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?
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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 is co-author of the New York Times bestseller Masters of Networking. He is the founder and CEO of
BNI, the
world's largest referral organization with more than 2,400
chapters in 13 countries around the world. He also teaches business
courses at California State Polytechnic University, Pomona, and
resides in Southern California with his wife and three children.
Dr. Misner can be reached at misner@bni.com.