Should I pay a referral fee?
Yes. You should pay a referral fee (also known as a bird dog fee) to reward the clients who believe in you enough to send more business your way. Think of it as an advertising expense. You can afford to pay a referral fee, since you’re not investing advertising dollars for leads on HomeAdvisor.com or Angie’s list listings, or yellow page, Yext or yelp ads. You’re advised against advertising in neighborhood penny savers, bargain hunter newspapers or mailing services like ValPak. Since you will be targeting your marketing to one or two neighborhoods – save your advertising money and spend it instead on a referral fee for the people who already like you, and are referring you to their friends.
Psychology 101 tells us that the behavior we reward (or pay attention to) is repeated. So yes, you want to show your appreciation in a positive way, so your customer will want to repeat it.
Clients like to feel like they are getting a good deal, and they like to be rewarded for the good choices they made. The good news is, when you positively reinforce the behavior with a referral fee, your happy clients will send you more referrals. Soon your schedule will be so full you will never look back.
You can do one of three things, you can pay cash. You can give extra house cleaning time, or you can give a gift.
This depends entirely on how big the referral was. Were you given a single house cleaning opportunity such as a “move out” referral? If so, you want to give something that says “Thank you, I appreciate what you have done for me.” This may be the equivalent to an hour of your cleaning time, or a small plant or perhaps a shower head on a hose that will make your future house cleaning easier. ($25-$35 value).
If you were referred continual business say a bi-weekly client who now uses your services twice a month, a bigger gift of two or three house cleaning hours would be appropriate. ($50-$75 value).
If a client advertises for you – at their expense (either with paid advertising, or their reputation, by posting and recommending you and your services, you’re your phone number and email, on a neighborhood site like “NextDoor” or a neighborhood Facebook group page, you will pick up five or ten new clients – then an even bigger gift the equivalent of one or two entire cleanings would be nice. ($75-$200 Value).
I cap my waiting list at 30 people. Why? Because my clients never go away. They move and they lose their jobs, but they don’t randomly fire me or quit. So there is very little attrition or turn over in my business. I will never get to clean for the 30 people on my waiting list.
So what happens to other people who call? In 2015 while cleaning houses, I had a client post a lovely recommendation on “NextDoor” which is a neighborhood app that is like “MyNeighborhood” where neighbors can recommend house cleaners, handy men, landscapers, plumbers, or private contractors that you have had a positive experience with.
Oddly enough, because misery loves company, and so do glowing recommendations from delighted clients, – my clients in two neighborhoods gave dueling recommendations of me, trying to out-do, or one-up each other with their praises for me in a public forum where lots of my other clients are members. I was the talk of the neighborhood for a minute, and my phone went ballistic.
Unfortunately for me, I was already running a cleaning schedule at full capacity. I gave away 40 to 50 new prospective clients a month for four or five months.
I personally interviewed other house cleaners in the area, I wanted to know how much they charged. How they worked, how they knew what chemicals to use on various surfaces. Where they bonded and insured? Were they honest? Were they reliable? What training did they have in house cleaning? How long had they been in business? What were their credentials?
The ones that really inspired me – I sent all of the new business their way. It cost me nothing, except a few minutes of my time, and it provided excellent customer service to people I was never going to get to work with. Those people however, would still talk to my regular customers who recommended me on the community page in the first place.
Here’s what I did:
(I returned the phone calls and texts from prospective clients with a note that said: “Hey John, I work by referral only, so I’m thrilled and blessed that you called. However my schedule is booked to capacity, and in order to serve my existing clients, I am unable to accept any new business at this time.
However, Irene is an independent house cleaner in our neighborhood, that I’ve recently interviewed and I’d love to pass along her contact information. She’s really great at house cleaning, she’s organized, she’s bonded and insured, and she’ll really do a great job for you. Her number is: 000-000-0000. Tell her Angela Brown sent you.”
So I didn’t ever get to work the referrals, but the short interaction with them was a vetted recommendation for another house cleaner. All of the new prospective clients were receptive to the new recommendations I passed along.
And existing clients I had, commented later while I was cleaning their homes that they heard from neighbors that my schedule was booked, yet they were impressed I took the time to find their friends and neighbors a house cleaner.
Working referrals is a turn-key system that will provide you with all the business you could possibly ever want. If you’re not good at sales, get really good at working referrals, and let your happy customers do all the selling for you.