Know-How Exchange : Student Questions

Why not send a wonderful gift to the referrer? Something tangible is always memorable. It could be as simple as an Amazon gift card, movie passes, a AmEx Gift Check, etc.

The best referral is one that doesn't have any clear motivation to the referrer, except to be of service. For certain types of business, a formal kickback program can sometimes send the wrong message.

An idea is trialing program with a new product/service that you want to increase exposure (or increase awareness) with an existing "fan".

Newly introduced products/services, or existing products in which you want to increase revenue, are challenging to get buy-in. If you have "raving fan" customers, conduct an initial trial at no expense to the customer (time and expense contingent upon product/service, and it aligns with their business objectives).

The result is two-fold: your "referrer" gets to try something new with a company he/she already trusts and your company benefits with increased product exposure. And since this customer base is already "referrer's", it may also result in incremental revenue created by more referrals from these existing "fans".

Thank for your suggestions thus far.

I should note, we do 'gift' our refferals currently, I'm looking to establish a more formal arrangement as alluded to in the first response.

Vicki your repsonse is very helpful, however, due to our structure, our services are tailored to each client's specific needs. To fan a particular aspect of our services may be trying to fit a square peg in a round hole. The philosophy is great and we might be able to work with it in some degree.

Thanks for the suggestions so far!

I'm new here but your question peaked my interest as we were asking the same questions a few years ago. We are a small company and our referral program was targeted mostly to our B2C side so some info may/may not apply.

We were also already receiving referrals - 30+ years with almost no paid advertising. We did see an increase in referrals with a small decline in the prequalification of the referrals.

We decided NOT (against most advise in our industry) to use cold hard cash as an incentive. We reward with discounts for future services. This decision was based on two major factors. 1-We rely strongly on repeat clients. We did not want to give ANY illusion that the referral was given solely for the cash. The referred client will most certainly be advised of the referral rewards program. 2-We thought this would also stregthen the referral by confirming the referring client finds value to our services and wants to continue doing business with us.

As a bonus, during the normal "valleys" of our business, we can increase referral rewards without the capital outlay at that time which would be required with cash.

On the flip side, in our particular industry, some claim to get up to 50%+ increase in referrals by using cash vs. discounts.

Some of the pitfalls are - a referrer not having or remembering all of the information you require to send your reward. (Sally from church referred me. Do you know Sally's last name? No. Address? No.) This is a huge negative when Sally finds out she did not receive her reward.
We ALWAYS have a way to backtrack and confirm. We advise everyone in all of our literature about our program if they do not receive their reward to contact us. If there is ever any question such as two referrers for the same client, we send the reward.
Sending our rewards is one of my first and most important duties!!! It is NEVER put on the back burner.

One other important factor-be very careful with every detail in the program. For example - we made our reward certificate look like a one dollar bill and although we clearly printed the amount on the face, people assumed it was worth $1.00.

In closing, if we had to do it over again, we would in a heartbeat.

Thanks all,

Zahid's answer was dead on!