I was waiting to meet my new client, the owner of a Chicago plumbing company, and I happened to be standing in the customer service representative area on a freezing cold day. This is what I overheard one of them saying, “I’m sorry, we don’t do heating work; just call XYZ company.”

When I was conducting one-to-one consulting work, I’d make it a point to be as invisible as I could in order to look, listen and better observe what was actually going on.

Anyway, I got to meet my new client in his office and I said, “Just curious: I overheard your CSRs fielding calls from what I presume were your customers as well as prospective customers. When asked about doing heating work as today is super cold outside, they recommended XYZ company. Do they also do plumbing?”

His face became filled with horror and anger; the company the CSRs were suggesting also did plumbing! The CSR had just unwittingly put the company’s competition in their customer’s basement. 

A network of trusted contractors

I explained how to better handle this situation moving forward: 

“We learned fast at my company that we were giving away our customer’s basement if we didn’t have a plan. So, here’s what we did and what I recommend you do. Create a great referral network of trusted contractors who do the trades you don’t do currently; therefore, you’ll be able to better keep your loyal customers by doing them a service.”

I added that the company must have an impeccable service record that matches the level of service his company provides today — and will be even at providing as we move through the work he hired me to do. 

I concluded: “You need a great referral network of other contractors who will keep your customers happy and will actively reciprocate recommending you for the plumbing work you do as you’re not their competitor.

“And down the road, when we have the plumbing business running systematically, we might revisit adding a new trade or trades to mirror what we did at my family business as we started out only doing heating work. Many times, we looked to acquire a referral company who had proved they were good.” 

Are you asking yourself, “How do you, Al, know this type of referral works?” 

It’s how my dad and uncle grew our heating-only business once upon a time. Dad and Uncle Morty were great at figuring out ways to do this. For example, they approached noncompeting contractors who they had met along the way or heard about and built a mutually beneficial relationship with them. Everyone benefited as our company grew, their company grew, and each of our customers was well-served.

The other thing we never stopped doing was identifying like-minded great contractors in trades we weren’t involved in. We had a list of these and were confident in recommending them because we knew how they operated, so the customers won. This had the added benefit of being able to share tips and tricks — now, people do this on Facebook. 

When selecting these contractors, you’ll have to use some judgment to ensure they really are that good, stay that good, and you’re on the same page when it comes to values and culture. In other words, check around to make sure the way they say they operate is actually how things are. 

The other thing to consider is how you will make referring each other’s businesses worthwhile, either through an agreement to reciprocate, a small commission or a customer discount. Ask them how they want it handled. 

The general information manual

Once you establish these relationships, the next step is to create a General Information Manual; this lays out the procedure the CSRs should follow when asked for a referral. 

For example, the roof sprung a leak, but they knew who we used for that. We had masonry issues, so they also knew who to contact.

Here is a sample of what this specific manual should look like:

Note: The names below in this excerpt of my General Information Manual are made up, so you will have to adjust this for yourself. And understand there are trades listed that later on were added to our own company.

The other great thing about this General Information Manual is it gave our own staff empowerment if we, the owners, weren’t available in a big emergency on which of those vendors to contact for our own use:

“Companies We Recommend:

“First rule: Always ask the customer who their regular company is for the trade they’re looking for a referral. You must check this list to see if that name appears. If it does, don’t recommend anyone else. Remind the customer to ask the contractor for any appropriate insurance coverage.

“Note: Do remind the caller to mention that they were referred by our company so they’re better served. 

“Air-Conditioning Contractors [for jobs or areas we don’t serve]:

“• AC Breeze: www.acbreeze.com, or call 516-123-4567 and ask for Bob. 

“Alarm Companies:

“• Security Team: www.securityteam.com, or call 516 234-5678 and ask for Tom.

“Appliance Repair Companies:

“• Appliance World: www.applianceworld.com, or call 516-345-6789 and ask for Chris.

“Asbestos Removal Contractors:

“Note: Advise the customer to ask the contractor he chooses for a copy of their workman’s compensation and liability policy before commencing work. They also should ask for a photocopy of any and all pertinent licenses. 

“This list is in alphabetical order, with no preferences given:

“• ABC Environmental: www.abcenvironmental.com, or call 516 456-7890 and ask for Caleb.

“• XYZ Services: www.xyzservices.com, or call 516-567-8901 and ask for Sue.”

Then, your new goal is to train your CSRs to only refer from that list. Provide them with a script and have them practice it. 

If a customer asks for a referral source that is not covered, tell the CSR to let you know and if there are frequent requests; you, the owner, may want to look for someone good to add to your list. In the meanwhile, here’s an example of what you can have the CSRs say in this instance:

“I’m sorry, but we don’t do that service or have a great referral to offer. Please do us a favor and let us know if you find someone you like or don’t like so we can help others down the road.”

Referral networking also includes identifying all the potential lead sources out there who serve your ideal customers. For instance, we built great relationships with all religious institutions in our area that were attended by many of our loyal customers, and then offered special deals for their members. Those members then became strong advocates for recommending our company to others. 

Developing an effective referral network in every possible way ensures that the referrals you make are ones that will serve not only the customers well but your company and others, too. A rising tide lifts all boats.