Is appreciation referral motivation enough?

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I talk to lots of small business owners and marketers about referrals. One of the burning questions always revolves around the topic of motivation. In other words, how do you motivate someone to refer your business when the time comes. Or, the perfect situation, how to do you get them to proactively evangelize your business.

The tried and true approach (although while it’s tried I’m not sure it’s really true) is to offer incentives. You do this I’ll give you free service or $10 bucks. This can generate some business, but I’ve found that over time it won’t create evangelists, in fact, it may turn evangelists off.

Highly motivated referral sources do it for two reason – 1) they think you offer a good deal, good service, something of value and 2) they know, like and trust you enough that they want to help, want to see you succeed, want to connect at a deeper level and be a part of what you are doing – particularly if that can help a friend.

So, can see how payola could actually demotivate that second reason.

I did two interviews this week with successful business owners who had moved their entire marketing focus to systematically generating referrals. In both cases, they had started with traditional pay for referral approaches and quickly realized (in some cases with direct input from the referral sources) that appreciation was all that was needed. In other words, keep us in the loop, thank us, send us the occasional hand written note or unexpected gift – and keep providing over the top service to our friends.

Mike MeDerment with FreshBooks.com says that his most successful referral tactic for his online business is to make personal thank your calls and invite local customers for a dinner when he’s on the road at a conference.

Zane Safrit of Conference Calls Unlimited sends referral sources the occasional stunning bunch of flowers from out of the blue. That bouquet sitting on the desk does more to generate word of mouth than all the 20% off your next purchases in the world.

So, when designing your referral system consider making creative appreciation a big part of it?

What have you successfully done to motivate referrals?

I would love to interview you if you have a great referral success story. Send your idea to me at john@ducttapemarketing.com

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Posted by: John Jantsch on Feb 08, 08 | 7:07 am
Category: Referral Marketing | Tags:

Comments

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Jacob Morgan

Hi John,

I believe that the most effective referrals come from customers (or clients) that are wow'ed. If you can really go above and beyond the customers expectations and provide extra value, then you can be that your customers are going to talk about you.

I think Mike MeDerment's strategy is just perfect.

Jacob
www.jmorganmarketing.com

Star Borner

People love to feel connected- to show colleagues and friends that they know people that know people that know people- and to feel like their opinion matters. I find that my most loyal clients seem to pass my name on b/c they like the feeling that comes along with it; knowing they were able to serve a dual positive purpose- to help a colleague out by recommending a service they know will provide value, while helping me out because I have served them well in the past.

In my opinion, this is one of the reasons referral sites such as Yelp.com have become so successful. Users of the site don't get paid to write reviews of places/products/services that they like/dislike- the feeling they get from doing it is enough to motivate them to participate.

Michael Goodman

Hi John,

Just wanted to say thank you for saying this out loud. As a Sales Consultant, I am often asked my opinion on the best ways to develop new business and so many small business owners are excited to show me how they are going to incent their referrers. Your article supports one of my primary contentions and proves the fallacy of paying people for referrals.

I contend that every relationship in the world is dependent on Trust, Credibility and Interest. And if any one of them are hurt, the whole relationship goes out the window. I think the subtext notion of paying for referrals is that the product is not good enough on its own to generate business so you have to pay for a referral. The problem with this is that referrers know they are putting their own name on your product and if you feel the need to pay them for the referral, than what is going to happen to their own reputation if one of their friends no longer trust them.

If you can help business owners improve both their product and their delivery of it to the marketplace than the business owner will do well and more importantly, we will have upheld a standard for quality across our business community. The referrals will then take care of themselves.

Way to go John!

Roman

I agree with your take on creative ways to thank your customers, who doesn't like an occasional nice letter or postcard. Reading your article sparked some ideas for me. Thanks!

-Roman

Eliot Sample

I've tried incentivising (if that is even a word) in the past with limited results. I mostly now just try to concentrate on putting out a good product, quickly, and keeping excellent lines of communication open with clients (the key, IMHO).

Will Kintish

“Say thank you, please.”

From the day we started to talk we were all told to say 'please' and 'thank you'. Good manners is good business even as we grow into adulthood.
When is it appropriate to say 'thank you'?
1 When we get new work from a new or existing client
2 When our suppliers exceed our expectations
3 When a colleague helps out or goes the extra mile
4 When we receive an email with help or information
5 When we get a referral or introduction
6 When someone tells us something useful
7 When someone sends us something in the post
8 Yes, even when a prospect turns you down.

How should we say thank you?
This depends on how much someone has done for you
1 Pick up the phone
2 Visit with an appropriate gift
3Send an email
4 A typed-written letter
5 A hand-written letter
6 A hand-written card
7 Flowers, chocolates or drink
8 Vouchers for something appropriate to their interests
9 An invitation to an evening out ( watching carefully no third parties will get upset!)
10 A donation to their favourite charity

Old-fashioned courtesy and good manners is becoming so rare; when it happens it's such a nice surprise!
Networking is building relationships. What a good idea to be old-fashioned!

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