Why Referral Incentives Fail

If only it was this simple... Find someone who really likes what you sell and pay them a few bucks or give 'em something cool (everybody wants a free iPad, right?) every time they bring you a new client.

Too bad referral incentives almost never work.

There are two underlying reasons:

#1 - Most people are uncomfortable with the self-interest that's injected into their recommendation of your business. They worry that if they disclose the incentive they'll hurt their relationship with the person being referred. And if they keep it a secret...they worry that they'll be found out.

#2 - The oft-overlooked reason these schemes fail is that selling is hard when you do it for a living, have training and experience. It's nearly impossible when you're part-time, virtually unpaid and completely un-trained.

The idea behind incentives is good...align your client's self-interest with your own.

But there are more elegant, more effective ways to create the alignment.

marketing consultant Steve Gordon