Should I Provide Incentives in Return for Referrals?

Posted by James Vumback on October 3, 2017

Topics: Customer Referral Program

incentives-return-for-referrals.gifYou need to be asking your current and past customers for referrals. A happy customer is one of the strongest types of advertising you can have for your business. This is because people trust the recommendations of their family and friends. But, providing a referral takes time and effort. So it is essential that you provide your customers with an easy-to-use customer referral program. Minimize the amount of time and effort it takes for customers to provide referrals. The other way to maximize customer’s willingness to provide referrals is to make incentives part of your referral program. There are a number of things you can accomplish by providing incentives in return for referrals.

1. Show appreciation to the customer who provided the referral.

People like to feel appreciated. In fact, research on workplace dynamics has found that employees place a higher value on appreciation than pay raises. Clearly, appreciation is something that can motivate people. You can harness the power of showing appreciation in order to maximize the success of your customer referral program. The way to show appreciation to your referral sources is to provide them with incentives in return for referrals. The type and size of the incentives you provide depends on the type of business you have and the overall value of the referral. Some common incentives for referral programs include cash, gift cards, and discounts.

2. Encourage more referrals.

Providing incentives in return for referrals will help you encourage more referrals. There are companies out there that promote amazing customer referral incentives but make it difficult for people to actually earn or collect the incentives. Because of this you may have customers who are skeptical about your customer referral program. But, once you provide an incentive in return for a referral the customer will know that your customer referral program is legitimate. This will encourage them to provide you with more referrals.

3. Increase the quality of the referrals you receive.

You have the ability to customize your customer referral program to fit the needs of your business. This allows you to insure that the leads you receive are high quality. You can offer different levels of incentives based upon the quality of the lead. For example, you can provide an incentive for any lead that results in a sales appointment-regardless of whether the referral makes a purchase. You can offer a better incentive if one of those leads results in a sale. This is a great option for businesses that have a long sales cycle. Referral sources can get a small incentive at the beginning of the process and a larger incentive when the sale is closed. Setting your incentives up in this way will help you increase the quality of the referrals you receive. When incentives are tied to the quality of the lead then your referral sources will be intentional about bringing you the best leads possible.

Making incentives part of your customer referral program will maximize the number and quality of referrals you receive. The cost and effort of providing incentives in return for referrals will be recuperated many times over as you convert those referrals into paying customers.


5 Step Guide for Customer Referral Program