[fakie99]

happy new year to all.....

this season, we've decided as part of our marketing plan to offer a $175 cash incentive to past clients for passing our name along. (paid only if it results in a job). does this amount seem reasonable, and has anyone had good/bad experience with this in the past?

thanks,

jim

[Lawn Lad]

If you read the book, Get More Referrals Now, Bill Cates states that most customers who refer you will do it because they A) want to help you out and B) because they want to help a friend out. They don't do it because you're offering them a financial incentive.

I heard from a sales consultant that 20% of your customers will refer you without your asking for referrals, assuming you're referable. 60% of your customers will give you referrals if you ask. Most people want to make sure that if they give your name/number to their friend/associate/family member, etc that they're going to be treated well. There is nothing worse then giving someone a referral and then finding out the person you referred them to did not service your friend/family member. Now by referring someone you look like a chump.

A simple hand written thank you card may be all that is needed. For someone who has referred a lot of business to you (multiple names - and is a champion of your business), you might give them a piece of apparel from your company with a logo on it, or a gift certificate to a nice restaurant, etc. The value need not be big. You DO NOT need to do this for every referral.

What is important is that you're consistent. You must say thank you and acknowledge the referral and follow up with the person who referred you so that they know you've taken care of their friend/family member.

How you treat the referral relationship is much more important than the financial "reward" you send the person. Your sincere thanks and respect for their friend's contact information is what they'll appreciate the most.

On your thought of $175... that is a pretty nice finder's fee. What is your sales cost to get a job? If that customer who signs with you is doing a $2,000 job, that is just about a 10% referral fee. Unless you've now marked up the job to cover this referral fee by 10%, you've lost any profit on the job that you've made. I think you're giving away too much - and not recognizing what's truly important in the referral process.

Last note... about being referable - make sure your business is running in such a manner that your customers want to give your name to their friends and families. If you make them look good to their friend's because they were right, it was a good idea that they recommended the friend to you, then you make them a hero. Your new customer had a need and your other customer helped them out by sharing your name to help solve a problem they had. You've got to be easy to do business with and consistent in your results. Do the little things rights and follow through with your customers to thank them and let them know you appreciate the referral and that you took care of their friend.

[Stonehenge]

I think Lawn Lad hit it. An official program sounds cumbersome, and I would think it would tend to commoditize something that is relationship-based. I'm not opposed to giving something to people who've helped us out - I've done that myself. Just that it should be from the heart, not according to line 4b of the Referral Agreement.

[Pelican]

Be very careful in how you word your referral program, and have it in writing in a similar form of a contract if you decide to proceed, it can come back to bit you in the hind quarters. I had a verbal agreement with customers when I was developing my snowplow business of a free snowplow for every referred customer. One customer referred a customer to me outside of my service area and insisted on credit for that. We ended up in court, she was a pain in the neck account anyway, and she won. The judge felt it wasn'r unreasonable for her to assume that I should travel across town, 20 minute drive and back, to service a $25 driveway. Lawn Lad's points are good too, and I agree with Jeff!

The hair on my neck stands up when I get a customer who hints at some kind of compensation today because they have given my name out to someone, or that his neighbors have seen my work at his house and are interested in having work done. If you are offering quality work at a fair price, the work will come to you naturally.

[ecoscapes]

I have considered doing this as well although $175 sounds really high. Does anyone handout more then just business cards for clients to pass referrals. I was thinking of a post card that they could give out and reward those referrals that were fruitful. Does anyone do this -- and how are the results?

[wnklandscaping]

I agree with LawnLad as well. Not only will it cut into your profit margins, but it will also cut into your time since you will have to take time each week to sort out the referalls, add them up, and then credit yoru customers. I personally get more work from word of mouth than I do by advertising, or even getting noticed while working in a neighborhood on me residential work. I always take a little time to keep the customer updated, and informed of progress (beyond what they can see done), and answer any questions they might have. I have found that by showing a personal interest beyond the proffesional work attitude the customer is friendlier and more willing to refer their friends and family to me. I have never really thought about doing anything beyond thank you cards or taking 5-10 mins to do some extra work at no charge for them( I don't do anything major- just something little- pull some weeds, a little extra in the end of the day cleanup, etc...) I like the idea of a gift certificate to a nice place towards dinner for them, or something along those lines. The little extra steps make you look good in the customers eyes and I have had great success in getting referals that way.

Just my $.02!

Bill

[fakie99]

ok thanks for the replies everybody - i have opted to simply let clients know they can be assured that thier referrals will be handled right, rather than offering "incentives."

ecoscapes - nice website you have there...
jim

[ecoscapes]

thanks fakie -- I think I got a great deal -- it was a new start up web design company and he did it for $1200 with two years of hosting and free update for two years.