Refurbishing Referral Programs


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Refurbishing Referral Programs
By: Tama Swan, Associate Editor
Issue: 2009oct

Make sure your program’s rules and guidelines keep up with shifting company goals.

Offering bonuses to employees or clients who bring in new business can be an effective way of boosting sales. But is your bonus program structured with your company goals in mind? Here are a few tips for setting up a bonus program that works.

• Consider whether your goal is to do business with as many new clients as possible, or if it makes more sense for your business to seek customers with long-term partnership potential. If it’s the latter, look into adjusting your program to offer bonuses once your relationship with the client reaches a specific milestone.

• Determine other characteristics—pays invoices promptly or fits your ideal customer profile—you want in new clients and build those elements into the bonus program.

• Train staff members on how to properly identify prospects, approach them and introduce them to your sales team. You may also want to make marketing materials available to everyone.

• When referrals do come in, celebrate them. This serves to encourage others and to remind everyone that the program exists.

• Examine how bonuses are paid out. For example, some firms base bonus pay on the size of the new contract and pay upon receipt, not billing. Others choose to offer flat fees, such as $50 for a qualifying prospect and $500 for a signed contract. Some companies overlap their referral programs and employee retention programs by paying bonuses in installments and hoping employees will stick around for the money.

• If extending your referral program to subcontractors, look at how much work they do with you and adjust their fees accordingly. In some cases, subcontractors who could have kept the work themselves but passed it on to you deserve higher-than-average bonuses.

Source: www.businessweek.com

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