Like testimonials, builders and renovators live and die by their referrals. For some, it's the only marketing tool they really use to build, and maintain their business.

The problem is most builders / renovators leave it up to their clients to "pass the word around". However, they never know if their clients are actually passing the word around...to whom...and if the potential prospect will act on the referral.

This is "word-of-mouth", and completely out of the control of the builder / renovator, meaning you sit by the phone waiting for it to ring. Referrals or, more the point, a referral system puts you in the driver seat, allowing you to control the system from beginning to end...not waiting for the phone to ring but making the phone ring.

Systematizing Referrals: Putting You in the Driver's Seat

The farthest most builders will go to 'systematizing' their referrals is to ask their clients "know anyone else?" or "make sure you pass my name around."

Now, there's nothing wrong with this...but it's not effective use of your time. You're leaving your business development to the good graces of your clients, who are just as busy as you are and equally apt to forget to help you out. I'm not saying they won't, but they won't necessarily flood you with referrals when you most need it.

If you want to control when the referrals come in, and how qualified those leads are, I suggest you systematize your referral system with the following strategies:

1) Make sure your clients know your ideal client. This may seem common sense...you're building / renovating for them...but that doesn't mean they know who to look for to refer to you. If you're like most builders and renovators, you just don't want anybody with a pulse and a wallet...no matter how great a client the referral comes from.

Don't assume your clients know...you know your work the best. Make sure, when you're asking for referrals, to ask if your clients know anyone looking for a builder / renovator who specializes in ________ [enter your speciality here -- it could be energy-efficiency; renovating small spaces; vacation homes; accessibility for the disabled; whatever target market you've decided to focus on -- and you do have a speciality...a target market, don't you?]. This will go a long way in weeding out non-qualified prospects.

2) Don't just ask your clients. Nothing says referrals can only come from clients -- friends, family and business associates are a great source of referrals. However, one greatly untapped source is prospects and leads. Absolutely nothing says you can't ask your prospects and leads if they know someone who's interested in the services you provide.

3) Don't ask just once. Not everyone builds a home or completes a renovation every year...and times change. Go back to your past clients once or twice a year and ask again. Just because they didn't know someone in June doesn't mean they won't know someone in January.

All of the above are especially effective when combined with the next two strategies. (And this is where most builders and renovators miss out on the greater potential of referrals.)

4) Give them something...both your client and your potential prospects. Don't just ask for referrals, but have something of high value, but of low cost to you, that's passed along to the referral -- especially something that moves the referral into action. For example, a checklist for "how to choose a builder / renovator"; sample design plans; even a subscription to an appropriate magazine.

Also, give something to the client in advance as a thank you for the referral(s) (another hint: don't give it to them only if they refer...give it to them expecting the referral)...movie gift certificates, video rentals, free pizza night for the family.

(By now, some of you are saying "too expensive". However, compare some of these costs against your time spent drumming up business; advertising yourself; networking; trying to get leads through your website. Also, if this leads to someone spending tens of thousands, if not hundreds of thousands, of dollars with your company...you can add fifty or a hundred to that price to cover these ideas. These are 'profit making' strategies, not 'profit taking' ones.)

5) Use special dates to keep in touch. Send your clients (and, even, your referrals) something for the anniversary of their move-in date / project-finish date; or their wedding anniversary; or their birthday. Any reason to thank them for being a client and ask if they know anyone who would enjoy your services.

6) Finally, reward them! When a referral becomes a client, immediately send a thank you. A card; fine wine; dinner out. Let them know how much you appreciate the referral (and the fact they did a lot of the work for you...)

A Final Word... Remember...test, test, test. Nothing says you have to spend $1000s before spending $100 or so to figure out what works. Every builder and renovator know referrals work...however, knowing they work and making them work as effectively as possible means taking the time to test a few different methods. Even a couple of the above ideas will start to make that difference in your business.