When a homeowner or business in your area experiences water damage, a plumber or an insurance agent will likely be the very first call they make. While a plumber can often remedy the source of the water damage and an insurance agent can help secure financing for the repair, neither can actually do the work of water damage restoration. Because of this, they typically keep on a hand a list of contractors who perform high quality restoration work in the area to refer to homeowners experiencing water damage.
Referrals made by other contractors or insurance agents have become one of the most effective means of generating leads for water damage restoration work. This is why the team at More Floods places a high priority on building strong relationships with insurance companies and contractors in related industries.
However, in most cases, a good rapport is not enough to convince another company to recommend your company above all others. Instead, it has become an industry standard to offer an incentive for each referral that materializes into a legitimate lead. Due to the competitive nature of our industry, referral fees have become inflated, making it difficult to determine just how much is appropriate to offer as compensation for a referral. Continue reading for two strategies for deciding how much to pay for a water damage lead.
Option #1: Pay a Fixed Percentage of Each Job
The first option to consider when determining how much you will pay for a water damage lead is offering a fixed percentage of the income from the job. For most companies, a good rule of thumb is to offer 10 percent to your referral source when all is said and done. This means, if a referral turns into a $1500 water damage restoration job, the referral source will be rewarded with $150, or 10 percent, for their loyalty to your company.
Option #2: Pay a Flat Fee for Each Job
The second option to consider when determining how much you will pay for a water damage lead is to offer a flat fee, no matter the worth of the job. Depending on the jobs being secured, this option can offer a monetary advantage or disadvantage. For instance, if a referral source is being paid $200, no matter the value of the job, this could be a disadvantage if the job only has a value of $1000. However, in most cases, companies will experience more profitable jobs, and in the case of a job valued at $5000, a $200 flat fee is a bigger savings for your company when compared to an incentive of 10 percent.
So, how can a water damage company determine which option is best for their company? When it comes down to it, the best way to decide is by looking at your job average over time. If your average profit is $3000 or more, offering a $200 flat fee makes the most sense. If you find your average is on the lower end, it is probably best to consider offering a set percentage of the profits to your referral source
Lastly, like any other aspect of running a water damage restoration business, organization is key. Keep careful track of what your company is spending on referrals and the income these leads have generated. This information will help you to adjust your strategy in the future and determine if the relationship you are working to build are beneficial to your company.
To learn more about referrals as a way to generate leads, click here or call 1-866-667-3356 for more information about becoming a member of the More Floods network.