Driving repeats and referrals in a down remodeling market

In today’s remodeling market, leveraging past clients for new business is more important than ever. Professional Remodeler’s Tom Swartz talked to remodelers Ed Cholfin and Tom Mitchell about how they are tapping that important source of business.

November 15, 2011

Tom Swartz: Two-part question: Define or describe your repeat customers, and tell us how much of your business is from your repeat customers?

Ed Cholfin: Today, repeat business is about 25 percent. Previously, it might have been 40 to 50 percent.

Our typical customer is a professional. It could be a one- or two-income family. They live in an area they enjoy and they’re willing to put the money in even if it means they’re overbuilding for the neighborhood, because their intentions are to stay for an extended period of time.

The typical customer will have us do a kitchen one year, a master bath another year, maybe do their basements, decks, etc. We become personal friends with most of our customers. We try to maintain that relationship through a number of methods: newsletters, email, social media.

They are very comfortable recommending us. They have a comfort level with us, with our subs. I still have keys for homes I did six years ago. They just tell me to hold them.

Tom Mitchell: Repeat is probably around 40 percent. That client is someone who fits us really well. They have similar values. They were a good client, obviously.

They’re somebody who typically wants us and nobody else in their home.

Swartz: So, it’s typically a customer that will not go out and shop price?

Mitchell: Most likely, they’re not going to go out and shop price, or if they do they’re going to discuss it with us. I think we’ve created relationships where people feel like they’re making too big a compromise letting someone else in the house. They have a trusting relationship with us.

Swartz: Do you see your referral business as steady and how much a part of your business is that?

Mitchell: Referral business is the majority of our business. I hope it always is. That’s not to say that we don’t market. The referral business is the mainstay of what we do.

Our referrals will come mostly from our past customers. We do have some professional relationships that I’m always trying to foster. Most of our better jobs do come from clients that we’ve had great relationships with.

Cholfin: About 25 percent of our new business comes via referrals. We’re blessed that our customers appreciate that we adhere to everything we say we’re going to do. They’re willing to, without question, recommend us to anyone that they know. They’re so much a part of our future that everyone we’re working with these days is willing to do video testimonials for us and tell everyone else exactly what it’s like to work with us.

Swartz: Let’s just stay right there. What are specific methods you use for marketing for repeats and referrals?

Cholfin: We do no marketing where it costs us money. We are very big into social media. Emily [Smith, the company’s marketing manager] is constantly working on adding or revamping information on the website in conjunction with social media. She’s very big into writing, getting us placed online, in magazines. Anywhere she can get our name out, she’s doing it … to the point where if somebody in our area does a search, we come up pretty high.

Swartz: You mentioned video testimonials for referrals.

Cholfin: I have one of those Flip cameras. I’ll go out to the customer’s home … and basically, they’re just walking around their kitchen, talking off the cuff, explaining what the procedure was like with us.

Swartz: How do you use that?

Cholfin: I upload it to our server and Emily goes in, and using Microsoft Movie Maker, edits 30 minutes to an hour’s worth of video down, inserts some still pictures as needed. She’ll make it a four- or five-minute video and put it on our website. When a new potential customer contacts us, she sends them a link to those testimonials on YouTube and on our website.

Swartz: Tom, let’s talk about your marketing plan and how it relates to your past customers.

Mitchell: We reach out to our past clients about five times a year. Sometimes it’s casually, just through a phone call. Last year we started a home maintenance program. We’ll do work for anybody, but we market it only to our past clients.

We send a letter from me once a year. We send out a bookmark at the beginning of the summer. It was a very simple mailer and we got great response.

Occasionally, we do a postcard, but the things we do most often are phone calls, letters and bookmarks. I think you can’t replace that human contact, so we like to call them.

I also think every time the guys are in their house, it’s marketing. We’re always looking to add a little bit of value, to give a little more than we’re getting paid, so to speak.

On top of that, we do other things. We’re in magazines. We conduct seminars, where we’ve had past clients speak. We do videos on our website. Our website has a blog that is updated weekly.

Swartz: Do you reward [past customers] in any way for referrals?

Cholfin: Years ago, we tried to have a rewards program based on size of the project. It was sort of mercenary and capitalistic, and I went to some customers and they said it didn’t put us in the best light. If a customer refers us to someone, they get a hand-written thank-you note. Any contract, we send them some sort of present based on personal knowledge of them.

If they’re into wine, I’ll buy them some nice wine. One customer, we gave them a custom-made wood cutting board with their name on it, and another one we made a picture book, taking all the before, during and after pictures. It depends on the customer.

Swartz: Do you give price breaks to past customers?

Cholfin: No, but I don’t charge them a design fee. If they’re going to be my customer, I’m not going to charge them a design fee unless I have to go to architecture.

Mitchell: Not necessarily. Our needs as a company … our success depends on being a viable entity. Across the board, there have been times when we’ve elected to do jobs for less money.

Swartz: Do you track repeat and referral business, and has the role of repeats and referrals changed in the last few years?

Mitchell: We do track it. If anything, it’s playing an even more important role than it ever did, because finding a good fit is harder than it ever was. People shop more than they ever did. Yet, they don’t want to take a risk with their family, with their home.

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