Companies typically use a referral fee as the vehicle to pay a non-sales employee who identifies an opportunity, refers it to a sales person, and it closes and becomes new business for the company. Lead referral incentives can be great to motivate the rest of the company to feed good leads to sales, similar to bonuses offered to employees who identify an external candidate for an open position. Here are a few guidelines to maximize the effectiveness of your program:
- Offer a meaningful reward, but not one that will encourage non-sales people to focus so much on this earnings opportunity that they neglect their key accountabilities. For example, if the eligible employee has total compensation without the lead bonus of $50k/year, then an award of $100 – $200 for a lead that turns into business would be about right (assuming their opportunity to hand off these leads would come up only a few times per year, and the deal value is such that the referral fee is affordable).
- Start the program for a limited time – six months or a quarter for example. This gives people a sense of urgency to find some leads, and also gives you a chance to adjust if it isn’t having the results you want. You can always declare success and extend it.
- Only pay the award for results that hit your income statement. If you pay for leads, you may get a lot of leads. If you pay for closed deals resulting from leads, your lead quality will be better.
- Watch for any pattern that would indicate that suddenly all leads have come from an eligible referral source. Some companies have had the experience that, when such an incentive is offered, it appears that there is an attitude that someone may as well get the referral bonus so let’s be sure to code someone to get it every time.
- A few months into your program, check with your sales people about the quality of the leads they are getting. Be sure you are clear with your referrers about what constitutes a good quality (well-qualified) lead. It will make everyone’s efforts more productive and the whole program more satisfying.
Donya Rose, CSCP, is Managing Principal of The Cygnal Group. She is a recognized expert in sales compensation plan design, regularly speaking at conferences and writing published articles. She serves clients from F500 to growth-stage businesses, and advises WorldatWork on sales compensation hot topics and best practices.