Referral Incentives 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.

incentive program

Incentive Program for Referrals

When you offer any type of discount or novelty item as an incentive program for referrals, keep in mind what your cost would be to generate a new client from scratch. These costs include the cost of printed literature, advertisements, sales calls, telephone time, meetings, appointments, and so forth.  You can readily see that the cost of gaining a new client through a referral incentive program is almost always lower.

Incentive programs also help you sell more products or services more frequently to your existing customer base; again, these are sales that are generated at a far lower marketing cost and effort. No matter what form of incentive program you use, the fact that you offer incentives means that your potential for generating word-of-mouth business will increase.  The question is, what type of incentive will work for you?

Some health care professionals offer a free visit when a referral becomes a new patient.  Other business professionals send small gift baskets, bottles of wine, flowers, or certificates for their services or the services of other businesses in the community.  Depending on the type of product or service you offer and the relationship with your referring parties, you may also employ the following:

Incentive Program Examples

  • Free estimates, samples, or analyses
  • Additional products or services for no extra cost
  • Product or service discounts
  • Product or service time extensions
  • Extended telephone consultation privileges
  • Extended or life memberships
  • Exclusive or charter memberships
  • Group discounts
  • Extended warranties
  • Reduced costs on peripheral items or services.

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.

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.

The Referral Process–Step 4

Over the past few weeks, I’ve been explaining the easy, eight-step referral process in increments. Today I will be going over step 4 and if you’d like to review the previous steps I’ve already covered, simply click on each of the following links:  step 1, step 2, and step 3.

  • Step 4.  Meet with the Referral

Now comes the move you’ve been waiting for: your first meeting. You might close the deal on your first call, but it’s unlikely.  Instead, you’re probably going to be getting acquainted with your potential new customer and gathering information to help you prepare a proposal. Now, what if you could get your referral source to go along?  That would make it a real powerhouse meeting.  It would add to your credibility and instantly deepen your relationship with the prospect.

If you do close the deal at your first meeting, you might think the referral process is over, but in fact it’s just started. Before you start turning cartwheels on your way out of the building, call your referral source, tell her what a great referral it was, and thank her for it.  Then, when you’re back in your office, set your “thank you for the referral program” in motion.

If you don’t currently have a “thank you for the referral program,” you’ll need to create one right away because thanking your referral sources is extremely important if you want to ensure that they keep sending referrals your way.  To learn more about referral incentives for your sources, you can check out a couple of blogs I wrote on the topic:  “Simple Recognition Is Sometimes the Best Reward” and “A Win-Win Way to Reward Referral Sources.”

If you’re interested in learning  more about the easy, eight-step referral process, be sure to check back next week because I’ll be explaining steps 5, 6, and 7.

A Win-Win Way to Reward Referral Sources

If you’re looking for creative ways to give referral incentives, it’s worth considering a technique I like to call “Incentive Triangulation.” This is a powerful way of leveraging other people’s services to benefit your customers, clients or patients and reward those who refer you.

The concept is simple and can be designed to fit the needs or requirements of any business. For example, a retailer might negotiate an arrangement with another local business, such as a florist, printer or appliance store owner, whereby that store will provide its customers with a discount of 10 percent or more on their next purchase. After that, each time someone gives you a referral, reward him with whatever you would normally give as an incentive and also a coupon good for the discount at the prearranged business.

This form of joint venture is beneficial for all three parties, hence the term “Incentive Triangulation.”  You benefit because you are providing another incentive for people to refer you. The other business benefits because you are sending your clients to it, along with a recommendation, of course.

Finally, your clients will benefit because they got recognition for their effort as well as an additional product or service at a reduced rate.

If you have an example of how you’ve successfully used Incentive Triangulation, leave a comment and explain how you’ve used it. Your example could spark great ideas for other blog readers on how they might use the technique for their business.

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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