finder's fees Archives - Dr. Ivan Misner®
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.

Finder’s Fees

Do Finder’s Fees Work?

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:

One Realtor I met in Northern California told me that for almost six years he had offered a one-hundred-dollar finder’s fee to anyone giving him a referral that led to a listing or sale.  However, 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 on his own vineyard.  Therefore, a thought occurred to him:  Why not take the next step?  He began processing the grapes and bottling his own special vintage wine.  After his first harvest, he had a graphic artist design a beautiful label, which he affixed to each bottle.  Instructing 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.

The Realtor 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 of wine cost him less than ten dollars to produce.  Therefore, this special vintage wine makes him infinitely more money than giving away a handful of hundred-dollar finder’s fees. I got a call from the Realtor and he shared me this story…

Success Uncorked

“Last Friday I got a phone call from a woman I didn’t know.  Out of the blue she gave me two referrals.  As I wrote down the information, I asked her how she had heard of me.

“She said, ‘I had dinner last night at a friend’s house.  He served wine.  I took a sip.  “Wow, great wine!” I told him.  “Where did you buy it?”  “You can’t buy it,” he said.  “The only way you can get it is to give this real estate agent a referral.”

“’I have two referrals,’ she said.  ‘Can I get two bottles?’

“So I gladly sent her two bottles.  Furthermore, both referrals turned into more business, and each of them cost me only ten dollars.”

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:  because it’s special.  A bottle of wine that can’t be bought can be worth ten times what it cost to produce when traded for something as valuable as a business referral.

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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