Paying Customers For Referrals May Backfire

Many companies like banks and others pay their customers for referrals.

Thinking about paying customers for referrals? You may want to think again about this approach.

Paying customers for referrals actually makes customers less likely to refer prospects to you, especially when the prospect learns that that the customer is being paid for the referral, according to a study, “Social Sharing Behavior Under E-Commerce Context.”

If you find out a friend has recommended a restaurant, hotel, smart phone, or other product because he’s being paid, you’re much less likely to trust the recommendation. On the other hand, there is nothing more powerful than a genuine recommendation from an authentic Brand Advocate.

Alex Littlewood, one of our customer success directors, talks about this in his excellent blog post “Why Referral Programs Suck.”

Recommendations are always less trusted and credible if the recommender is getting paid.

-Rob Fuggetta, Founder/CEO, Zuberance