Should You Pay for Referrals?
Friday is “Question of the Week” day here at Duct Tape Marketing. Each Friday I’ll tackle a specific question I received via readers or in places where I’m speaking. Submit your question here and if we use it we’ll highlight you and send you a signed copy of Duct Tape Marketing.
This week I received what amounts to a two-part question about ways to motivate, incentivize and reward someone for sending your a referral.
Here’s the question: Should I reward my referrals sources with some sort of monetary incentive and if so should it only be for referrals that turn into customers?
So, here’s my two-part answer: I believe that the best referrals are made for social reasons and not financial reasons. Certainly if you’re selling a $19 item someone might tell their friends in order to get $5 referral fee, but beyond that, money changes the dynamic in a way that isn’t the healthiest.
I’ve always contended that the best reward for a referral is enormous appreciation. The way you pull that off is two-fold. First shower the person referred to you with a special experience. Then make your referral sources feel special by creating opportunities for them – build a referral club, give them surprises, give them access, give them community.
Now, for the second part of the question – a referral that doesn’t turn into a customer right away is still valuable. I’ve always advised people to come up with some way to show appreciation or reward for the referrals that don’t pan out. Send them a gift card, flowers, movie tickets or chocolate. As long as you keep that referral source motivated the next one and the next one will turn into your next great customer.