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Make Referrals Predictable
Turn “word-of-mouth” into a measurable growth channel
John Wilson
January 14, 2026
Referrals are the oldest growth channel in home service.
They’re also the most neglected.
Most operators treat word-of-mouth like weather. If it happens, great. If it doesn’t, you shrug and go buy more leads.
I’m gonna help you change that mindset…
Check out these resources before we get started…
How to respond, route, and convert leads from Angi, Thumbtack, and Google in seconds
An email marketing strategy blueprint for 2026
Make Referrals Predictable
This week’s breakdown focuses on a channel every home service business says they want, but almost none have systemized: referrals.
Referrals already drive a huge portion of booked work in this industry. The problem is most operators treat it like luck. If word-of-mouth happens, great. If it slows down, you go buy more leads.
In the most recent episode of the Owned and Operated podcast, Murphy Nadauld, CEO & Founder at ReferPro, shared a stat that frames the opportunity perfectly: 83% of customers are willing to refer you, but only 29% actually do. That’s a massive gap of people who like your business, trust your work, and still never send anyone your way.
Not because they don’t want to. Because the process is messy.
Below, I break down the gaps that kill referrals, the referral funnels you can build, and how to turn referrals into a trackable growth engine instead of an accidental one.
And if you’re ready to dive in right now, check out ReferPro. It’s much easier to generate referrals when the process is automated with software. Trust me.
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What Referral Marketing Actually Is
Referral marketing is just turning word-of-mouth into a system.
Instead of hoping customers remember you and casually send people your way, you make referrals intentional, trackable, and repeatable.
Murphy shared the stat that explains why this matters:
83% of customers are willing to refer you
Only 29% actually do
That gap exists because most businesses don’t stay front-of-mind, don’t track referrals cleanly, and don’t have a simple process to reward the person who sent the lead.
In short:
Referral marketing is how you get more referrals than you’d get naturally.
The Stats That Explain the Opportunity
Referral marketing is having a moment. And the numbers Murphy shared explain why.
Most operators already know referrals are powerful. What they don’t realize is how much growth is trapped inside the channel simply because it isn’t systemized.
Here are the key stats that jumped out:
83% of customers are willing to refer you
Only 29% actually do
That’s a 54% referral gap sitting inside the average customer list
And once a referral program is set up, the “small group effect” becomes obvious:
Only 1% to 10% of customers tend to become true “power referrers”
Those top referrers are often sending 10+ referrals each over time
The incentive lever is even more interesting.
Murphy mentioned clear jumps in performance based on payout size:
A big conversion jump from $50 → $100
Another major jump from $100 → $250
And $500 incentives convert “off the charts” compared to smaller rewards
In some verticals, the ceiling is even higher:
Roofing programs can go up to $2,000 per referral
And the best efficiency signal:
Referrals driven through techs in the home (QR / tap-to-scan) can hit around a 40% conversion rate into a referral received
The takeaway from all of this is simple:
Referrals aren’t constrained by demand. They’re constrained by process.
How to Build a Referral Engine
Most referral programs fail for one reason: they’re built like a campaign.
A text blast goes out.
A few people share.
Then everything dies.
Murphy’s framework is different. It treats referrals like an actual channel with inputs, workflows, attribution, and payout rules.
Here’s the tactical playbook.
1. Build the program around the 3 referral funnels
Murphy breaks referrals into three buckets. This matters because each one behaves differently.
Bucket 1: Customer referrals (highest volume)
This is the base layer. You have the most leverage here because the list is large.
The strategy:
trigger referral outreach post-service while recency is high
keep customers front of mind later with drip follow-up
use workflows so you’re not sending the same message to everyone
Bucket 2: Technician referrals (highest efficiency)
This is the “in the home” system.
The strategy:
technician asks in person while job is wrapping up
customer scans a QR / tap-to-scan NFC
that action creates the attribution link immediately
follow-up drip campaigns support it later
Murphy said those in-home asks can convert around 40% into a referral received (massively higher efficiency than a cold blast).
Bucket 3: Affiliate referrals (B2B growth lever)
This is where things get interesting for restoration, real estate adjacent services, etc.
The strategy:
plumbers, realtors, inspectors, other trades get a tracking link
make it simple enough to send in a two-way or three-way text
attribution starts the moment the link is used
referrals route directly to CSRs and into your CRM
John’s observation here is important: you can recruit these affiliates online the same way you recruit leads.
He mentioned running Meta ads into an affiliate funnel to build an “army of advocates.”
2. Treat attribution like the foundation
This isn’t optional.
Murphy’s point is: incentives don’t work without clean tracking.
You need to know:
who referred the lead
whether a technician was involved
whether it came from a customer vs affiliate
whether the referral actually turned into revenue
That’s what enables:
leaderboards
performance tiers
automated payouts
and most importantly: behavior change
3. Use tiered payouts so incentives match ROI
Referral incentives only work when they’re aligned with ticket size.
Murphy specifically called out this example:
HVAC install = high ticket
HVAC service call = low ticket
So incentives should be tiered by revenue, not flat.
That way:
you don’t overpay on small jobs
but you can be aggressive on installs where CAC is high anyway
They also made the key point operators overlook:
You only pay after revenue is collected.
So referral spend becomes a performance-based CAC, not a gamble.
4. Set incentive levels using conversion jumps
This was one of the most tactical details we spoke about.
Murphy said incentives have “step changes” in conversion:
$50 → $100 creates a real lift
$100 → $250 creates another major lift
$500 converts at an entirely different level
And in some categories (like roofing), incentives can go as high as $2,000.
Takeaway: don’t guess.
Decide incentives based on:
your normal acquisition cost
your average ticket size
and your margin tolerance
5. Use workflows to identify + nurture power referrers
The advanced move isn’t blasting everyone.
It’s segmenting by behavior.
Murphy explains it like this:
some customers refer constantly
most don’t refer at all
the goal is to find the top slice and build around them
He said typically:
only 1–10% become meaningful “power referrers”
and those top customers can generate 10+ referrals
So strategically:
heavy personalization goes to the power layer
lighter reminders go to the rest of the base
you build momentum as the channel starts performing
6. Protect the customer from “too much communication”
This is a real operator concern.
John’s pushback was sharp:
“we fix toilets… customers don’t want constant messaging.”
Murphy’s solution:
map what you already send (review requests, invoices, memberships, reactivation)
avoid stacking asks
delay referral requests until a better moment
Because if you ask for:
a review
a referral
a membership signup
and payment
all at once…
you get nothing.
So the strategy is cadence control: space out asks so each one performs.
The core play
If you want referrals to become a real growth lever, the play isn’t “run a referral program.”
It’s:
build 3 funnels (customer, tech, affiliate)
make attribution automatic
tier the incentives
automate payout
nurture power referrers
and control communication cadence
That’s how referrals turn into a channel you can actually measure, forecast, and scale.
The Most Common Setbacks
These are the mistakes that keep referrals stuck as a “nice-to-have” instead of a real growth channel:
Assuming referrals will just happen
Not staying top of mind after the job is done
Asking for referrals with no system behind it
Not tracking attribution (so you never know who to reward)
Offering incentives but handling payouts manually
Letting referral leads sit instead of routing them fast
Sending the same message to every customer
Bombarding customers with too many asks at once (review, referral, membership, payment)
Trying to run referrals with too small of a customer base (under ~1,000 customers)
Most operators don’t have a referral problem.
They have a process problem.
Fix the system, and referrals stop being luck.
Never Lose Context Again
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Referrals already drive most home service businesses. The opportunity is turning that into a system you can measure, repeat, and scale. Close the awareness gap, track attribution, and reward the behavior, and word-of-mouth becomes a predictable growth channel.
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👊 John
Disclosure: Some of the content and links in this newsletter are sponsored or affiliate links, which means we may receive payment or earn a commission if you click through or purchase. However, all opinions expressed are entirely my own.
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