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Category Archive: Incentive

Adam Robinson

3 Simple Steps to an Effective Employee Referral Program

Asian businessman making handshake with smiling face

Most business owners understand the importance of referrals when it comes to their customer base. According to a recent survey conducted by Harris Poll and Nielsen, 82 percent of Americans indicated they look for recommendations from friends and family members when they’re deciding on a purchase. Input happens organically, especially with big-ticket items like a vehicle when advice from trusted advisors is even more valuable.

Meanwhile, brands have tapped into the fact that incentives help facilitate the referral process. In fact, that same study found that 88 percent of American consumers said they would want to receive money, products or services, loyalty points and other reimbursements for promoting or referring a product over social media or email. By doing so, businesses can put themselves in a strong position to grow and generate new revenue through new customer acquisition.

Now, what does your employee referral program look like? As critical as new customers are for your dealership’s continued growth, your employees are equally important to your business’ sustained success.

An effective employee referral program allows you to tap into your talent and make them proxy recruiters. The foundational aspect of this approach to hiring is ensuring your existing employees are precisely aligned and identify with your company culture. In other words, they have the motivation to recommend a friend because they feel comfortable and appreciated at work and have a positive outlook of the business.

How to Build an Effective Employee Referral Program

Let’s assume your dealership’s company culture is in excellent condition, but your recruitment costs are exceeding what you had forecasted on a yearly basis—with average turnover rates for salespeople at 71 percent, this is a likely scenario.

With this in mind, here are three simple steps that will help you build a referral program that takes much of the headache out of recruiting:

1. Expectations

As you put your program policy down on paper, you have to begin with clearly defined objectives and expectations—both from an employer and employee’s perspective. As the business, you need to run an audit of your staffing needs and how to best optimize your referral program to bolster specific departments. Are there a few employees reaching retirement age in the sales or service departments? Has someone in billing and accounting recently relocated? Are you rebuilding your marketing team? Whatever your short- and long-term needs may be, these goals are critical to the strategic success of your referral program. If you’re already sitting on a large stack of high-quality resumes for salespeople, direct your referral efforts elsewhere.

At the same time, your employees need to know who qualifies as a referral. Can it be their high-school buddy? Should it be a former colleague? How about a friend or classmate from college? Can employees refer candidates who have already applied for a position? Another consideration for your referral program is who can recommend candidates. In many organizations, those at the highest levels—including vice president and above—or those directly involved in hiring decisions are restricted from making referrals.

2. Incentives

As mentioned above, participating in an employee referral program comes with the expectation of some reward. The extent to which you choose to compensate employees for their successful referrals may depend on the role. For instance, a management position may offer an incentive at a higher rate than an entry-level candidate. That’s up to the discretion of the dealership and how you assign value for each referral. However, having a consistent, documented incentive is a way to show your employees that you take the referral program seriously.

Another significant consideration with your incentives is timing. As an employer, it feels better to wait to reward the referring employee—especially monetarily—until the new hire proves themselves to be a successful member of the dealership staff. From an employee’s perspective, this sends a confusing mixed signal. On one hand, you trust their referral enough to hire the candidate; however, you don’t have confidence that the new hire will last. So, you withhold the reward until six to 12 months down the line. This policy produces a net loss in terms of employee engagement and culture. Consider a two-step process where you pay a portion of the financial incentive at the time of hire and deliver the remainder after the new employee proves themselves.

3. Process

If you truly want your employee referral program to get off the ground, you have to make it as simple and straightforward as possible. The fewer obstacles employees have to go through or around to make a referral, the better the results. If you want to take a bare bones approach, you can simply ask employees to email HR with a name and contact number for the referral. Or you may ask them to provide the candidate’s resume as well. Regardless, your employees aren’t the one applying for the open position, so avoid making the process that complicated.

No matter how simple you make the process of submitting referrals, an integral, ongoing step is consistent communication with staff. Make sure they know to whom they send referrals, and that they understand their role in the review process and the employment requirements through the onboarding stages—meaning some organizations require the referring employee to remain on staff throughout the first 30 days of employment. It’s also a smart idea to include a communication plan in the case you don’t hire the referral. If a candidate doesn’t meet the established requirements, you must clearly explain that so that your staff doesn’t perceive it as a slight against their recommendation.

What Employee Referrals Mean for Your Dealership

What would you think if you weren’t getting any customer referrals? Clearly, this is bad. One on hand, you likely have operational issues in one or more department that are keeping your clients from telling their friends and family to visit your dealership. On the other, you have to invest significantly more in other marketing channels that are an expense on your P&L sheet.

The same rules apply for your employee referral program. Forbes contributor Liz Ryan explained that if you’re not getting any referrals from your existing staff, it’s could signal a couple of issues:

  1. Your dealership’s culture is suffering. Your employees are telling you that they wouldn’t want their former colleagues and friends working at your dealership.
  2. Your existing referral program is filed away somewhere that hasn’t seen the light of day in the past 12 months. Nobody remembers this is even an option.

As a result, you have to increase your budget for job board advertisements and other recruitment channels to get the attention of prospective candidates. Either way, it’s not an ideal case.

An effective employee referral program doesn’t replace other recruitment strategies, but it certainly alleviates much of the strain—after you’ve put in the hard work to build a dealership culture where talented people want to work.

Thanks to NCM Associates’ partner, Hireology, for sharing the guidance on employee referral programs. Learn more about Hireology. And join NCM’s experts for more actionable advice for hiring the best people for your team in our Finding Top Talent and Success-Driven Pay Plan classes.

Permanent link to this article: http://blog.ncm20.com/2016/09/3-simple-steps-to-an-effective-employee-referral-program/

NCM Associates

#AskNCM: What’s the best pay plan for today’s market?

By NCM Associates

Pay plans are always tricky. So, how should you best structure your compensation to recruit (and retain) the best sales staff?

NCM expert, Robin Cunningham, knows that the best automotive pay plan varies from dealership to dealership. But, he shares with us, there’s one key thing you should ALWAYS do for the first 60, 90 or even 180 days. Watch the video to get his recommendation.


Have your pay plans been causing you trouble? #AskNCM a question in the comments, and we’ll answer it!

Permanent link to this article: http://blog.ncm20.com/2016/05/askncm-whats-the-best-pay-plan-for-todays-market/

Russell Grant

How to Motivate Your Customers: It’s a Gift

travel-incentivesAs I travel the country speaking to dealers, there are several questions that have come up consistently in the 20 years I have been in this business.

One of them is: “Why do I need to give something away to get people into my dealership, especially if they’re already my customers? I don’t want a bunch of gift seekers at my dealership.”

While there are a number of reasons why gifts are a strategic part of a successful marketing campaign, I want to share with you the three most important:

  1. Law of Reciprocation. We all know that if we do something for somebody they will feel obligated to do something in return. This doesn’t mean someone will buy a car out of obligation, but it does mean if you get that customer to your showroom they may take a test drive—or be more generous with the time they give you at the dealership.
  2. Motivation. Just because someone is interested in purchasing a vehicle doesn’t mean they’re coming to your dealership any time soon. By offering them a gift, it motivates your customer to take action now. This way, your marketing gives customers a reason to respond when you want them to, which is often much earlier than they would have without your offer.
  3. Proven Results. At J&L Marketing, we have been tracking marketing results for 22 years and the results are overwhelmingly stronger for campaigns that use a gift versus those that do not. Also, dealerships that highlight their gift in marketing materials receive a better response rate and experience the high quality traffic they’re looking for. The best approach is to make your offer first and then motivate the customer to take action with a gift.

Be Strategic With Your Offers

Premiums/Gifts should have a higher perceived value than their actual cost. However, be careful. They should not be a gimmick.

Trip incentives are a great way to motivate the customer with something they may not be willing to give themselves. This fits the description of high perceived value. Would you be willing to visit a dealership for a chance to win a trip to the Super Bowl? Most people would if they were also in the market for a vehicle. The best part is you can insure the cost of this once-in-a-lifetime trip so that your dealership only pays a fraction of the cost and can guarantee there will be a person who wins—if they show up at the dealership with the winning number.

Maximize Your Incentives

Utilize microsites and give your customers a gift if they RSVP for an appointment. Wouldn’t it be worth the $500 to gather valuable information from customers on the RSVP microsite; information you can use to help sell vehicles before your promotion even starts? Plus, that same information can be used for your future campaigns.

So don’t worry about gift seekers. If your campaign is done properly and creatively, a gift is a strong tool that will motivate customers and drive high quality traffic directly to your dealership.

Permanent link to this article: http://blog.ncm20.com/2013/07/how-to-motivate-your-customer/