We are working with a real estate company and doing marketing for new leads. As part of the process, we will be sharing new listings with the email list and social media. We wish to create a referral program which incentivizes those who do not qualify for the new house (may not be looking, or out of budget or out of neighborhood) and want to enroll them in the idea of sharing the listing, but need an incentive to do so. Do you think a draw for a prize would work or would we need to go a % of commission?
This can be tricky.
Generally I recommend paying commissions on revenue-generation events only. The reason being, if it is free to generate a lead then it makes it really easy to take advantage of the system.
That being said, there are some ways to go about it. Calculate (you should already have this) your cost of acquiring a lead (CAC). That's your baseline. You can now set your referral commission at or below that CAC number. Since you only pay a commission based on the generation of a new lead you guarantee a positive ROI.
A prize/sweepstakes is not a bad idea. Make sure to create a prize that really resonates with your target demographic (YES: set of All-Clad pans, NO: an iPad) I would run the program the first time based on your best estimates; if you expect to generate 100 new leads, and would normally pay $10-$15/lead then you can afford $1,000-1,500 prize.
You can then adjust the process during future iterations based on:
1) The quality of the leads you received. Referrals are generally more valuable, but scam/spam leads are not.
2) The number of leads you generated.
If you want to work through details in your specific case let me know, I'd be happy to set up a call to discuss further.
Good luck!
If Im understanding your idea correctly you want to provide potential customers who for some reason did not qualify for a home an incentive to direct people to you.
IF this is the case you have a few options but each you need to be careful with So ill give you the pros and cons of each
Percent of commission. .... you could be asking for more work as far as tracking sales and taxes if it is applicable.
If you use a contest most customers dont care to go that route because they feel there is no chance of winning.
My best suggestion is to have a set amount per sale and do giftcards.
One, you can track your giftcards. You then know how much is going out and a better tracking method can be established as to how well this referral method worked compared to leads and sales.
Hope this helps and I wish you luck in you business.
As the owner of a real estate school, I can tell you it is illegal in every state I am familiar with to offer success based referral fees to any individual who does not have a real estate license. You cannot only pay for successful leads that earn you or your entity a commission. However, you can pay on a per lead basis regardless of whether or not they convert, but the unit economics probably won't work for what you are trying to do.
