Episode 14: Customer Referral Program Strategies for HVAC Businesses

Podcast episode 14


0:29 – Learn 2 strategies

0:44 – Customer referrals vs. Joint Ventures

2:16 – Strategy 1: Business cards or vouchers

4:10 – Strategy 2: Follow up letters

4:37 – Best time for customer referrals

5:16 – Letter campaign

7:38 – What’s the cheaper option?

8:20 – Tip of the week

9:07 – Special offer

Hello everybody! Welcome to the hvacbusinessgrowth.com podcast. I’m your host, Nick Bielawski. We’ve got another great podcast lined up for you today. Today’s topic is Customer Referrals.

I’m just going to give you a quick overview of what we’re going to cover today. Basically, I’ve got 2 strategies that I’ve lined up for you and that you can implement in your business straight away no matter where you’re at with your business. So let’s get stuck into the show.

No matter who you talk to, customer referrals appear to be the best form of advertising across all industries. I even think it’s better than joint ventures. This is because, in joint ventures, you’re actually asking for referrals from other business people that are out there. But truth be known, the relationship with the prospects isn’t as good as it could be, particularly when you’re comparing it to either friends or family. The great thing about a customer referral program is that you’re actually using the network of people’s friends and families. I think it’s a really great way to do business and the core of it is totally based on doing good business. You just have to make sure that you look after the first person and then you ask the question and keep doing good business and keep looking after people and then more and more referrals will come to you.

One thing I’m really amazed at with people’s business is that they just leave this to chance. Referrals, like I said, are really powerful but nobody goes out of their way or sets up a program to ask for it. They may just find out in hindsight that they have a word-of-mouth marketing program that’s actually working because if they ask, people would say, “Oh I found out from John”. So it’s really important to come up with a program and have a plan or system that you can measure.

I’ll give you the first strategy. If you have any appointments coming up, what I need you to do is get some business cards or vouchers printed out. The premise of the offer is you’re going to offer either a free gift with purchase or offer a discounted rate on a consultation or a new system. The catch is it has to only be available to people who are a part of the referral program. It just can’t be a normal or regular promotion that you have on your business.
So if you have an appointment or you make a sale, what you need to do is to give out 3 of these business cards to every person that you do business with. We’re aiming for a very small, 10% redemption rate here. I know how cheap business cards are because I get them printed all the time. I think I got 500 business cards printed for under a hundred dollars. So this promotion is really cheap to run. The way I look at it, there’s no excuse for you to not implement this.

Other things that you can do with this gift voucher or business card promotion is you can actually give a prize to the person who gives out the most referrals. However, people aren’t really interested in prizes. If you do a good job, service or deliver a good product, people are just happy to tell other people about the job that you did. I think you still need to, at least, acknowledge these people. It might not be a prize but you could send out a nice box of chocolates or a gift basket or some nice flowers as an acknowledgement to the person who helped you out.

But if you want to you can take it that step further, like I said before, and actually make a competition of it that you actually advertise to the people that actually give you the most referrals. There are plenty of ways that you can do it especially in this particular case.

You can also send out some follow up letters to your newest customers. They might be customers that came to your business just recently, say the last month. You follow up with those people purely because you haven’t had the chance to get the business cards to them. Send a nice follow up letter, with these business cards in it, just explaining the promotion that you’re running. I think you’ll get a really good redemption rate on these as well.

When is the best time to get customer referrals into your business? Between 2-4 weeks is absolutely ideal. The reason why I say up to 4 weeks is because when it goes past 4 weeks people will forget about you. They’ll forget how good the products or the services that you delivered to them. The sooner the better. And provided that you do a good-enough-job, you can ask along way after a particular appointment or service has been delivered.

I’m just going to go through an old customer example for you. This shows the power of having a good customer referral system. What I want you to do is create a letter campaign for every customer that you’ve had in the last year. It’s going to be a 3-step letter campaign; we’ve spoken about this before in the Direct Mail podcast episode. Let’s just say that you’re running a business and you’ve had a thousand paying customers in the past year. And these 1,000 people give you an average of $1,000 profit, more or less, depending on the unit that you sell or the service that you delivered. Then, let’s say the cost to send out letters in the mail is $1. If we do a 3-step letter campaign, it’s roughly going to cost $3,000. To recover the $3,000 that you’ve invested in this letter campaign, you only need a conversion rate of 0.3%. Obviously, only 3 people need to be referred to you out of the 1,000 people that you sent this letter campaign to. I would like to think that if you do this letter campaign, you’ll get more than just 3 people being referred to your business.
Obviously, the upside of this campaign is massive. If you get a 1% conversion rate which should be 10 people, that’s $10,000 from a measly investment of $3,000. The Math is starting to work out nicely. What if we start to get this campaign moving up to maybe 5 or 10% now it’s starting to get into the 50 to $100,000 worth of extra profit into your business?

But it doesn’t stop there. Once these new people are referred to you then you can start this business card campaign that we’ve spoken about earlier. Give them 3 business cards and the whole thing just snowballs from there and before you know it your business may have increased by 20 or 30% just by implementing a simple but really effective customer referral program.

I just want to preempt a question that I think that I would get from people. If you say, “I can’t afford $3,000 for this program”.

Well, what I think you should do is go the cheaper approach by using email or the telephone. Obviously, the telephone route is going to be a bit more time consuming. Emails can be effective but can be quite impersonal. You’re probably going to get a better response rate if you’re using the mail system as opposed to using email. But if you can’t afford it, then I completely understand. So by all means use the email system and the telephone system. The formula and the structure of what you’re going to say is exactly the same.

Now it’s the for the HVAC Business Growth tip of the week. This week’s tip of the week is simple. It’s almost too simple that it’s stupid and it’s this: You need to be consistent rather than be creative with this.

There’s no point coming up with a letter campaign or customer referral program and only doing 1 step even though we’ve said it’s a 3-step process. So you need to be consistent. You need to stick with it and make sure this is an integral part of your business moving forward because we all know that customer referrals are probably the strongest form of advertising, bar none. It’s really cheap and you can get a great return on your investment.
We’re nearly finished today but I just want to tell you about a special offer that we have for your business at the moment. It’s special because it’s pretty much brand new.

What is it?

It’s a done-for-you lead generation service. Head over to the website, hvacbusinessgrowth.com. You’ll see the navigation menu that says “Done for You Lead Generation”. You can basically hire me and my business to take over and do some of your online lead generation for you. There’s a nice letter on the page that will help you understand what it’s about.

If it interests you, there’s a survey on the page as well. This is step 2. Go there and fill out the survey. I’ll get back to you as soon as you fill out that survey and we can talk about doing some lead generation for your business.

So that’s all we’ve got time for today. Thank you for listening and I’ll speak to you next week.

Episode 14: Customer Referral Program Strategies for HVAC Businesses

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