Editorials

Marcus vandeVliet
Marcus vandeVliet
Why aren’t you getting more referrals?
By Marcus vandeVliet

One of the biggest “ah-ha” moments I’ve had in my consulting career came when I was talking to one of my contractor client’s customers. I flat out asked him, “Why are you not referring my client?” He said, “Your client is good enough to work for me but he's not good enough for me to risk a relationship on.”

Regardless of what someone tells you or marks on a survey, if they're not referring work to your company they’re probably not as happy as they're telling you. I think the number of direct referrals is the key indicator to your customer’s real satisfaction.

Calculating your referral percentage is a good measure of customer satisfaction. If you're doing residential design/build work you should be getting somewhere between 50% and 70% of your work from direct referrals/repeat business.

Not meeting customer expectations is the main reason why a lot of contractors aren't getting the referrals they should. For most reasonably perceptive contractors, not meeting customer expectations is typically the result of not focusing all of their attentions on serving a specific customer niche and then not developing systems so they can consistently serve that niche.

I constantly see companies struggling with consistency because they’re trying to do so many things. They dabble in tree work, irrigation, decks, fencing, swimming pools, power washing, demolition work, pesticides, etc. They do commercial. They do residential. They do municipal. They take on small, medium and large projects.

When your crews are doing different things all the time, they don’t get enough experience in any particular area to become proficient in anything. This hurts the quality and profitability of your work as you find your company at a competitive disadvantage to those who do focus their work within a niche.

In contrast, everything falls into place when you focus on serving a defined niche of customers and developing systems to further improve your consistency.

For example, I have a client who gets all his work directly from referrals. He does high-end residential design/build projects. He will not work for outside landscape architects. His territory is very small. The designs are different but the type of project is almost always the same. Nearly every project has a swimming pool, hardscape and some type of wooden structure whether it's a pergola or a trellis or a storage shed.

He runs 4 crews. Naturally, they have gotten very good at building these projects. Every crew has the exact same equipment package. He has an experienced supervisor who does a lot of quality control and a lot of training so that each crew performs consistently to company standards.

He is incredibly quality focused and customer experience focused because he knows his business has to be built on referrals. His overhead is very low for his company size because everything about this company is geared for that same niche. He's extremely profitable.

It’s much easier to set up job descriptions, appropriate training and standard operating procedures when you’re working in a niche. Once you have these things defined for a single crew it’s easy to use them as the basis for starting up additional crews.

With your crews under control and most work coming in from referrals, your closing rate increases exponentially. You now need only 1 or 2 appointments a day rather than 6. So you can spend the proper time with your clients, educating them, understanding their expectations, designing something around their specific needs and desires and ultimately selling the job.

Boost your referrals by focusing on a niche and developing systems to serve it well. You will see your profitability – and your sanity – greatly improve.


Marcus vandeVliet is the owner of MV Enterprises, a consulting firm dedicated to helping companies take control of their business success. He is also a former Vander Kooi Associate and a former contractor with 25 years in the industry. Call (302) 345-8348 or email marcus@mventerprises.biz.

Digital Edition
April/May 2024