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In a recent class, I made the statement that referral leads should never account for more than 20% to 25% of your work. Boom, the argument was on. One young fellow was bound and determined that I was wrong, and several others shared his view. It didn’t make any difference what I said; they didn’t want to hear it.

I realize I bring up this point fairly often – but it concerns me more as time goes on. We’ve had a strong building and remodeling market, which made business owners lackadaisical about marketing – finding new customers has been easy. I don’t know the future, but what I see now makes me nervous and leads me to believe things will slow down. Those who have a strong marketing and advertising program in place will survive – those who work “by referral only” will be the first to hurt. If you doubt this, for those of you who work by referral, how did your business do after 9/11/01?

So, even though you may disagree, here are a few reasons why working “by referral only” is dangerous:

  • Your leads are not pre-qualified.
  • You can’t control where the lead came from.
  • The customer may or may not have the income to purchase your services.
  • The customer may or may not work in an area that you like to work in.
  • The customer may or may not live in a home that is easy to work on.
  • They may or may not be interested in quality, value and service as opposed to low price.

If you gain a customer by referral, that’s great. But if you take charge of your marketing and advertising program and let referrals be frosting on the cake, you can count on quality leads as opposed to just hoping for quality leads.

A good advertising program will put you in front of the customers you want. Working by referral only sounds good, and it may do great things for your ego when you say it. But is it worth gambling your business future on? Cardinal Rule # 4.

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