Referral Fees Are Sorry Bribes – Part 1

By Daryl Logullo | January 14, 2009 | Popularity: 26% | 1,698 views

It amazes me how most people use referral marketing and building referrals from their clients by offering them a (forced) incentive to get them to take action and refer business.

I suppose “forced,” is not really a good word because you can’t force someone to do something they don’t want to do, including sending you referrals.

And herein lies the problem: Referral fees inherently have two flawed notions when it comes to referral marketing:

People presume when they offer a referral fee, that:

1.       People actually like to give you client referrals;
2.       People will provide you those referrals conistently when you offer them a cash reward (or other incentive).
 
Both are dangerous referral myths.

Why?
 
First of all, I’ve rarely met anyone — client, colleague, or family member — who truly enjoys giving referrals to someone. Let alone, that person actually responding favorably and frequently when you go asking for referrals from them (however you do currently now, in your own biz).
 
It just doesn’t happen. At least not consistently.
 
So what happens?

Most people seeking referrals try to up the ante: They pile on $25, or $50, or $100 or $1,000 or whatever… if you send to them X-amount of referrals or referred business. They reason to themselves that if I offer a high enough bounty, others will get interested and that will create more referral flow for myself.

False.

I’ll explain why next time in Part 2.

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