Referral Sales – The Pinnacle of Lifetime Customer Value

HomeBlog › Referral Sales – The Pinnacle of Lifetime Customer Value

Referrals. Word-of Mouth-advertising. This is the foundation that every successful business is built upon.  And it’s never been more vital than now. After all, social media is just the latest rendition of referral marketing.

If you can do just two things – 1) get consistent referral sales and 2) manage your overhead and costs effectively – your business is virtually assured of success.  

To earn referral sales, everything else in your business must be focused on pleasing your buyers. You must build high rapport and trust for your buyer to risk their reputation by recommending you. And if you have that, you should be seeing a minimum of 30 – 40% of your overall sales coming from referrals.

Referrals are your very best sales, your ideal residents. Here’s why:

  1. Referral sales require virtually no investment in marketing or advertising;
  2. Referrals are more likely to convert into a sale than any other lead;
  3. Happy customers tend to refer people similar to themselves;
  4. Happy residents refer people they want as their neighbors;
  5. Referrals come in with more realistic expectations; fewer problems.

Building a Referral Strategy

Increasing the percentage of referral sales your business sees requires three things:

  1. Measure and record your current referrals as a percentage of overall sales
  2. Set specific goals as to where you want your referrals to be
  3. Create your strategy, processes, and program to reach your referral goals.

1. Determine and record your current referral sales as:

Total Sales: ______ ÷   Referral Sales: _____ =   _______

Example: “Total Sales:  10  ÷  Referral Sales: 2   =  . 2 or 20%”

2. Set new referral goals:

Increase referrals from ______% to _______% of total sales.

Example: “Increase referrals from 20% to 40% of total sales.”

3. Create and outline your strategy to reach those goals:


Goal:  Increase referrals from 20% to 40% of total sales.

Process: Customer Loyalty/Referral Program

Budget: $80 per customer per year  $80 x 50 = $4,000/yr.


  1. Customer satisfaction survey
  2. Address key issues
  3. Ensure satisfied customers
  4. Define scope of loyalty services
    1. Happy move-in anniversary gift
    2. Seasonal gift/promotions
    3. Community improvement programs
    4. Annual complimentary inspection
  5. Define scope of program
    1. Incentives
    2. Referral offer
    3. Time frame
  6. Launch program
  7. Evaluate and adjust

Let’s look at these steps in detail:

1. Customer Satisfaction Survey. The great majority of your customers will truly appreciate that you’re interested in their opinion, and their comments will be more positive than you probably expect.  And while some might use this as a ‘gripe session’, overall you’ll get both testimonials you can use, as well as helpful, constructive ideas that may help you to improve in ways that you might not have anticipated.

2. Ensure Satisfied Customers. Respond to every suggestion or complaint personally and rationally.  And even if you can’t offer the solution that someone asks for, you can show you care and do what you can.  Doing so will inspire your residents to be more reasonable themselves, and build a stronger rapport.

3. Define the Scope of Your Program. Setting aside a portion of your marketing budget for customer appreciation might be the best marketing you can do.  You don’t have to go overboard, but everyone likes to be remembered and shown appreciation.  Keep this simple and focused on delighting your customer with something unexpected, and set a realistic budget.

Bottom Line

When you have a powerful Customer Loyalty Program focused on achieving high levels of customer satisfaction along with a formalized referral program, you can expect 5 referral sales over the lifetime of every customer.

Picture of Scott Stroud

Scott Stroud

Scott Stroud is CRM Program Director for MhCRM, the only automated CRM for the MH industry. Scott is the co-author of Managing Your Business With 7 Key Numbers, available at, and The Complete Guide to Marketing and Selling New Homes. Scott is a regular speaker at MH national and state events and a key contributor to He can be reached at or at (606) 416-2078.
Share this
Tagged in