To Pay Or Not To Pay, That Is The Question.


I am often asked this question: Should I pay for referrals?

Both sides of this argument have some valid points but I have to say, and putting my puritan hat on here, that my short answer would be “NO.”

The one time that a reward is appropriate is when the referral system you are using is so shallow that there is no other reason to do so. For example, you go into a draw for a prize for recommending either yourself or a friend. In this case there is no relationship between the customer and the organization and the reward is the only reason that someone has volunteered a name.

But herein lays the problem. What about the quality of the referral?

If you are simply gathering names then you will have to do a lot of work to sort the wheat from the chaff before you actually find someone that wants to follow up on your offer. This is the sort of referral strategy designed to feed a telemarketing department a list of names so they can play the numbers game and hit one buyer by sheer weight of numbers.

You all remember that old motto your old sales manager repeated to you over and over again don’t you – “Every no brings you closer to a yes!” This is this philosophy.

Here is something I have learnt to be true from years and years of working with referrals. Get ready, it is a goody.

The really worthwhile referrals come from the people that know you, like your service or product, trust you and are willing to let you be introduced to their REAL friends.

They do not come from someone who surrendered you the first name they think of because you are going to give them a free “Something”, cash or the chance at a holiday!

When someone refers you to a close associate they are putting their own reputation on the line as well. That’s why they have to know and trust you and the offering you have. You may get a few names when you start a relationship but the real plums come later after the relationship is built. And it is built on trust.

Now if there is a valuable time to give some recognition or reward for the recommendation, it is after it has been given and when the person that has given it is NOT expecting one.

Picture this: I trust you enough to suggest people that are close to me that I genuinely think will benefit from your services and I have done so for no other reason than that I like and trust you and your service.

Imagine my delight when you pop around to say high and thank me with a gift that is thoughtful and relates in some way to what you know about my personal interests and passions. I am delighted!

But it is an added extra over and above our usual relationship. By positioning it here, it is not a condition of the referral but an appreciation of trust.

Now that is powerful.


Bill James raced from the humble beginnings of selling door to door to becoming a national sales manager within the finance and insurance industries.

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