When is the best time to send a referral gift to someone who has sent you new business? When they first send the referral? Or when that referral actually turns in to new business?

*Disclaimer: Some industries have rules and regulations regarding referral gifts. Please look into the requirements for referral gifts in your industry before sending referral gifts.

Why Send a Referral Gift at All?

Maybe you’re thinking you don’t need to send referral gifts at all. Your clients love you. Some of them already send you referrals. However, incentives exist for a reason. People really do refer more when they get a reward or incentive for doing so.

Referral gifts are a marketing cost. Maintaining client relationships is key. People trust referrals from family or friends, and they become loyal customers and advocates in their own right, leading to even more referrals.

When Should You Send a Referral Gift?

Sending a referral gift after you close a sale is a pretty easy call. A colleague or client led directly to you earning more money. Sending them something as a ‘thank you’ makes perfect sense.

However, sending a thoughtful gift when you receive the referral, before it turns in to new business, shows that you appreciate their confidence in you and your work.

In order to maximize the benefits of sending referral gifts, the best thing to do is send a small gift upon receiving the referral, and a larger gift when the referral turns in to new business.

Five Reasons Why

  1. Reinforces the relationship: Even if a referral doesn’t turn into business for you once, you still want that client to continue to send you referrals. If the first referral doesn’t work out and they don’t hear anything from you, they might think it’s not worth it. You close off that avenue of new business forever. Thanking them for the referral, even if it doesn’t lead to business, solidifies the relationship and lets them know that you would welcome future referrals.
  2. Centers the relationship over money: Sending a small gift when you receive the referral, before it turns into business, sends the message to your client that you appreciate your relationship and their confidence in you, not just their ability to make you more money.
  3. Offers two points of contact with the referrer: Remaining in contact with former clients is important, but it can be difficult to do without seeming aggressive or pushy. Sending a gift when you receive the referral and another when you close a sale gives you two fairly natural points of contact with your former client.
  4. Encourages quality referrals: Sending a gift when a sale actually closes encourages people to send you referrals that actually turn into high quality business for you. It will encourage them to not only send you lots of referrals, but to really focus on the ones that will turn into business.
  5. Makes clients feel successful: Your clients want to know that you appreciate their referrals, but they also want to know whether their referral was successful. Everyone likes to feel like they made a good match.

The Bottom Line

Sending a gift when you receive a referral sends the message that you value your client’s confidence in you. Sending a gift when the referral turns into business lets them know that they contributed to your success. So, why not do both?