By Jessica Huhn
How can you ensure that your business receives a constant flow of new customers or clients? Build a network of people who refer others to your business in exchange for a monetary payment, known as a referral fee.
A referral fee is a type of commission paid to the coordinator in a transaction—a person responsible for bringing a customer to your business. Sometimes, this fee is paid in exchange for the business introduction, but more often, it is tied directly to a sale.
Why referral fees?
Why rely on referral fees? The answer is simple: more and more people aren’t trusting traditional ads.
Most print ads seem as dead as the dinosaurs. As for digital ads, people are either blocking them with ad blocker software or tuning them out the old-fashioned way. And let’s face it—advertising costs rack up quickly. But your potential customers trust the recommendations of their peers more than other forms of advertising, making referrals an especially powerful marketing tool. Referral fees reward people for sharing your brand and generating new customers, so they help you tap into the power of these trusted recommendations.
But how can you use a referral fee to generate more sales? This article has you covered.
Referral fee fundamentals
Referral fees are all about rewarding skilled individuals for consistently bringing in new, quality customers. Often, these individuals have experience and connections that your business otherwise wouldn’t have.
It’s sort of like when you pay a realtor to search out apartments that haven’t been placed on the market yet. A realtor has the experience and contacts to find these apartments that you would never know about on your own.
As a business, you can offer payment to brand advocates who are able to bring in new business. The structure is similar to a referral program agreement, but these people are exceptionally good salespeople, drumming up a new business that you wouldn’t have otherwise. At some point, these brand advocates should be rewarded, and you should consider paying them a referral fee.
Do referral fees work?
Through referral fees, any type of business can access client networks that are tough to tap into. If someone has a whole network of people who would be perfect customers, it makes sense to enlist them as a salesperson, and pay them a percentage of the revenue generated from customers they bring in as a referral fee.
But first, you must determine whether a referral fee will work for your business. A referral fee will only work if your brand’s products or services are seen as valuable, your customer service is top-notch, and your brand is generating positive buzz. So, make sure to generate excitement around what your brand has to offer first! To ensure that people are spreading the word about your business, you can then award incentives to those who share your brand.
Keep in mind that a referral fee won’t work if people aren’t excited about your products and services. A traditional referral fee incentivizes someone to share pertinent information with their network. But why …read more
Read more here:: B2CMarketingInsider