Referral Incentives The Gift For Giving
How important is it to offer some type of incentive for people to give you referrals?
Everybody loves referrals and one thing I’ve learned, is that they also love to be recognized for giving referrals.
In a survey conducted by Robert Davis and I (published in our book Business By Referral), incentives were found to be one of the most important methods of generating referrals for successful business professionals. Incentives can range from simple recognition such as a thank you, to monetary rewards based on business generated. Nearly a quarter of all the respondents in the international survey we conducted, considered incentives an effective generator of referrals.
Creativity is the key to any good incentive program. People just naturally like to help each other, but especially when they know their efforts are successful. Let your contact know when a referral he or she has made comes through, and be as creative as you can.
I’ve heard many novel ways business people reward those who send them referrals. A female consultant sends bouquets of flowers to men. A music store owner sends concert tickets. A financial planner sends change purses and money clips.
An accountant in St. Louis thanks those who successfully refer a client to him by paying for a dinner for two at an exclusive restaurant at least one hour’s drive from their homes. This approach firmly plants the accountant in the minds of his referral sources: they won’t be able to use it right away because the distance requires that they plan for it. As the date approaches, because it has been planned, they’ll be talking about it, and probably about the accountant. Later, when the referring party runs into someone else who might need an accountant, who will he recommend?
One Realtor I met in Northern California told me that for almost six years he had offered a one-hundred-dollar finders’ fee to anyone giving him a referral that lead to a listing or sale. He said that in all that time he had given only about a dozen finder’s fees, so he decided to try another kind of incentive.
Living on a large parcel of land in prime wine country, he had begun growing grapes in his own vineyard. A thought had occurred to him: Why not take the next step? He began processing the grapes and bottling his own special vintage wine. After the first harvest, he had a graphic artist design a beautiful label, which he affixed to each bottle. He told all his friends that he did not sell this wine; he gave it as a gift to anyone providing him with a bona fide referral.
He gave away dozens of cases in the first three years – half the time it took him to give only one dozen cash finder’s fees. Yet each bottle cost him less than ten dollars to produce. This special vintage wine makes him infinitely more money than giving away a handful of hundred-dollar finder’s fees.
About two weeks after the first edition of this book went to the printer, I got a call from the Realtor. “Has your book gone into print?” he asked. I told him it had. “Too bad,” he replied. “I’ve got a terrific story for you.”
Last Friday I got a phone call from a woman I didn’t know. Out of the blue, she have me two referrals. As I wrote down the information, I asked her how she had heard of me.
She said, “I had dinner last night at a friend’s house. He served wine. I took a sip. ‘Wow, great wine!’ I told him. Where did you buy it?” “You can’t buy it,” he said. “The only way you can get it is to give this real estate agent a referral.”
“ I have two referrals,” she said. “Can I get two bottles?”
“So I gladly sent her two bottles. Both referrals turned into business, and each of them cost me only ten dollars.”
It sometimes amazes me, even now, how something as simple as a bottle of wine can be such a power incentive for people to give you referrals. But the explanation is really quite simple: because it’s special. A bottle of wine that can’t be bought can be worth ten times what it cost to produce when traded for something as valuable as a business referral.
Are there employees, co-workers, friends, or relatives who might be able to refer you? It always surprises me that people forget to provide the incentives for the individuals working with them. You’ll probably need to offer different kinds of incentives for different groups of people. You may choose to offer something completely different for your employees than you would for your clients or networking associates, such as bonuses and vacation days.
Remember, finding the right incentive is considered the biggest challenge by most individuals who are preparing to score big by building word-of-mouth business. To make it easier on yourself, be sure to get opinions and feedback from others who have a significant interest in your success.
Don’t underestimate the value of recognizing the people who send you business. A well-thought-out incentive program will add much to your word-of-mouth program.
Called the father of modern networking, Dr. Ivan Misner is a New York Times bestselling author and Founder of BNI (www.bni.com), the world’s largest business networking organization. His latest book, Truth or Delusion can be viewed at www.TruthorDelusion.com. Dr. Misner is also the Sr. Partner for the Referral Institute, an international referral training company (www.referralinstitute.com). He can be reached at firstname.lastname@example.org .