Business Results Survey: Repeats and Referrals

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Repeats and referrals dominate 

Repeats and referrals continue to be the most reliable source of leads for most contractors, accounting for almost 80 percent of lead activity.

Past customers make up the biggest portion of that, with 35 percent of business coming from client referrals and 32 percent coming from repeat business. An additional 12 percent comes from referrals from other professionals, such as trade contractors or architects. Overall, 51 percent of all companies get more than half their business from repeats and referrals.

While companies of all size are fairly dependent on client referrals for business, repeat business is clearly more important to the smallest companies. Companies with less than $500,000 in annual revenue get 40 percent of their leads from repeat business, compared with only 30 percent for those with revenues over $500,000. About 21 percent of companies get less than 10 percent of leads from repeat business.

Despite this reliance on repeats and referrals, most companies get a significant portion of their leads from other sources — 21 percent on average. Not surprisingly, that number goes up as company volume increases. Still, 26 percent of companies report relying solely on repeats and referrals for leads, and another 28 percent say they get less than 10 percent of business from other sources.

Remodelers use a variety of tactics to get the word out, with the most popular being job/truck signs (74 percent), company Web site (58 percent), organization membership/networking (48 percent), print advertising (48 percent), direct mail (39 percent) and Yellow Pages (35 percent).

Conversely, this means that many remodelers are ignoring two of the basics of marketing: 24 percent of companies don't use job site or truck signage and 42 percent don't have Web sites, including 21 percent of those with revenues over $3 million.

The most effective of those "other sources" were job/truck signs, membership in local organizations and a company Web site.

To read more of our survey, click the links below:
Examining the depths of the downturn 
Revenues take a plunge
Labor is top expense
Small workforce the norm
The amazing shrinking job 
Repeats and referrals dominate
Lean sales operations