Should You Offer To Pay For Referrals?

Have you ever wondered if you should and how much you might pay someone who gives you a referral?

Do you already have some type of referral program in place in your business? If so, how's it working for you?

This is a question that has come up multiple times from clients recently. Let's face it, prospecting is one of the biggest challenges we all face in our business. There's just nothing quite as good as a referral to gain new business? Less prospecting has to be done on your part and a much warmer lead comes as a result of a referral. Often, clients think if they pay people, they're more likely to receive referrals.

What do you think?  Do you expect to be paid when you refer a friend to a business? Are you inclined to refer more people when you do get paid?  When I say “get paid” this could mean receiving a gift card/money/discount on your next service.

Structured Referral Program

The idea of a structured referral program may seem enticing. You let everyone know that when they refer someone they're going to get something in return. It seems like a no-brainer, right? Who doesn't want to get paid for referring people?

Yet, in my many years of sales experience, these structured referral programs rarely work the way people expect them too. Often the end result is people actually start referring to you less. I've experienced many times in my own business.

What Happening

I've even had people ask to receive payment if they refer people to me. Often I've agreed to pay for their referrals. The end result, these people rarely refer even one client to collect their fee. Somehow when you tell people they're going to receive payment, it changes the way they refer people to you.

That's not to say I don't get referrals. Actually, I get quite a few referrals in my business. I've just stopped offering to pay people for them. It's worked much better to ask people to share about their experience when they're happy with the work we do together.

What You Might Try Instead

That's not to say you shouldn't recognize someone who does send a referral your way. When people give referrals, it's unlikely they're expecting anything in return. Sometimes just a simple, yet thoughtful thank you note is plenty. Of course, there's always the opportunity to send some fun treat, or even better, sending a referral back to the person who sent you one.

Referrals shouldn't feel like a business exchange. When they do, it loses some of its shine. Please note, this article is not addressing affiliate programs, that's a whole separate issue. Referrals that come as a result of a raving fan, truly cannot be bought.

Easiest Way

The easiest way to get referrals is to ask for them. Often people feel weird about asking for referrals. It doesn't have to be awkward. As a matter of fact, all of my VIP clients receive a manual as part of their program where a referral exercise is included with the language of how to phrase the ask.

Not too long ago a VIP client who had actively implemented the exercise from her VIP manual and was asking for referrals shared how it had changed her business. Many of the new clients she was taking on were coming as a result of her asking for referrals.

Never be afraid of asking for referrals. Remember, often times, it's not until you ask that people actually decide to take you up on your offer.

Wishing you continued success in building your business.