If you're in charge of your company's employee referral program you've probably wondered about the effect reward amounts have on referral activity. The most accurate way to measure this is by looking at what happens when the reward amount changes.** Here I'll highlight high level numbers from two such cases:
Starting reward amount was $300.
Reward amount was raised to $1000.
For the two weeks before the referral amount was raised, the company's employees sent out 45 referral invitations.
For the two weeks after the reward amount was raised, the company's employees sent out 113 invitations. This is a 150% increase in number of referral invitations sent out.
The number of employees clicking through
the engagement email (the one inviting them to make referrals) doubled after the increase.
Company 2 (Specific positions only)
Starting reward amount was $2500.
Reward amount was raised to $5000.
For the two weeks before the referral amount was raised the company's employees sent out 32 referral invitations.
For the two weeks after the reward amount was raised, the company's employees sent out 51 referral invitations. This represents a 59% increase in activity.
We'd all love to think that employees will make referrals to help the team and help their friends, and I'm not suggesting they won't, but don't underestimate the value of a good cash reward to get employees to participate in the program. Remember, nothing says thank you like a big pile of cash.
EmployeeReferrals.com helps companies organize, optimize and automate their employee referral program.
** You might at first be tempted to just look at the positions with the highest reward amounts and see if they have more referrals made for them. This is an inaccurate way to look at the data. Companies tend to place higher rewards on their hardest-to-fill positions, those that already have very low referral activity. This analysis might mistakenly lead you to believe that higher rewards lead to less activity, e.g. "We offered $1 million for an introduction to a unicorn but we didn't get a single referral."