You likely already know the value of referrals — it’s hard to miss. From our research, up to 71% of staffing firms’ revenue is generated from referrals.

But many firms leave money on the table and struggle to harness the true power of referrals. Traditionally, managing referrals isn’t a process that has been easy. Common issues include:

  1. Relying on already-busy recruiters to solicit referrals
  2. Losing track of referrals because of manual data entry in applicant tracking systems
  3. Finding time to promote the program
  4. Getting recruiters to share program details with talent on calls
  5. Lack of processes to enable candidates to share the program

Reliably sourcing and tracking referrals is key to success in staffing. Here’s how to implement a successful referral program.

The “old ways” of referral management before the digital transformation

Before we look at the factors that make up a successful referral management process, let’s dissect what can go wrong with old-school methods.

Many of our clients come to us frustrated with analog processes. Perhaps they record referrals in an Excel spreadsheet, rely on recruiters’ “mental Rolodex” for referrals, and mention referrals to candidates in an ad-hoc way when they reach out for other reasons.

Though referral sourcing, follow up, and follow through sounds simple enough, in practice, when firms rely on these old-school techniques, they miss valuable referral opportunities. Often, referrals slip through your recruiters’ fingers, your most engaged candidates fall through the cracks, and your new candidates don’t get the attention they deserve.

Even when your recruiters have the best of intentions, an analog referral management system is unreliable. And in an industry as competitive as staffing, a delayed bonus or an unanswered email can push your favorite candidates over to your competition.

What’s more, analog methods lack transparency, leaving both established and new candidates wondering where they stand with you. You want to encourage your best candidates to not just refer once, but continue to refer good-quality candidates to your firm. Trust and transparency are key factors in this – that means that candidates know every referral is tracked and credited to them.

The bottom line is that an old-fashioned “analog” process could be costing your firm valuable referrals. We’ve found that up to 85% of your network is open to new job opportunities, but without a robust referral management system, they may never be referred to you.

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The “new way” of referral management for companies that are embracing the digital transformation

There are some important lessons to take away from the “old” methods of referral management and apply to a new, better way of managing referrals with software built for staffing firms:

  1. Referral outreach needs to be consistent and automated
  2. Referral tracking needs to be reliable and easy to manage
  3. The whole referral process needs to be transparent to candidates.

Analog programs just don’t reliably meet those conditions, but digital programs can. For example, referral outreach can be set up to happen automatically, with standardized promotion all stemming from a digital referral platform. Emails and text messages can be sent out, social media posts can direct people into your centralized system, and follow-up can be automated.

Of course, a digital program also means that tracking can be automatic, too. Spreadsheets, your ATS, or any other method that requires manual data entry are not fail-safe. Digital systems produce unique links so that referrals are automatically credited to the right person. They also bring transparency to the process so candidates always know where they stand and that their referrals are counted.

Another success factor of referral management that digital programs help with is reach. A “traditional” approach to referrals has people trying to think of who they might know that will be a fit for the roles you have available. They might think of a small handful of contacts (maybe 3 people at best) and pass your details onto them.

Digital programs connect you with your candidates’ entire network. Think about how many contacts you have on LinkedIn. How many of these contacts are looking for a job right now? It’s impossible to know. But imagine being able to share a unique link with your entire network so that you can reach your entire social network. When a candidate shares their personalized link for your referral program on their Facebook page, their reach goes beyond the mental Rolodex. A bunch of their contacts see it — some may even share it to their own networks. This potential reach consistently generates more referral leads for staffing firms.

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Other referral program success factors

What else makes for a successful referral management process? Here are a few important factors:

1. Define clear leadership of the referral program. It doesn’t matter what sort of program you implement, they tend to be more successful if you have someone with active responsibility for its management. They become your subject matter expert for the program and ensure that action is taken where needed. The program owner should also track the overall success of your program – are you meeting your goals?

2. Track referral program metrics. The old saying goes “what gets measured, gets managed,” and this is very true for referral programs. They shouldn’t be “set and forget”; it’s important to track this key source of revenue and measure how it is doing against your goals. Things may need adjusting – for example, your messaging or your rewards.

3. Remove roadblocks to success. This goes for both your recruitment team and your candidates. Any hurdle can cost referrals – for example if it takes too many steps to share a link or to connect contacts with your firm. If you’re shopping for a digital solution, prioritize a proven user-friendy program, and consider using an Automated Referral Management (ARM) platform.

4. Adopt the right bonus structure for your workforce. In general, rewards need to strike the right balance between being competitive with what other firms are offering and making sense in terms of your own bottom line. They also need to make sense to the candidate: if most of your roles are for temporary or contract positions, for example, it might not make sense to put a six-month wait period on the reward.

5. Tap the power of multichannel promotion. Your program should have different channels available for sourcing referrals, but centralize all data from those channels. For example, widgets and forms on websites, links shared to social media, and links sent out via email or text all need to be tracked in a single source of truth.

6. Gamify your referral program with your recruiters. It doesn’t matter how old you are or what position you hold, people tend to respond to a little friendly competition. This means adding “gaming” elements to a referral program, such as the ability to track leaderboards.

Final thoughts

The “old ways” of manual processes and relying on people to remember just don’t cut it for such a valuable revenue source. Digital referral management programs cut out the failings of those systems and help you to reach more candidates.

Staffing firms that don’t embrace the digital transformation with new tech to simplify and automate recruiter processes risk being left in the dust by the competition.