How do you encourage referrals?

Small, local businesses, particularly service providers such as landscape contractors, often say that word-of-mouth is the best form of advertising. Customer referrals are incredibly important, especially when these businesses want to grow.

Do you simply provide quality work for your current customers and passively wait for that precious word-of-mouth to spread, or do you have a formal customer referral strategy that you aggressively work on an ongoing basis?

How do you encourage customers to refer other customers to you? Do you offer any rewards or incentives? Do you promote the referral process? Do your employees know how critical referrals are so they can play a role in advancing the cause?

Here's a look at what a handful of contractors from across the country have to say about how they actively work the customer referral process to grow sales.

If a referral is simply an introduction to a potential client, we send a handwritten thank you note, and may also include a Starbucks gift card for $5. If the referral results in an opportunity to bid on a project (depending on size), a handwritten note is also in order, and potentially a $25-$50 gift certificate to a nice restaurant. We recently received a referral from an old client of ours. The referral led to about $25K in a one-time landscape renovation. My plan is to send this client a very nice orchid ($75-$100).

The important thing is that we take time to recognize those people—clients, vendors, friends, etc.—who help create opportunities for our company through quality referrals. It's the best way to grow.

Tom Heaviland of Heaviland Enterprises, based in Vista, CA

We think our satisfied customers refer because they are just that—satisfied—not because they will get a reward. It doesn't mean they don't deserve a thank you. It's just that we've never felt the need to set up a formal referral program.

When we do know a customer was referred to us, we sometimes write a thank you note to the referring customer. We want to start doing this more consistently. If it's a real big referral, we often offer chemical lawn treatments at no charge.

We're a little more active in regard to referring customers to our competitors when we can't take on a job. We do it to build goodwill; our competitors are less inclined to go after our established customers and in some cases won't even bid against us. I usually give two or three names who operate in the geographical area.

We're still selling ourselves though. We let the potential customer know that we offer different and broader services than our competitors, but we simply can't pick up another mowing account.

Char Kellogg of Grasshopper Property Maintenance in Millersburg, OH

We have a formal program in which we provide our existing maintenance clients with a one-time $150 credit for referring our company to a friend, preferably a neighbor, if we are able to add the referral to our client base and they plan to do a minimum of $3,000 worth of business with us during the first year. We usually follow up with a thank you note or call, as well.

Walter Wray of Wray Brothers Landscapes in Bethesda, MD

We've been in business 22 years and have built an established reputation on professionalism. Early on, as we were growing our business, we focused on 1) performing great work, and 2) telling clients that we'd appreciate it if they'd tell their friends about us. That said, we've never really had a formal referral program, and I don't think it would be very beneficial to us if we did.

We have a lot of very high-end customers, and promoting a formal referral strategy to them could backfire on us. Telling a high-end customer that you'll give them a small discount, for instance, if they refer a customer could make us look "cheap" in their eyes, even though the intent is just to say thanks.

Nonetheless, everybody likes something—whether it's a multimillionaire or an average Joe. Down South there's a popular French word, lagniappe, which is kind of like a baker's dozen. That's how we say thanks and encourage referrals. We might present a gift certificate to a restaurant, or maybe a bottle of the customer's favorite wine. We get to know our customers and what their likes are, so we know the types of things they'll appreciate.

But the majority of our referrals are based soley on our performance. Everybody wants to be associated with a winner. Make sure your customers know your story; where you've come from and where you're going. It's about marketing your business and raising your level of professionalism.

Michael Hatcher of Michael Hatcher & Associates in Memphis, TN

Saying thank you is an age-old value that seems to be forgotten in today's business world. In reference to the commercial landscape industry, the art of thanking your clients for referrals can be one of the most important decisions you make.

Remember, your clients are most likely referring your company because of their relationship with you or one of your representatives. By thanking them adequately and with class, you further reinforce that relationship that is actively growing your business.

The biggest mistake I see in most green industry client referral programs is that they are too rigid or pre-planned. The reality is that each of your clients is different, and the individual characteristics of that specific client's personality and employment should be considered before adequately thanking them.

If your company predominantly services residential pest control and fertilization contracts, then an established "one free application to a homeowner per referral" program may work for you. But if you serve commercial properties where your property manager clients are not allowed to receive free gifts or services, you are faced with the creative challenge of personalizing your gratitude. In those cases where a tangible "gift" is not allowed, there is still a tremendous opportunity to take that client to a nice lunch or purchase a beautiful bouquet of flowers for their desk. Whatever you do, do it from your heart, and never lose touch with knowing your customers on a personal level.

Pete Lucadano of Luke Brothers Landscape Services in Holiday, FL