Posted by: JC Gatlin | July 22, 2010

Lean Marketing: Creating a Referral System


There’s probably nothing more uncomfortable than asking a Homeowner for a referral. You hate to impose on others. And you just know that as soon as you ask, “Do you have any friends or family members who are looking for a new home?” your customer is going to shrink back in horror, eyes growing wide in shock, mouth skewing in revolt, and scream, “How dare you! That’s none of your business!”

But referral marketing is a critical component in lean home sales. A lean organization shies away from expensive marketing campaigns and media blitzes in favor of grassroots, mano-a-mano strategies to “get the word out.” Obviously referral marketing reduces sales expenses. But it also increases your sales revenue. According to Tom Hopkins, the world renowned sales guru, in Sales Prospecting for Dummies, “our closing ratio for non-qualified leads is 10 percent versus a 60 percent close ratio with referred leads.”

But no one’s saying referral marketing is easy.

So how do you get a continual stream of qualified referrals without becoming the annoying, in-your-face sales person that every customer dreads? Well, for starters approach referral marketing as another process in the lean home building system.

1. Establish a consistent process

Pick a consistitent point after the closing that you ask for referrals from your Homeowners. This may be at the six month walk that your Construction Professional is already performing or while conducting a 12-month satisfaction survey. But be consistent. It will keep your closed customers from falling off the radar and keep you from chickening out from asking.

2. Contact past Homeowners

I don’t have to tell you that Homeowners who closed 5 or more years ago may be ready to make a change. Now pick a contact method and start reaching out. Call past Homeowners about your Repeat Buyer’s Reward or about our Friends & Family Referral Incentive. Or just call them about the Builder’s Facebook Fan Page and that you’d like them to check it out. Then set a goal to contact 10 past Homeowners a week. Or 25. Or 50. (It’s consistently doing it week after week that will pay off.)

3.  Mine your warm market

Have you ever thought about how many people your hair stylist talks to a day? Now there’s a person who has to make small talk for a living and could very easily bring your Stage 10 inventory home into quite a few conversations. Now think about who else you know that touches a lot of people’s lives? A child care provider? Lawn maintenance service? Start mining your warm market and work out a referral program that could benefit you both. For every referral your pizza delivery guy sends your way, you could could give him a $10 gas card.

4. Put your business card to work

Last week, a Realtor handed me her card. Personally, I’m not in the market for a new home — but as she said, “One of these days, you will be.” Obviously that’s networking, but what really intrigued me was on her card, below her name, were the words: “By referral only.” When I flipped the card over, I found this printed on the back:

“By referral only… means I invest 100% of my time and energy to delivering quality service to my clients. As a result, my valued clients and friends refer their family, friends and work associates to me for advice on buying or selling real state because they know they can trust and depend on me to deliver the same service they received.”

Like any other process in a Lean System, referral marketing is dependent on consistency & standardization. Set goals and measure your results. And finally, check and adjust to continually improve your process and increase your responses.

Hey… no one ever melted from asking for a referral.

© July 2010 Homebuilding Partners, Inc.   twitter-logo



  1. Spot on JC. As easy as a phone call or a quick email. Referral leads from past sales are already half sold on you and your company. We’d all love more leads like that on a regular basis.

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