When it comes to remodeler marketing, a high percentage of referral-based projects is a blessing that can turn fatal. But how, and why?

Having a high referral rate generally means you are doing a good job in making your clients happy, which is great remodeler marketing. However if a high percentage of your remodeling business’ sales are from repeat and referral projects, then you have an unbalanced marketing strategy that will work well in a good market but can be disastrous in a down economy. The reason for this is simple. Generally a remodeling company marketing strategy that gets much of its business from its past clients and other referral sources (together sometimes called your circle of influence or COI) neglects other ways of keeping its name awareness and visibility high in the community and does not keep on hand other effective remodeler marketing strategies for when their circle of influence referrals slow down. Suddenly the 200, 300, 400 people in your circle of influence are remodeling less and are being asked less by their friends for the names of remodelers. Since you cannot quickly or easily increase the size of your COI, the people who know you get tapped out before you have the business you need.

To be sure, having a high referral rate is important. Referrals generally convert to sales in higher numbers than strangers do and referral marketing is less expensive than attracting and landing homeowners who don’t have a connection to your company. However, having a remodeler marketing program based solely on referrals leaves you with nothing you can scale up and often little brand recognition beyond a small and limited number of homeowners.

Therefore, while it may seem counter-intuitive to invest extra money on remodeler marketing when you have enough low-cost referrals to keep you busy, making sure your remodeler marketing strategy has components that will promote your brand during tough times should really be viewed like insurance, or putting away cash in the bank for the rainy day that will eventually come.

Many of the methods that are scalable and therefore useful when the market softens take time to develop and mature. Therefore, the time to implement these remodeler marketing strategies is before you need them and while you have the cash flow to afford them.

If you have any questions about this post or other remodeler or contractor marketing questions, please contact us.