⚡ Get All Content for 20% Off ⚡

Referral Incentives: The Gift for Giving Give clients a reason to talk you up, and you'll earn new business without lifting a finger.

By Ivan Misner

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

If there's one thing I've learned, it's that everyone loves referrals--and everyone loves to be recognized for giving referrals. Referral clients are easier to close, have fewer complaints, are more loyal, remain clients longer and are more trusting.

In an international survey I conducted with Robert Davis (published in our book Business by Referral), nearly a quarter of all the respondents considered incentives an effective generator of referrals. Incentives can range from simple recognition, such as a thank-you, to monetary rewards based on business generated.

It goes without saying, then, that building an incentive program is important in any successful business. So how do you do this?

I've heard of many novel ways that businesspeople 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.

One realtor I met in Northern California told me that for almost six years, he had offered a $100 finders' fee to anyone giving him a referral that led to a listing or a 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 occurred to him: Why not take the next step? He began processing the grapes and bottling his own 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 $10 to produce. This special vintage wine makes him infinitely more money than giving away a handful of $100 finder's fees.

It sometimes amazes me, even now, how something as simple as a bottle of wine can be such a powerful incentive for people to give you referrals. But the explanation is quite simple: because it's special. When given as a thank-you, a bottle of wine that can't be bought can be worth 10 times what it cost to produce.

Finding the right incentive can be a big challenge for individuals who are trying to build their referral business. To make it easier on yourself, be sure to get opinions and feeback from others who have a significant interest in your success.

Most important, never 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 efforts.

Ivan Misner

Entrepreneur Leadership Network® VIP

Bestselling Author

Dr. Ivan Misner is a New York Times bestselling author and co-author of the bestselling book, Networking Like a Pro (Entrepreneur Press 2017). He is also the founder and chief visionary officer of BNI, the world's largest referral marketing and networking organization.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Side Hustle

The Remote Side Hustle a 43-Year-Old Musician Works on for 1 Hour a Day Earns Nearly $3,000 a Month: 'All From the Comfort of Home'

Sam Ziegler wanted to supplement his income as a professional drummer — then his tech skills and desire to help people came together.

Business News

Costco CFO Reveals Uncertain Fate of $1.50 Hot Dog and Soda Combo

CFO Richard Galanti reveals that the price will stay the same — but only "for a while."

Business News

The Most Unexpectedly Popular Side Hustle of the Decade Has Low Startup Costs and High Markups

A new report shows that vending machines are a popular investment — and the industry is set to grow up to $3 billion by 2031.

Marketing

Ever Wonder Why Certain Websites Rank Higher Than Yours? This SEO Expert Reveals The Secret to Dominating Search Results

It's often the smart use of SEO, now supercharged with AI, particularly in keyword optimization.

Business News

AI Is Impacting Jobs. Here Are the Gigs Affected the Most, According to an Analysis of 5 Million Upwork Postings

The researcher said in the report that freelance jobs were analyzed first because that market will likely see AI's immediate impact.

Leadership

Former Interrogator Shares 5 Behaviors Liars Exhibit and How to Handle Them

Five deceptive behaviors to look for and how to respond to those behaviors when you encounter them.