cash incentives for referrals Archives - Dr. Ivan Misner®
incentive program

Final Thoughts About Your Referral Incentive Program

To meet the challenge of finding the right incentive program, tap into the assistance and insights of other people.  An effective way to do this is to invite about ten people you know to meet with you.  Include a representative sample of your customers/clients/patients, business associates, partners, and friends.  Their purpose is to think up incentives you could offer to produce a larger word-of-mouth-based business. Host a lunch or dinner for the group and either take copious notes or tape-record the meeting.  Invite those who are willing to donate about two hours for your benefit (and receive a free meal, of course).

Prepare yourself, well in advance of the group meeting.  Think the subject over beforehand so you have an idea of the limits that you may need to set for an incentive program, such as cost, duration, appropriateness, etc.  Have water, note pads, a preliminary questionnaire, sample materials, a flip chart, and even a few ideas to get the ball rolling.  If you’re going to discuss a product, bring actual samples to give the group a point of reference.

Begin the actual session by clearly stating a specific problem.  Make sure your group understands that the incentive has to be geared to the group you’ve targeted.  Explain that you are looking for a variety of ideas and that you won’t make any immediate decisions.

An accountant in St. Louis thanks those who successfully refer a client to him by paying for a dinner or two at least one hour’s 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?

I’ve heard many novel ways 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. Please share below in the comments about how you reward others who send you referrals.

creative incentives

Do Creative Incentives Work?

You can greatly enhance your word-of-mouth based business by designing creative incentives for people to give you referrals.  Yet of all the key techniques for making the system work, wanting to give referral rewards bonuses to individuals who pass out your business cards and obtain new clients for your business seems to frustrate others the most.

Historically, finder’s fees or referral rewards have been used as an incentive for giving someone referrals.  Although finder’s fees can be appropriate, I don’t believe they are necessarily the best technique to employ in most situations.  Here is an excellent example of a non-monetary incentive system:

Sign of the Times

Years ago I went to my chiropractor for a routine adjustment.  Several weeks before, I had referred a friend to him who had recently been in an accident.  As I walked into the waiting room, I noticed a bulletin board that was displayed prominently on the wall.  The bulletin board read, “We would like to thank the following patients for referring someone to us last month.”

Actually, there was nothing unusual about this sign.  It had been there on each of my previous visits, except this time my name was posted on it.  I took notice and was pleased, but didn’t give it a second thought, until a month later, when I returned and saw that my name was no longer on it.  Instantly I thought, Who else can I refer to the doctor so that my name will be put back up on the board?  For the record, I did come up with another referral for the good doctor.

Something like this may not work for everyone.  But if it worked on me, I’m sure it will have a positive effect on others.  The key is to select several incentive options so as to impact as many people as possible.

Simple Recognition Is Sometimes the Best Reward

Rather than receiving a finder’s fee, for most referral sources  it is more important to be recognized as a person who can direct others to the goods and services provided by skilled, highly competent, trustworthy people.

Over the years I’ve witnessed time and again that most people will do more for simple recognition than for money. However, for those who expect a finder’s fee, this is a good thing to know in advance if you want to keep the relationship healthy, active and profitable.

You will find that different motivators will inspire different members of your referral team, and this is a matter in which understanding the various behavioral styles of people can be helpful.

People who are embarrassed by being in the spotlight, even for accolades and applause, might prefer their rewards low-key and private–perhaps a simple thank you or an evening cruise on your boat if you are a boat owner.  Those who like public recognition might prefer seeing their name showcased on your bulletin board.  Still others may be more highly motivated by an inexpensive but thoughtful gift than by a more substantial cash reward–a bottle of wine from a winery near their hometown or a coffee table book about their favorite travel destination.

The point is, simple recognition really resonates with most people and, more often than not, simply recognizing people in the way they prefer to be recognized is a far better reward and incentive for them to refer you to others than offering them a cash finder’s fee.

If you’re in the habit of recognizing people as a way of thanking them for referrals, please leave a comment about what’s worked for you and even what hasn’t.  Then check back next week to read my story about a way in which someone recognized me that kept me motivated to refer that person over and over again!

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