Question

Topic: Strategy

Offering Referral "awards".

Posted bymickey.griffithon4/20/2009 at 10:30 AM ET 25 Points
I have a client that is offering a $100 reward to their clients for making a referral to them. I'm not a big fan of this idea because I'm not sure it sends the right message. This company has a strong reputation for customer service and doing the right thing and somehow this just doesn't feel right. I hope that's not too touchy feely for you all.

There many different kinds of client rewards out there, what is the prevailing thought on cash rewards to the referring person?

I look forward to your responses.
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RESPONSES

  • Posted byCarolBlahaon4/20/2009 at 10:35 AM Accepted
    My main concern is keeping it clean. You have two companies that refer the same client-- who gets the cash? You tell the 2nd there was someone who referred that client 1st-- and now you have a "situation".

    Your client wants to give cash because they aren't consistantly asking for referrals. Give the salespeople an incentive. Run a spiff that gets them asking. Get them writing a thank you note to anyone who refers clients and give a gift certificate for your service, not cash.
  • Posted on4/20/2009 at 11:03 AM Accepted
    Referral fees, incentives, and spiffs are somewhat normal tacts for companies to gain information.

    They should consider offering a gift card (such as AMEX gift card) instead of cash payments. The gift should be remitted on a timely basis. In addition, a qualifier needs to be put in place to avoid any miscommunication.
  • Posted byLinda Whiteheadon4/20/2009 at 1:03 PM Accepted
    I have run successful referral programs where the incentive was a Starbucks card or Amazon gift card. That has worked very successfully, and the gift card was always given whether the referral turned into a client or not. It should go to the referring individual.
    I am not very comfortable with cash, unless it is donated to a company Christmas party fund or charity they support. I think a lot of companies would really frown on this practice.

    Linda Whitehead
    Zuz Marketing
  • Posted byCarolBlahaon4/20/2009 at 1:20 PM Accepted
    D4 is right. We run promos with cash incentives all the time. The manufacturers are billion $ companies-- one owned by Warren Buffet, if there was an issue it would have been flagged a long time ago. The company likes it-- the bonus we give their employees is one they don't have to pay. Its not a "kick back" -- its a totally different animal. It builds a partnering relationship and is no different than giving a gift card.
  • Posted bymickey.griffithon4/20/2009 at 2:48 PM Author
    Thank you all for the responses.

    The client has their program spelled out pretty well as to who gets the referral award, so that's pretty much covered. They are also involved in two BNI groups as well as multiple chambers, so they are actively engaged in the referral process.

    I guess my question was more one of core values and strategy. It kind of smells of desperation or "smarmy sales guy" tactics to me. I just find it kind of distasteful, but I don't want my personal feelings getting in the way of a solid, ethical marketing strategy.

    Thoughts?
  • Posted byCarolBlahaon4/20/2009 at 3:11 PM Member
    Its not swarmy. Its rewarding loyalty.
  • Posted on4/20/2009 at 3:23 PM Member
    I have to agree.

    Solid referral tactic.

    Kris
  • Posted bymickey.griffithon4/20/2009 at 3:33 PM Author
    I sincerely hope I haven't offended you Carol. I'm really willing to change my way of thinking and that's why I came here. Because it's not what we don't know that can hurt us, it's what we think we know, that isn't so, that can hurt us. And if I'm simply being ignorant, then I'm trying to correct that. I really value the input of many contributors here and am happy to be receiving such objective points of view.

    Thank you, everybody.
  • Posted byCarolBlahaon4/20/2009 at 4:34 PM Member
    Truly I was not offended. Thanks for clarifying, but I really didn't take any offense. Best wishes, Carol
  • Posted bymickey.griffithon4/20/2009 at 10:05 PM Author
    Great! Thanks Carol.
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