Tuesday, June 02, 2009

The Dangers of Promising Too Much

Do you offer people a reward for people who refer you? If it is a financial one, always be very careful how you do so and manage people's expectations. Otherwise, what you planned as an incentive to refer could backfire dramatically.

I'm sure you've heard the term 'under-promise and over-deliver'. This is perhaps never truer than in referral incentives. If you offer a cash incentive, do you know what people understand by that? It may be that you have a token 'thank-you' in mind, while your referrer is expecting a substantial commission. Is the risk of the subsequent disappointment worth the misunderstanding?

Unless you are entering into a formal commission or affiliate agreement where everything is clearly spelt out up front, it's sometimes best not to offer a financial incentive. Where people would refer you anyway, there may be no point.

Understand the motivation for people who refer you and focus on that. If they want to refer based on the fact that they like and trust you, accept that and thank them. It may be that they want to help their contacts and believe you can do that, if that's the case, make sure you treat their referrals in the best possible way and feed back to them.

If they are a business contact, they would probably appreciate you referring them much more than a cheque.

There are so many motivations that are stronger than money, and so few that can potentially harm a relationship more. Bear this in mind next time you offer a financial incentive to refer. If you still do so be very clear about what you are offering and communicate that effectively.

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