Construction company owners should use three pillars with customers in referral management: relationship, time and quality.

In construction, we all know the advantages of having a dedicated project manager to run a project.  Ultimately we are expecting a project to come in more profitably by focusing on the three pillars of project management: budget, schedule and quality.  But what about the business development side of your business? What if you could use your project management skills to systematically do more business by referral? Could you also expect your business acquired by referral to be more profitable?  Let's translate these project management skills that you already have (budget, schedule and time) into the three pillars of construction referral management:  relationship, time and quality.

1. Build a Relationship with Customers

Doing business by referral is all about the relationship. But the question becomes, who should you build a relationship with? Think about who you would like an introduction to, and then think about who sells products or services to that person to whom you would like to be referred.

For example, let's take a specialty contractor who would like to meet a general contractor. Who sells products or services to that general contractor? How about the local car salesman who sells him his trucks? How about the cleaning company that cleans his building? How about the commercial lender who loans money for his projects? These are the people that you want to build a relationship with, because they are in relationships with many general contractors. The good news is these relationships can be strategically developed. Just make an investment into our second pillar of referral management-time.

2. Plan Time to Spend with Customers

Now that you know who to build a relationship with, let's play some golf! Yes, I am giving you permission to play golf as a business development activity, but only if golf is also a hobby of the person with whom you're trying to build a relationship.  What better way to develop a relationship than to get out into the fresh air and play nine holes?

Several years ago I worked for a mechanical, electrical and plumbing contractor large enough to employ a vice president of business development. Everyone thought that this man was a magician. He spent most of his time taking potential clients out, playing golf, going to baseball games and, in general, having a whole lot of fun. Everyone thought he was a magician because they watched him play lots of golf, but then somehow he also could show how many millions of dollars in new business had been acquired that year. He could play golf all day, and somehow convince people to want to sign multimillion dollar contracts with this company. Later I found out he had no magic wand, but he was a great referral manager. He had simply identified who to develop the relationship with, and then spent time developing the relationship.  It is a fact that if you want to build relationships that result in referrals, you've got to invest time in the relationships.

Just like a project manager schedules activities on a construction project, as a referral manager you also have to put activities on your calendar that will build the relationships you need.  This can include fun activities like golf or a sporting event, but don't forget that giving referrals is another great way to build a relationship. Ask the person you are trying to build a relationship with what referrals would help him/her. You will be amazed at how many referrals you can give them. What a great way to build a relationship! When it comes time for you to ask them for a referral, they will remember the referrals you gave them and want to help you.  It's as simple as that.

3. Provide Quality to the Referred Client

Quality is critical in project management. When you complete a project, you want the owner to have a big smile on his/her face. To a referral manager, quality is just as important. You want the person who gave you a referral to have a smile on his/her face. This will happen by taking great care of the referred client. Remember that the person referring you has his reputation on the line so your performance will reflect on him. If you take great care of the referred client, do you think you might get more referrals in the future? However, if the opposite happens, do you think your referral source may instantly dry up?

In addition, remember that less is more with relationship development. It is more important to have fewer, high-quality relationships than lots of less developed relationships.  The higher the quality of your relationships, the more likely it is that you will be referred to the closest relationships.

Since the quality of the relationships is so important in the referral process, it is also important that you are constantly evaluating relationships. Evaluate where your relationships are, and determine which ones need more time investmed to develop further. Evaluate existing relationships. Are some of them just not producing fruit? Would it benefit you to invest more time in another relationship? These are important considerations for any professional referral manager.  Your available time is very limited.

Remember a professional referral manager needs to keep focused on the goal. As a project manager, you want to bring in the job with as much profit to the company as possible and with a thoroughly satisfied customer.  As a referral manager, you also have to measure your results. At the end of the quarter or year your relationship development activities should show a harvest of new and profitable business. Also, your relationship development activities should show a bounty of reciprocating relationships, so that you aren't starting from scratch for the next quarter.  If your relationships aren't what you want them to be, make some adjustments moving forward as to where and how you spend your time.  Remember you don't have to reinvent the wheel. If you treat relationships with the same care and investment of time that a project manager invests to bringing a project in with profit, you, too, will develop relationships that will bring profit to the company.

Construction Business Owner, May 2010