Referral Fire Starter Tip #3

Referral Fire Starter Tip #3: Reward the Referrer

Many people will come up with a name or two if you ask them for friends or acquaintances who might be interested in your service or products. But promise them a reward of some sort, and they’ll suddenly think of long-lost aunts and former roommates who are in the market for someone just like you.

Before you sign away your hard-won profits, though, read these five tips for creating a great referral rewards program:

Reward based on QUALIFIED leads. What’s worse than having no referrals at all? Having a notebook full of unqualified leads or disconnected phones. If you’re in the car business, you don’t want referrals for people who are too young to drive. If you’re in the cosmetics business, your customer’s Uncle Joe might turn out to be a perfect lead, but chances are you’re better off with Aunt Betty. Do some initial qualification of your leads, and reward based on the number of people who actually turn out to be at least somewhat interested in your business.

For instance, instead of giving your customer a $5 credit for each friend they refer, give them a $25 credit for each friend they refer who agrees to a makeover. They’ll probably give you fewer contacts, but the contacts they give you will be quality contacts.

Reward related items. Offering a free oil change for anyone who sends five new clients to your house painting business? Umm, no. Make the reward fit your business model for continuity and branding; it’s just one more way to make your image stronger.

Reward quickly. Waiting a few months or even weeks can delay the action-reward cycle. When people are rewarded quickly, they are more likely to repeat the behavior so they can get rewarded again.

Reward intermittently, too. While it’s important to have a set reward schedule (for instance, $20 credit for each new customer who makes a purchase with you), it can be powerful to send “surprise” rewards as well. Once a quarter or so, send a thank-you email, coupon, or small gift as an additional thanks. These small surprises solidify your program in your customers’ minds.

Reward the referred party as well as the referrer. While it’s great to reward the person who refers new customers to you, it’s equally important to reward the new lead. Current customers will be much more likely to give you the name and contact info of their friends if there’s something in it for the referral as well. You can offer $10 off for the new customer as well as for the referrer. Then it’s a win-win-win for you, your current and your future customers.

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