Think for a minute back to when you were a teenager in science class. You learned about Pavlov’s dog. If you remember, Pavlov taught his dog how to salivate. He did that by ringing a bell and setting out food over and over again. This repeated action taught the dog that every time the dog heard the bell, there was going to be food. Soon he could ring the bell and the dog would salivate even when there was no food.
You need to do the same thing in your business. You need to condition and train your referral partners to give you referrals over and over again. The way you do this is to reward the behavior just like Pavlov did. The dog was rewarded with food every time the bell rang. You’re going to reward your referral partners with a thank-you gift every time they give you a referral. When that reward system happens over and over, they will learn that you appreciate referrals and that they will be rewarded for it.
How do you thank someone for a referral?
Receiving a referral in business is the equivalent of someone doing you a favor. A HUGE favor. A referral has the potential to increase your income one time or many times over, depending on your business. It’s important to thank the person who gave you a referral.
Laws, Rules, Regulations
The first thing to keep in mind is whether your industry is bound by laws that would limit how you thank someone for a referral. This is most common in financial services, health care, insurance, law or education. There may be a “no kick-back” rule. This is to prevent shady practices of buying customers. Make sure you know the laws and follow them. If you are restricted you can still thank someone for a referral by sending a hand-written thank you note. This lets them know you appreciate their efforts without breaking any rules.
Business owners have to be conscious of their budget. You may worry about spending money on a referral that doesn’t end up turning into business. Even if the referral doesn’t turn into new business, it should be rewarded with a thank you note. It will cost you under $1 to let them know you appreciate them thinking of you. For referrals that turn into new business, the reward doesn’t have to be big. You might only spend five or ten dollars, depending on the income you make from the referral. The important thing is that you give a reward every time you receive a referral.
If you are in a business that receives frequent referrals – multiple per day or week from an individual source – it is impractical to send a formal thank you for every single referral. An example of this would be a mortgage company sending referrals to an insurance agent. The volume can be very high. In this situation, you should acknowledge each referral – most likely by email – so they know you are following up on it. Then you can thank them in a bigger way, but less frequently. You could buy lunch for their office or hold a quarterly event for your best referral partners.
If you are in a business where you work 1 to 1 with clients at a higher investment rate, the referrals will probably be less frequent. However, each referral will have a greater impact on your income. If this is your situation you should thank someone for a referral with a gift that is repeatable. Choose a gift you could give over and over and your referral partner would never get tired of receiving it. Food, lotions, flowers, or gift cards are all things you can give again and again.
Having a reward system in place is an important part of a referral plan. If you don’t acknowledge and thank someone for a referral, why would they want to give you another? Remember Pavlov’s dog: ring the bell, put out the food. In your business, give a reward every single time you get a referral if you want to get more.