Rewarding Referrals Increases Referrals
Let’s start with the statistical evidence – then we’ll get to the “how to.”
I’ve seen two studies indicating that rewarding clients for making introductions increases that desired behavior.
The first study was a financial services-based study that showed that using small gifts to thank clients for introductions increased referrals by 40%. And, a more general industry study – conducted by Baylor University – demonstrated that the use of small gifts to thank clients for introductions resulted in a 22% increase.
The evidence is clear. You want to use small (compliance-friendly) thank-you gifts to increase your introductions from clients and centers of influence.
In the financial services world, making the gift contingent upon referrals is often against compliance regulations.
Besides, it can cheapen the referral process. And you don’t want to wait for the prospect to become a client. You just want to reward the giving of referrals.
There are two things that will give your little gift (I’m talking $25 or less) maximum impact:
- Speedy Response – The faster you get the gift to the client (meaning the closer to their action of giving) – the more that act will be appreciated. Have a simple system in place to act quickly. For instance, you can have an inventory of Starbucks gift cards, movie theater coupons, or ice cream parlor gift cards (for their children or grandchildren) in your drawer. These things are flat and easy to mail.
- Tailored Response – Anytime a gift is tailored to the client, it has more impact. This doesn’t necessarily mean you have to spend more money. In fact, a tailored gift brings you more bang for your buck. If your client likes the movies, then make the gift theater coupons. If your client has a special pet, get something for the pet.
Not too long ago, I delivered an in-person session for a client in Connecticut. It was a great day with about 150 financial professionals in the room. As my client was driving me to the train station, I learned that he had two dogs. He also started telling me about the introductions he was going to make for me. I immediately knew the thank you gift I would get. Once on the train, I went online and ordered the book Wolf in the Parlor, by Jon Franklin. It’s a fun and interesting look at how dogs evolved from wolves and eventually became the most domesticated animal on the planet.
Gifts vs. Promotion
My general rule of thumb is, “If it has your logo on it, it’s not a gift. It’s promotion.” That being said, when it comes to saying thank you for referrals with a small gift that has your logo, it’s not so bad – as long as the gift is very utilitarian – say golf balls for the golfer. (No pens, stress balls, cheap “personal fans” or other useless items!)
Get the New Client Involved
Here’s a best practice I picked up from a Canadian company I worked with recently. They were encouraging their reps to get the new client involved in the giving of the gift to the old client. I think this is brilliant. First, you end up with a gift tailored to the referral source. Second, the new client sees how you say thank you for referrals, so it plants the seed for them to give you referrals in the near future.
Personally, I think this client-assisted gift should actually be the second gift the referral source receives. First, they get a little something from you for the giving of the referral. Then they get something else when the prospect becomes a client.
One of the best gifts in this situation is when the advisor and the new client take the introducing client out for lunch (or other social event). While at lunch, the new and old clients sing your praises (validating their decision to work with you) as well as come up with other people who should know you. This is a very effective strategy.
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