As all successful executives know, new business
leads gained through referrals is good business to chase! Indeed
customer loyalty guru, Frederick F Reicheld, wrote in his
influential book 'The Loyalty Effect' that closing rates for
referral prospects are significantly higher than closing rates for
'walk-in' customers who have no prior knowledge of your
A good example cited by Reicheld of the power of referral
business is Northwestern Mutual, a US-based life insurance company
where agents are trained to sell solely through referral.
Reicheld concluded that Northwestern Mutual's yield rate for
referral selling was one close for every ten referrals contacted
compared to their yield rates for non-referral selling which were so
much lower that pursuing them made no economic sense.
If we accept that to gain new business through referrals is an attractive
proposition, how do we apply that knowledge to the recruitment arena? Or more
specifically, how do we apply the concept of referrals to help us
attract new, high-quality, candidate applications in a tight
Enter the feedback survey.
One proven approach to driving more candidate referrals is the humble
post-service feedback survey. The principle is simple: within a few
days of dealing with a candidate, take the time to ask for their
feedback on how you can improve and at the same time ask whether
they have any friends or colleagues who are looking for work.
Requesting referrals at the same time as seeking feedback on your
performance is not only appropriate, it also makes fantastic
business sense. After all, if you've done a good job, why not
leverage the goodwill you have generated and ask candidates if they
know of anyone else you can help?
Indeed the Harvard Business Review has shown that if you give good
service and then immediately take the opportunity of asking for a referral,
more than 50% of people will recommend you to other prospects. A very
impressive figure compared to the 5% of referrals it is estimated
you receive when you give good service but do not ask for a referral.
So, how then does one go about setting such a referral system up for optimal
Five steps to set up an effective survey-based candidate referral system:
1. Decide who to survey.
Job applicants. Interviewed candidates.
Short-listed candidates. Placed candidates. You can survey one or
all of these groups. The key is to strike a balance between volume
and quality; whilst surveying everyone who applies for one of your
jobs may result in more feedback and a greater number of referrals,
the quality of those referrals may be lower than had you only
surveyed short-listed and placed candidates.
2. Set up your survey.
Engage a professional online survey software
provider and set up a basic candidate feedback and referral
survey. Don't waste your time using expensive and cumbersome
paper-based systems. Local recruitment survey experts
www.PeoplePulse.com.au has ready-made candidate feedback and
referral templates to help you get set up with minimal fuss.
Ensure that you include an automated 'refer a friend' option at
the end of the feedback survey. For example, one of the last
questions on your survey might be: "If you were happy with the
service we provided, would you like to refer us to a fellow
colleague or friend who may be interested in talking with us about
suitable employment opportunities?" If the candidate answers
"YES", then branch them off to a new page asking them to
enter their colleague or friend's name and contact e-mail address.
Give them the option to write a personal message to their friend
(eg. "I had a great experience with these guys, you should give
them a call"). Upon completing the referral form, the survey software
should trigger two e-mails: one to the referred party inviting
them to contact you and linking them to the jobs page on your
website, and one to you to keep as a record of the referral that
The survey software should also provide you with full reports on
who referred whom and when it took place. This makes tracking
referral bonuses an easy task.
3. Offer an incentive.
Offer candidates an incentive to refer their
friends or colleagues. For example, the cost of an iPod Shuffle
(A$149) as an incentive is a small price for a recruitment agency
to pay for a candidate who may result in a $7,500 placement fee.
Likewise for corporate employers, an $149 iPod pales in comparison
to job advertising costs that can often balloon out into four
4. 'Do you want fries with that?' Systemise your processes.
McDonalds spend thousands of dollars every
year to train their crew members to ask business generating
questions of each customer who passes across their cash registers.
Likewise, in this candidate tight market you shouldn't neglect the
opportunities that can come from the candidate feedback and
referral process. Whether surveying job applicants or newly placed
candidates, ensure that every candidate you want to solicit
referrals from is contacted within two weeks of their last contact
with your organisation. Automated survey invite templates that are
triggered by events recorded in your database are the ideal
5. Follow up referrals and measure results!
Be sure to follow up any referred candidates who you don't hear from
within a week of the automated invite being sent to them. If the
referring party has given you permission to contact their referrals directly,
make sure you don't let the opportunity go to waste. Also be sure to
measure the results of your referral program. Indeed one of the
great aspects of a candidate referral program such as the one
outlined above is that the results and return on investment are
highly measurable. Your survey software should tell you the number
of people that both gave you feedback and referred others to you.
Any placements made can easily be cross checked against referrals
in the system. Remember, one placement alone will more than pay
for the cost of setting your referral system up.
In short, using surveys to ask for candidate
referrals is a proven approach that makes sound business sense. If
you accept the principle that effective, intelligent and highly
educated people often socialise with equally effective, intelligent
and highly educated people, then candidate referrals that result
from newly placed or short-listed candidates can help to not only
lower your candidate attraction costs, but can also help to increase
your quality of hire.