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How Referral Fees Make You Look Bad And What To Do Instead

referral fees vs delight factor

On the surface, referral fees make sense, right?

Rewarding a customer for sending you business. Seems reasonable. 

But why did they send you the business? 🤔

For the money? Or because you did work worth telling their friends about. 

If they did it for the work you did, they don’t want or need the money. 

And if they did it for the money, what does that say about your work…or their true loyalty?

Do they see it as an overly complicated discount strategy that they MUST exploit, 

Or do they see it as the genuine reward for what it was intended?

Some customers even see it as an unnecessary expense added to their (or the person they could refer) bill.

The thing is, a formal, public referral program is not, and will never do, what you hope it to do.*  

Which is to motivate actions that will positively affect your revenue, like:

  • Writing such a rave review that others are actually INSPIRED to call your business when they need what you sell. 
  • Not just telling family and friends that you did a good job and they would use you again, but literally INSISTING that their people deal with NO ONE but you and your company. 
  • Never deviating for your business as a service provider even in the face of all the ridiculous cheapy cheapy offers dangled in their faces daily. 

What actually motivates these desirable actions in our customers? Two things…

One. If your buying experience is less satisfying than that of your competition, you will fail to truly capture the hearts of your customer. Certainly, you will get your fair share of sales, but it’s today’s buying experience that determines tomorrow’s sales leads — thinking long term, of course. 

For example, Leland Smith’s team at Service Champions will literally WAX the outside condenser on their maintenance calls. It takes a bit of time. But it is a demonstration of value. 

What are you doing as a part of policy to deliver a buying experience that is superior to your competitors? 

My Partner at Wizard of Ads™, Mick Torbay, was conducting an uncovery with a new client recently. He had pulled up the website and mentioned a specific piece of copy that promised that every service call would be EXCEPTIONAL!!

WOW! Exceptional. 

Now my expectation, my minimum bar, is set at exceptional. 

What if the tech arrives late? What if they find an issue and jump right in on price before building value? What if someone involved, anyone…is just having a bad day? 

No chance of a 5-Star review there. 

No referrals, even if you do try to bribe them (their personal perception) with referral fees. 

You see, the buying experience is affected by ALL your choices in sales AND marketing. 

If you want to manage expectations and increase your influence quotient, the devil really is in the details. 

Two. Delight. Remember a time you were genuinely delighted. Something wonderful happened at work…at home…with a friend…a loved one. 

What about when you were a kid? Remember the anticipation of getting tickled by mommy or daddy? 

Delight is felt only in the presence of surprise. 

Some Home Service Companies offer ladder service for those unable, uncomfortable, or unwilling to change that burnt out light bulb on the second story foyer that no one can reach. 

The Home Service Companies who delight their customers with ladder service just make it a point to SURPRISE their customers with this offer while in the home. 

No preset expectation. No room for disappointment if someone fails to deliver on the aforementioned list of services on your website. 

Did you know that Five Guys restaurants budget in a scoop of fries in the bottom of every bag of take out? 

A touch of delight in every bag. 

But what is delight really? 

It’s Dopamine and Oxytocin. The happy chemicals that are in part triggered by, you guessed it, surprise. 

Scientific facts, research, and experience tell us that consistently overdelivering on the buying experience will in fact determine the sustainability of long term growth of your business. 

Protect your buying experience at all cost

Deliver a fast, easy, and safe service FIRST, and then top it off with Strategic Delight

Strategic Delight is the kind of delight that you build into your sales process, culture, and budget, but you don’t disclose anywhere, any time, until the good deed is already done (remember, it’s not delightful if the customer doesn’t know you did it)

At Alaskan Air Conditioning they give away copious amounts of Klondike Bars. 

No, not run of the mill ice cream bars. 

Minty, Icy, Cool, Refreshing, Invigorating KLONDIKE BARS. 

Delightful on a boiling Arizona day. 

But what about referral fees?

So if not referral fees, do you rely on a better buying experience and delight alone? 

Do I leave the fate of my business to chance? 

Nope. 

You delight your loyal customers with thoughtful gifts. Read that again. 

That means your referral program should be a SECRET

Because when they get that gift basket, bottle of wine, weekend away, free product, <insert creative solution here>, they will be surprised. 

Dopamine and Oxytocin will be released. 

  • Rave reviews will be written. 
  • Phone calls to the father-in-law will be made insisting on you as their service provider. 
  • And $29 coupons desparately seeking tune ups will be summarily tossed in the refuse bin. 

Need help with your buying experience and Strategic Deight? Let’s talk. 

*the rare anecdotal exception does not disprove the rule. It’s about playing the much less obvious odds in your favor.