Are customer referrals really worth the effort?

Professional Builder introduces its newest monthly column — New Home Knowledge. Based on a weekly web interview show specifically for new home sales professionals, New Home Knowledge will provide information on sales education, training and development.

We sit down with new home sales agents Nancy Smith, Kim Hodgskin, Denise Rolfe and Jennifer Leo.

John Rymer: Are customer referrals a wise and valuable investment of your time? Do they result in added sales? How do you find time to accomplish this in your weekly schedule? Do you ask for referrals proactively or wait for customers to refer their friends?

Nancy Smith: Asking for a referral is crucial. If your customers like you and you have built a great product, you deserve to ask for a referral. Even something as simple as "Wouldn't you like to pick out your neighbors?" works well. Keeping customers informed of price increases or about available inventory homes is another opportunity to ask them if they have any friends that might be in the market for a home. Referrals already know you're trustworthy and the product you're building and selling is reputable.

Kim Hodgskin: The amount of time and effort that I spend with my existing customers generates 50 percent of my future sales. Once my customer signs a contract, my referral process starts. I follow through on the progress of their home, send them pictures, tell them what's happening and celebrate with them when they close and move in. I make sure I return phone calls promptly and I'll even offer to help set up utilities or something similar. Many times I find customers automatically send their friends and relatives to me because I have built such a great rapport with them.

Denise Rolfe: I keep in regular contact with my customers as well as my prospects. I send them letters when prices go up in the neighborhood and remind them what a great investment they made in their home. I also invite them to parties to meet their neighbors. You have to stay in touch all the time to show them you really care. By the time a referral comes in the door, they already know what a wonderful experience their friend had so that customer is already sold for me. It's not very much time if you compare it to the time vested in a new prospect. If I'm spending just five minutes a month for each customer — resulting in a referral — then I'm spending less time and effort than I would had I needed to nurture a new customer.

Jennifer Leo: Asking for the referral should be as easy as asking for the sale! You're asking a current buyer who has already made the decision to purchase to share their excitement, their experience and their enjoyment of their new home. Making a great impression with every customer is the key. Even when a customer decides he or she is not right for my community, the first thing I say is "That's OK. Do you have any friends or family members looking for a home who I should contact?"