Referrals can be the cheapest form of advertising. They can also be the most expensive form of advertising. Why? When you do a good job, a few people may talk about it to their friends, relatives, and neighbors. If you do a poor job, make them mad, or can't satisfy a client, that person will tell everyone they know never to use your company again and explain why. That type of advertising is incredibly expensive and damaging.

If you are like most contractors I know, you try your absolute hardest to do a great job that the client and you can be proud of. Unfortunately this is the expectation of the client and they need to be gently prodded to talk about your job at their home or office. If you can do this, through some simple activities I'll describe below, you'll find that referrals will become one of your cheapest forms of advertising.

Unfortunately most of us spend more time planning advertising programs, direct mail programs, and other more expensive ways to generate new customers than we do asking our current customers for referrals. We use our co-op money from manufacturers and suppliers to generate new clients rather than keep the current clients and ask for referrals from those happy clients.

The referral program you create is generally not expensive in terms of dollars. It's expensive in terms of time. It's easier to write a check for a newspaper, television, or radio ad, rather than spend time making telephone calls, writing thank you notes, and talking to people you don't know. However, the client you get through a referral is a client who is less likely to question your price and is more likely to use your company even if your price is higher. You've satisfied someone they know and trust. That makes a big difference.

Be creative in asking people to give you referrals. At the end of a job or a service call if you simply ask, "Who do you know that could use our service?" You're not likely to get an answer other than "no one" or "I don't know." If your technicians are doing the asking, it doesn't take long for them to stop asking because they assume, from experience, that they will get a negative answer.

Here are three ways to ask for referrals. First, wait about 30 days after the job was completed. Call the client. He will be pleasantly surprised that you called. Ask if you can put his name on your referral list. Ask him who he has told about his new heating system, etc. Most people tell their friends or work colleagues about something that has gone on in their home. The person he's told is a potential client for you too. Ask if you can call that person and use your current client's name.

Calling 30 days later also gives you an opportunity to take care of any minor problems that have occurred since the installation. It shows that you care about the customer.

The second idea came from Dan Kennedy, a great marketing mind who has had huge success with direct mail programs.

During the proposal phase, you need to get to know your clients' interests and hobbies. Find out if he is an officer in a charitable, professional, or civic organization.

Once the job is completed and the client is happy, ask him whether he would be a referral for you. Assuming that he says yes, then you need to make it easy for him to give you the referrals.

Ask him whether he would be willing to share his experiences with the group that he is an officer in. If he says yes, offer to write the letter for him. Use his stationery. Once it is approved, get him to sign the letters and give you the mailing list for the organization he belongs to. If he doesn't want to share the mailing list offer to provide the stamps and envelopes.

Mail the letter to the people on his list. Will people open the mail? Of course. They recognize the return address. You will get your message heard. And, since it is a glowing reference letter from someone the recipient knows and (hopefully) trusts he is likely to use your company.

Does this take time to do? Yes. Will it produce results? Yes again.

A third way to ask for referrals is simply to pay for them. If you decide to pay for referrals, tell all of your clients in a nice way. They payment can be a gift certificate to a nice restaurant or shop in your area or cash. Some people are turned off by this. Others like it. You have to make a decision as to whether this method of generating referrals is right for your company.

Asking for referrals is the one of the cheapest forms of advertising. It doesn't take a lot of money to do it but it does require time. Once you start a referral program you'll find that the time is well spent.

"This article was originally posted on ww.reevesjournal.com."