Make Referrals Easy with Jamey Vumback

Hey, everybody, it's Jim Johnson here, the head coach at Contractor Coach Pro and your host with Contractor Radio. And Contractor Radio is designed to help contractors build the strategies and tactics they need to be successful out there in the field. And we hope to bring that to you each and every episode. Whenever we're talking with you, we try to be a little bit entertaining, a lot informational, very strategic and tactical and practical for what it is that you're doing out there as a contractor. And today we have an awesome topic we're going to be talking about referrals. But before we do, let's pause and pay the bills and hear from one of our amazing sponsors.

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And we're back here at Contractor Radio and today we're going to be talking about referrals. And I said, hey, if we're going to talk about referrals, let's bring in the one guy I know that knows anything and everything about referrals. So much to the point that they created some software for it. He has an unlimited amount of experience in dealing with this. I call him the referral guru. Welcome to the show. Our boy, Jamie Vonbag. Jamie, welcome aboard, man.

Hey, thanks, Jim. Appreciate it. Love being here, that's for sure.

Yeah. I've gotten to know you over the last few years and when I first saw your software, I was like, man, this is awesome, because it's one of the things that contractors really struggle with. They struggle with taking advantage of the opportunity that they have with each one of the clients that they're working with and using that to get more referrals. Before we get into that stuff, kind of give us a little bit of background, like, where were you? What brought you to this whole thing of getting referrals and actually building some software for it.

Yeah, I mean, I won't go back too far because I got quite a few years of experience over decades, but, you know, I spent a lot of time in print media with Yellow Pages, believe it or not. And that was quite the experience for me in learning, you know, about how customers, you know, come to be and what do they use to, you know, identify new opportunities when they're looking for a product or service. And so in Yellow Pages, you know, back in the day when there was Yellow Pages, you know, we actually went door to door and really asked customers, you know, do you have a yellow page? You know, how do you use it? Right. And then what that did was built a lot of trust and knowledge about how people look for different companies for different services. So over the years, through Yellow Pages, you know, learned about, you know, cost per acquisition and lead cost and dealing with contractors and all sorts of businesses. And through the years, went from selling Yellow Pages to my last position back in 2008 was Vice President of sales. And at that point I exited AT&T and moved back to California from Connecticut, moved across the country a couple times, so got to know the middle states, know the east coast and the cold and the sunny San Diego weather. So loved it out here. And at that time in 2008, was looking for my next gig and I came across this opportunity to start a solar company. Guess what? 2008 was pretty good time to start a solar company. And so it really, the opportunity was a franchise type model, and it really matched up with my skill sets, which was sales and marketing. Right. Over the years, learned a lot about it. And so I actually partnered with an existing electrical contractor. They were commercial, believe it or not, and they were looking to get into solar. And so I brought this opportunity to them. In 2008, we started Solar Universe in the Central Valley of California. So through the years of running the solar company from scratch, we built it up from Nothing to about 20 million over the next 10 years or so. I had a lot of, you know, interaction with, you know, door knockers and print media and billboards and radio, you know, in the early days in 2008, 2010, it wasn't that hard to find new customers. But then the market got a little tighter and our market started shrinking a little bit. And I started looking at, you know, our cost per acquisition and saying, there's gotta be a better way. There's gotta be a way to control our costs. And I took a long, hard look at referrals, right? So we were doing pretty good with referrals. About 25% of our business came from referrals. But let me tell you, one of the things that was doing was I had a pen and paper Google sheet. We were rewarding people $500 for a referral at the time. So then we had to send out checks, and then we get the calls that they didn't get the check or the dog ate the check, you know, oh, I saw that you put solar on my friend's house. You never paid me. And it was all these problems surrounding referrals. And so I really took a deep dive, learning more about the method of getting more referrals, the word of mouth, what can we do in order to really get our customers more engaged with us and give them a better experience? And from there, came up with some solutions for myself as a contractor. So I really learned in the trenches, I talk about our product and such, which is, you know, it was built by contractors for contractors. And so that's really the key here is understanding the psyche behind referrals, the psyche behind getting rewarded, and the simplicity of a system that will help you get more referrals.

That's super cool, man. So you've actually put some, like, thought into it. Not just this surface level, but it came down to it seems like a lot about cost per acquisition. The lower your cost per acquisition, the more profitable you are. And so let's talk about that for just a second, because I don't think people relate the two things together all the time, because you mentioned two things. You mentioned lead cost, and then you mentioned cost per acquisition. And I think most people think of those as almost the same thing sometimes, which really. And truthfully, it isn't. It's all about how many leads does it take to actually get a. Get a customer. So if you're, say, putting out Facebook ads and it's costing you, you know, five cents a click or a dollar a click or whatever it is, and it takes you $500 to get one person to give you a lead, and your closing percentage is 25%, then your cost per acquisition is actually $1,000. And so you know, that type of marketing could get quite expensive if you're not closing at the. At high enough numbers. Did you take it to the level like, hey, you know, for all these things that we're doing in marketing that cost this much, so it's costing this much to actually get a job, and so getting referrals quite a bit cheaper.

Yeah. I'll tell you a quick story, too. I was on a panel one time, and we were in a panel of probably 50 contractors, and we posed a question of how many people in this room understand what their cost per acquisition was or their cac. And I was amazed at how many people did not even know, you know, and for me, it's so crucial to understand the money that you're spending and how much you have to spend in order to get a new customer. And that's ultimately what that is. And so when you look at lead costs nowadays, you know, there's all sorts you got. You can get a $20 lead to a 250, $300 lead when you're buying them. Right. So how do you determine what leads are you going to buy? You know, are they going to be shared with other customers or other contractors? You know, and so if you can really drill down and understand your cost per lead, and then as you mentioned, Jim, how many leads is going to take to make a conversion? And then ultimately, at the end of the day or at the end of the year, how much you spend to get that, 100, 200 customers. Right. And that's going to be your cost per acquisition. And in the solar industry, back in the, you know, 2008 to 2015 or so, you know, it was, it was, you know, 2000 to $3000 to get a new customer, you know, and that's you. A lot of times you don't think about it that way, right? It's like, oh, I got a new customer. But if you really understand the cost per acquisition, you're going to want to find ways to drill down into that and find out how can I reduce that cost. And I'll share one stat with you. We had, and this is as I rolled out our product, I've actually built the product for my own company. As I rolled it out, about 25% of our customers were coming from referrals. And in a short period of time, within eight months, our business was growing year over year, about 10% and 80%, excuse me, 70% of our customers were coming through referrals. So what did that do? It drove our cost per acquisition down from about $2,100 down to about $700, because we're paying $500. And we were actually paying for completed demos or presentations and such. And so we were able actually to control that and shrink that dramatically down to a.

Of the cost.

And what we did was we were able to, because we were a private company and a smaller company, a lot of that money went back to the bottom line, you know, and we were able to reduce our advertising spend and some of these other areas. So it's really, you know, kind of figuring where is the right mix between, you know, whether it's print, whether it's social media or referrals. Where does that all come into play? Ultimately? It's going to come down to where am I going to get my biggest bang for the buck? And I'm telling you, referrals is it. You work so hard to get a customer to refer you to somebody. You got to take advantage of that.

Yes, that's. That's. For me, the value of referrals. The value of referrals is my cost per acquisition is significantly less. It's also why you see people do a lot of door knocking. Your cost per acquisition comes down quite a bit as well. But if you're doing any heavy print media, Facebook and social, any of that kind of stuff, your cost per acquisition can be pretty crazy. I was just talking with a company the other day, and they were saying their cost per acquisition for solar was 3 or $4,000. I was like, wow, that's a crazy. Just to get one customer. So you must be making some money off of these folks is kind of what that comes down to. And. And in the roofing game, you know, I see numbers anywhere from 450 to $800 is about what people are paying cost per acquisition. If they're lucky. Sometimes it can be even more than that. So why don't contractors get more referrals? Why wouldn't they, like, put more effort into it?

Yeah, you know, I think the folks that we talk to a lot, they go, oh, we're already getting referrals. Right. They think they're already doing well in this. In this sector, you know, and they, oh, yeah, I get referrals. And, you know, when I ask how much? Well, maybe 5 or 10%. The fact that I always bring up is you don't know what you don't know. You don't know what you're missing. Because there's such a big opportunity out there. If you can somehow mechanize this and make it simple, and easy for you to track and manage that and engage and communicate with your customers in a way that they like to be communicated to. They're going to. They're going to. They're going to tell their friends. They're going to tell their friends what a great experience they had. So there's an opportunity here to certainly enhance what you're already getting and make it a little bit easier. But expanding about, expanding that, you know, horizon of opportunities through social media sharing and just really great opportunities to get customers to talk about your company. And so, you know, I don't have that answer. Why don't they do it? Because every time I talk to somebody, oh, yeah, we already get referrals, but they don't know the power of it. They don't know that it can actually run their entire business, you know, at least 70, 80% of their business off of referrals if they do it right.

Yeah, I think a lot of it comes down to they don't really have a process for it. They tend to just ask whenever everything goes kind of well. You're like, hey, do you know anybody? And that's their idea of asking for a referral. You know, anybody that needs a roof or anybody needs solar, anybody that needs, you know, painting or whatever it is they do as a contractor, and I wouldn't call that a great experience. You use that word several times. Experience. We coach that pretty heavy duty as about creating this experience where everybody becomes like this raving fan.

And.

And if you do that, they want to give you referrals. If you don't position it right and you don't make it a part of your process, it's even worse. It's like, hey, I did a great job and I didn't ask for it. How do you think contractors could make. Let's. Let's talk first about the actual process with a contractor. How could they make the experience better there?

So, you know, with regards to. I'm going to take a step back because with regards to, you know, go back to your previous question. One of the stats that I see and it just drives me up a wall is only 11% of salespeople ever ask for a referral. Right. So, you know, why is that? And there's reasons for it. Right. You know, because it may be in the past they had, you know, they had a customer that referred somebody and it went to another salesperson. They lost the opportunity. Maybe it was, you know, it got lost in the shuffle. The customer lost their business card or whatever. So what we want to do is we want to make sure the sales rep as part of the process because we want to make sure that they see the value. What's in it for me as a salesperson? Well, I'm going to get that referral. I can build my own network of these raving fans that are going to send me referrals every single week. And so that's really important. And the first step in being successful with a referral platform is getting your sales team engaged. And that's all part of putting together a process by which it is a every single day process that you can inspect what you expect, right? Make sure that you know, if the process is in place, that you have some tools in place that will allow you to then make sure that your sales team is making part of the process. And once you do that and they start seeing the power of having people refer them and they know that they're going to get that referral back and they know that, you know it's going to close at 60% of the time, 70% of the time, they know that when they walk into that home or do a virtual demonstration that there's not going to be five other contractors knocking on the door, it's going to be maybe one, maybe two, maybe no others because they asked a friend about who they needed or who they used for that particular job. So getting your sales reps involved, getting them excited about it and then having tools that will actually help that process of tracking that for them and for yourself is a really, that's the number one key.

So you brought up a big concept. I get work done on my house all the time. As a matter of fact, right now I am looking for somebody to do.

A.

Like a timber frame patio, cover over my back, hot tub and outdoor kitchen and all that stuff. The first thing I did, the very first thing I did was go to my Facebook group that's for our neighborhood. And I said, does anybody know anybody? Like they'll, they'll refer somebody, did good work with them. You know, you see people do this in next door and stuff like that, right? And that's who we trust is we trust somebody that's had a good, a good experience with somebody else. And I don't know anybody here, so I'm still figuring out. I just moved here about a year ago, so I'm still figuring out who the good guys are and who the good guys aren't. And then another part of what you said that was super important was it's not really part of any process. It's like just told, hey, you should get referrals. That's really good for you, right? And that's. That's as far as they go with the. The selling of it to their sales rep instead of saying, hey, this is a part of our process. We're going to set expectations that we're going to do a great job for the customer. And if we do that, they would give us referrals. This is exactly how we're going to do our work. And when we perform, I'm going to ask you for referrals at the end. You got that? And they go, yes, I got that. Well, then it's a lot easier to actually ask for them later on whenever you do that. Good job. And then I hit point number three that you really nailed. I don't know how many times I've asked for referrals from somebody before, and they didn't have them at that point in time. But then they ran into somebody, right? Like, just like me. I was asking on Facebook, does anybody know anybody? And they go, oh, yeah, you should call so and so Company. They don't say, call Jim Johnson. They say, call so and so company. Because that's who they remember. And so that call comes in, goes to another salesperson, that other salesperson goes out and locks up the deal. You're like, that was right next door. There's no way that that job came in without somebody knowing me, right? And the work that we did. So you get all irritated and you're like, hey, nobody's tracking this stuff. So it seems like we might have a solution for some of that with. With what you guys do, but would you say that that's a good way of putting it into the process, is setting expectations up front with that client that, hey, we're going to ask for those. Do you see people be successful with that?

Yeah. So I'm going to take it a little deeper in what I believe is the ideal way to kind of bring that referral process into place with the customers. Right. So a part of our software, we also have Project Status Update. Right. So we integrate with your CRM, whatever project management tool that you're using, and within the application itself is the stages that they're going to go through as a customer. So right there at the kitchen table, or right there at the presentation, if they're doing it virtually, you're going to have them download the application, they're going to show them the customer journey. It's a great way to get that customer into the app and start Showing them. See, this is how the journey of your roof is going to be. We're going to get the permit, we're going to schedule, the materials are going to be delivered, and guess what? You're going to be notified every step of the way in real time. So as we know, you're going to know what's happening with your job. You won't have to be calling us. You won't have to be bugging your salesperson. We're going to let you know every step of the way automatically, as we start to do your job, the salesperson takes that customer through that journey, and they start showing some other tools and things that are really cool in the app and say, oh, by the way, you can write a review. Just click on this tab. If you're happy with the job, this is how this happens. And you know what? We also pay $250 for every referral. So if you know anybody, matter of fact, do you know of anybody right now that might need our services? You know, you seem pretty happy about, you know, our product and how we're going to deliver it. Do you know anybody today that might be able to help you? And I'm a big proponent, Jim, of asking that day. There's some folks out there that says, no, we're going to wait till the very end. So the customer is 100% happy. Well, I'm telling you right now, you're missing opportunities. You really are right. Because the customer is excited about working with that salesperson. They love the product. They're ready to sign a 10,000, 20,000, $30,000 deal, and they're doing it because they like that salesperson. They like the product, but it really comes to that salesperson. Right. So take advantage of that opportunity that's in front of you right then and there, and do it in a natural way. Right. And do it in a way that makes the customer feel very comfortable. And it's not in your face. You know, you got us. You got to send us three referrals today to get a discount or anything like that. You know, hey, if you're happy with the product, you're happy with me. Is there anybody out there that you might, you know, need, you know, that might need our services? Let me show you how you can do that. And you just walk them through the app. So it's. It's just a subtle way of bringing them through the whole journey and say, oh, by the way, it really works really nicely.

Yeah. So I learned something new about your. And just so everybody knows the software that they have is called getthereferral.com so go check it out. It is awesome what it does. And when we coach clients, we talk to them about getting referrals and setting expectations. We believe what you believe. Day one. I'm here to get referrals. And the thing is, I'm going to be meeting with most customers more than once, right? Whatever it is that you're doing as a contractor, there's the initial inspection. There's maybe meeting to show the estimate and go over product. There's while you're actually performing the work, there's final inspection, collecting the money, you know, four or five times that you're going to meet this customer. So we make it easy, and you plan it out. You say, okay, at this time, we're going to ask for these people this time, these people this time, these people. And we take this giant Rolodex that they have in their head. Because if I asked Jamie and say, hey, do you know anybody that needs some roofing? You'd be like, your brain expands.