I’m looking to give a discount to my current customers who refer me business. I’m going to offer 10% off for each new customer they send me. Now my question is which pricing model would you choose?
Base your discount on the original price, with each addtional referral. Or discount from the current subtotal?
Example:
$100 job customer gets me 3 referrals, so that equals 30%. If I discount 30% right off the original price, the job is now $70.00. No matter when the referral was made. If I discount 10% on consecutive subtotals then the price for the job becomes $72.90…
Which would you choose? I hope this makes sense.lol
I’d go w/ the second option Ray as you lose less ground on them over the next few referrals. I know it doesn’t seem like much you’d end up getting almost one more referral before the cleaning is free on option 2.
Some people will tell you they never do discounts. I do. For every new client you get it is DEFINATLY worth something to you! I would shy away from %'s tho. Do $20 for every client you get! Look at costs.
Those 5 clients you could get will generate (per your example) $500 in new business. all it will cost you is your labor costs to give aaway a free cleaning. also remember the value of a client! Every new client will be a minimum 2 cleanings a year so those 5 clients will potentially bring you $1000 a year and $1000 every year you keep them.
And think of all the clients they may reffer to you!
I have a 10% of what I must have in my cost. That 10% goes for referrals. If a customer sends a referral I send them a check. example, Monday I had a residental customer that was referred by another one, total job $300.00, after I collected, that night, I wrote a 30 check and a thankyou card to the one that referred them. This does 2 things for me, it lets customers know I pay a finders fee, and the card is something they can be reminded that I pay a finders fee. about 30% of my business comes from referrals.
You can give anything away as long as you factor it in as a cost.
Either option works really. 10% is nothing at all. I would tell them (if its only a 100 dollar job) that 5 referrals, you get yours done for FREE! I dont care, I still have 6 customers.
I’d do option 1. The reason why: Try explaining option 2 to your customer. It doesn’t hurt you that much price wise. But if a customer is expecting 10% off and refers three others to you, they’re expecting to see a price tag of 70 not 72.90. I can see a lot of customers being a little annoyed thinking you tried to cheat them.
I’m another one of those that does not do referral finder programs.
If I’m giving a 10% discount for every referral then it may be construded that I’m charging an addtional 10% to the client so that I can pay someone else for my business growth. (hope that made sense)
My clients say that they are more than willing to referr me because of all that I do for them. I spend my “referral fee” back to the homeowner by doing detail work for them. Not only cleaning their windows but screens, tracks, cob web removal, hose off the patio and front entry, mirrors, light fixtures.etc… wearing booties, a drop cloth, skid plates for under heavy furniture to protect the flooring if they have to be moved in order to get access to the window. Caring on a converstation but not too much. Informing them of any poetential maintinance problems, informing them that you made sure that each window opening and door was locked as you finished working around them to insure that their home is secured once you leave. These things will give the homeowner confidence that you not only do a great job like most companies but that you can be trusted in their home. This is priceless and I am told all the time when they give me a referral and I call them to thank them for that referral they state that they are more than happy to give my name out because they know that they can confidently give my name out and I will follow through everytime with a great job. [B]If you want to invest in your company then invest it in your current customers and the word will spread like wild fire.[/B]
I have been thinking about setting up a program almost like a rainbow dealers program. Thinking something like, Ask the homeowner for the names and numbers of 2 people that they believe could use our service, then just call those people, tell them who you are and who referred you to them and ask them if they would be interested in you coming out and setting up a bid or demo for them. I am thinking that I could set up some type of reward program for the original homeowner, something like if the 2 people that they referred agree to service they get something, and if they refer us to 5 homeowners instead of 2 they get something bigger. Obviously needs alot of tuning but just an idea, it seems to work for the rainbow people.
This is what I have major concerns over. Of course I would want to go with the higher profit but if that higher profit leads to that customer being upset and contacting the referrals. Well then I could lose all the referrals.
But another part of me does not think it’s fair to me to provide 10% off on the original price when their price is no longer the orignal price.
I hate doing promos like this as I always have some conflict within myself as to the morals of doing business. But promos like this bring in business. It’s part of how I got built my list when I 1st started. I did not get a zillion customers but I feel 100+ customers for a new business in 6 months with 1 little B&W business size card ad running in a free newspaper, was not a bad ROI.
I’m very old school and would love to work on handshakes but we all know that story. Well I guess I’ll leave the profit with the customer. 10% off the original price it is. That’s what people would expect in an old school discount program. I don’t think SAM Walton would have done it any other way.
I do mine a little differently. I’ve always offered customers, friends and family ten percent of a sale that they get me, each time I do the job. I have a $30 customer that got me a $600.00 gig. The next time I did his windows, when I got through, I gave him $30.00. I have $80.00 a month drafted from my account to my little sister’s, monthly, for as long as a gig she got for me holds out. Customers usually just discount it from their next window cleaning. One lady gets $160.00 quarterly for getting me the Glasco Smith & Kline offices. It’s a win win situation. I just love the fact that I stimulate sales and make a few folks really happy at the same time. Speaking of happy. I wish you all a happy holiday season.
THEGLASSMACHINE “because glass looks it’s best when you can’t see it”
I haven’t instituted an organized rewards system but I would think if I were to personalize my show of appreciation, it would strengthen my relationship with the referring customer and be good for all involved in the long run.
For example: "Mrs. Johnson, I really want to thank you for referring your friend Leona to my window cleaning service. I value all my quality contacts and it is a pleasure serving homeowners such as the two of you who insist on high quality, trustworthy individuals to be in their homes. I know you love to golf, so as a small token of my appreciation I’m including a gift card to Green Hills. I’ve heard nothing but good about it! Thanks again and I’ll look forward to seeing you."
That was off the cuff. Something in that vane seems to me to be very warm and thought out.
I’m not blasting anyones business here. But for one the question was “WHICH ONE WOULD YOU CHOOSE?” Not do you offer discount services. IMO. In todays day if a company does not offer something then the normal “We are the best”, your business will fall to the wayside. Go tell wal-mart or home depot how discounts don’t work. One man bands will remain one man bands for a very very very long time if all they offer is the cleaning service. The way business is conducted in this country changes everyday, if people want to ignore it, that’s up to them. IMO if someone came to my house and then sent me a standard “YOU GET NO DEAL FROM ME BUT I WANT YOUR BUSINESS AGAIN” postcard, it ends up in the trash no matter how great they were. There are too many other companies looking to gain your business and offer you some kind of incentive to use them. Be it money, be it more services at a cheaper price, a gift card or whatever. There is only one way to get a bigger company and that’s with more customers. Can’t be done any other way. You can’t get more customers just from being the best in an industry, that has no way for the customer to measure YOU ARE THE BEST other then word of mouth. But that’s just my opinon and we all know what opinons are like.
I second this, but I like the $20 a piece option better. Ten percent seems measly… but, you don’t want to take the benefit out of referrals by giving away too much either. I like $20 to the referr-er
10% may seem measly on a $100.00 job but when your offering 10% on a $1000.00 and up well then $20 bucks isn’t worth wiping the dogsh*t off the bottom of your client’s shoes
With respect, I dont understand why people are so against discounts. EVERY company anywhere has sales and gives deals. Why would our business be any different. Customers are the name of the game. If you advertise, in essance you are paying for each customer right?
$500 ad brings you in 20 customers you are paying $25 a person, right? What is the difference? JMO. If I went to a nice steak house that I had a coupon for or they were having a special, the next time I went there I wouldn’t say well last time i paid X amount.
I’ve always been a handshake guy, and have rarely been burned. The only times I have been was by subcontracting -never by a residential job.
I’ve built two window cleaning companies (working on #3, but neither #2 nor #3 have really been by choice, lol) almost entirely by word-of-mouth, largely by offering a standing 10% discount for referrals, coupled with excellent customer service and almost never getting a callback complaint. If I do, it’s generally from a new customer that isn’t familiar with things like “thermal pane damage.”
My 10% discount offer has been good for the customer’s next service, and I don’t stack discounts on top of each other. It’s too much of a financial loss at once if someone accumulates em on you. Instead, really good referrers get “freebies” from me, such as mirror cleaning (easy peezy!) or some hard H2O removal. Most folks have a glass patio table that could also qualify (also easy, but difficult for the homeowner to do).
There’s a couple reasons I don’t stack discounts, although many of my best customers end up getting a “standing 10% preferred customer discount.” Many times that amounts to simply NOT raising their price when others do take the inevitable inflation hit every couple of years.
My business cards have always read “Discounts for Referrals.” Most times, a single home in a subdivision turns quickly into two day’s work on this merit. Get creative with it. Say if someone gives you 3 referrals, rather than give them 30% off, offer them 10% off (the 1st ref) & some mirror cleaning (the 2nd ref) then offer their other 10% for even another job, like say a family member. Then you’ve just picked up a 5th customer. Politely explain that you have to limit the discounts on a single job, but that you’re sure to remember a customer as good as they are in the future, then surprise em by doing a little something extra without being asked.
You’ll have a customer for life that will tell everyone they know about you.
It’s also a good idea to limit the top end of the discount with a cap at say, $25. The vast majority of residentials fall under that category, and the folks with homes bigger than that probably don’t need discounts anyway, instead relying on the quality of the service.
One thing every neighborhood has is a “neighborhood contractor finder” -that one person that everyone goes to for any number of services from plumbing to landscaping to windows. Typically they are very particular and have a perfectly groomed yard. If you can find this person and make them happy you my friend, are golden!
Maybe try something like gift cards per signed referrel. % will cost you huge if you are in $800.00 - $1000.00 neighborhoods. (love those) Gift cards still work and do not hurt you as much in the long run. Although, you may find tax complications if you are incorporated.
