a good marketing pipeline.” (more…)