There’s no better way to gain customers than through your customers’ referrals. A customer’s personal recommendation adds strength to your marketing program that money can’t buy.

Referrals are big business — and they’re serious business.

Your relationship is under development the moment you get the prospect’s name. The pressure’s on. You have to come through for both your original customer and your prospect.

You’ve got a small window when you need to make contact (24 to 48 hours) and you better be prepared to deliver the same level of service that brought you the referral in the first place.

Knowing a lot is at stake with referrals, let’s look first at your customers’ motivations. What’s in it for them? Why would they want to give you referrals? Sales training expert David Holt points to four main reasons:

1. The hero factor. Your referral source has an opportunity to be a real hero to one or more friends or colleagues. If working with you truly has been a pleasure, he can “look good” by helping a friend or colleague learn about you. Remember, people prefer to find service providers through recommendations.
2. It brings them better service. Your customers know that if they give you referrals, it will give you added incentive to provide them with even better service. Even though you attempt to give all your customers the best service possible, isn’t it natural you will run a little faster and jump a little higher for the customers who give you referrals?
3. They like you and trust you. If people like you and trust you, they probably want to help you. This is the most powerful reason! If you’ve been serving them well, most customers get great pleasure from helping you become more successful. If you share your vision for success, they will enjoy seeing your success by helping you with referrals.
4. They know keeping you in business helps them. Help your customers see the benefits of you staying in business. You can help them as their needs change, and you will be there to cover their warranties and continued maintenance.

Your customers also may respond to the incentives you offer, such as a $25 discount off their next service.

Just remember, even if you do offer incentives, don’t overlook the fact that what you’re really offering are great products with great service from a great company. That’s the true incentive for referrals.

The trust component

When the customer trusts you, he begins to believe the things you say and doesn’t worry about whether you will fulfill your promises. Your customers know a trustworthy contractor always fulfills promises. With their trust in you, your customers will be reluctant to try an “unknown” plumber.

As their trust in you grows, so does their confidence in you. They know what you can do. This confidence factor is important for two reasons:

• Customers will call you because they know you can fix their problem and your customer service representatives will make sure it is handled.
• They know you will take good care of their friends and family members. This is an important point.

Think about it. Would you ever tell your mother to go to a restaurant that didn’t cook the fish correctly? Would you tell a friend to go to a store that treated you poorly or messed up an order?

People look out for their friends and family. Never doubt that. You earn the right to ask for a referral by treating customers with respect, honesty and value. When they refer their friends and family to you, don’t think they’re selling their friends’ names for a discount. They are looking out for them by providing them with a quality plumber with great customer service.

Same thing goes for online reviews and testimonials. If a customer is online in search of a plumber, he’s more likely to choose one who has a lot of good recommendations and testimonials from your previous customers. These can be a huge image builder and help generate more future sales.

So, you see, referrals are a good thing for you, your customer and the new prospect. Everybody benefits when you get referrals.

Facing customer obstacles

Even if you’re great at your job, some customers may be reluctant or unwilling to give you referrals. Here are the eight most common reasons:

1. They like the product but don’t like and trust the salesperson enough.
2. They don’t want to sic a pushy salesperson on a friend or colleague.
3. They aren’t clear about what you do and how you might benefit their friend or colleague.
4. They prequalify their friends and colleagues for you even before speaking their names.
5. They are afraid of upsetting their relationships.
6. They don’t want to appear that they’re talking behind this person’s back.
7. They can’t think of anyone at the moment, but may later.
8. They truly don’t know anyone who could benefit.

What can you do to gain more referrals? Three tactics come to mind:

• Improve the customer experience. John Jantsch with Duct Tape Marketing and author of “The Referral Engine: Teaching Your Business to Market Itself” said during a podcast interview he knew of companies that would basically say of their customers, “We get ‘em, we do good work, we hope we get referrals.”

Sounds familiar for a lot of contractors. However, the distinction his research found was the companies that got more referrals were more “referable.” He said, “They did things people talked about.” In that sense, referrals are as much about customer experience as they are about generating word of mouth. And a referable customer experience follows a logical progression that moves customers from the point they become aware of your business to the point where they are taught to be an advocate.

• Create incentives. The study “Referral Programs and Customer Value” investigated the value of customer acquisitions through referrals that involve a financial incentive — and whether it’s worth the investment. In this case, the study tracked 10,000 customers of a German financial institution, so that’s not exactly like a plumbing contractor in the United States.

This articles was originally titled “True incentives” in the July 2015 print edition of Plumbing & Mechanical.