Q: How important is it to offer some
type of incentive for people who give me referrals?
A: Everybody loves referrals, and
one thing I've learned is that they also love to be recognized
for giving referrals.
In a survey I conducted with Robert Davis (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 one-quarter of all
respondents in this international survey considered incentives an
effective generator of referrals.
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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 businesspeople reward those who
send them referrals. A female business consultant sends bouquets of
flowers to men. A music storeowner sends concert tickets. A
financial planner sends change purses and money clips.
I know of an accountant who thanks those who successfully refer
a client to him by paying for a dinner for two at an exclusive
restaurant located at least an hour 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 offered a $100 finder's fee to anyone giving him
a referral that resulted in a listing or sale. Yet during that
time, he had only given away about a dozen finder's fees. He
decided it was time to try another kind of incentive.
Since he lived on a large parcel of land in prime wine country,
he had begun growing grapes in his own vineyard. A thought soon
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 who provided
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 away a 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 really quite simple: It's
special. A bottle of wine that can't be bought can be worth 10
times what it cost to produce when it's traded for something as
valuable as a business referral.
Remember, finding the right incentive is a big
challenge-especially if you want to score big by building
word-of-mouth business. To make it easier on yourself, 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.
Ivan Misner is the founder and CEO of Business Network International
(BNI), which has more than 2,900 chapters throughout the world.
He is also the author of five books, including his New York
Times bestseller, Masters of
Networking, as well as Entrepreneur Press'
forthcoming Masters of Success.
The opinions expressed in this column are
those of the author, not of Entrepreneur.com. All answers are
intended to be general in nature, without regard to specific
geographical areas or circumstances, and should only be relied upon
after consulting an appropriate expert, such as an attorney or
accountant.