Candidate Referrals

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 organisation.

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 candidate market?
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 impact?

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. An online survey product such as PeoplePulse 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 occurred.

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 figure sums.

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 scenario.

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.

Why not have a look at PeoplePulse today?

If you are interested in a demonstration of full featured online survey software offered by a full service provider, please request a demo.

Alternatively contact PeoplePulse on ph +61 2 9232 0172 to discuss how we may be able to help you

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Staff Induction: Following Up On Your New Hires