Five reasons to stop incentivizing brand recommendations

By pandodailyguest , written on October 8, 2012

From The News Desk

The term “brand advocacy” has been making its way up the social marketing buzz word ladder, and rightfully so, since advocacy is the top digital priority of CMOs worldwide, according to a recent IBM study. However, speaking with marketers every day, it has become clear to me that this new type of marketing has spurred different approaches behind getting people to "recommend" brands, some of which are not so good.

Some companies are incentivizing customers to recommend through tactics like pay-for-referral, pay-for-review schemes, or promotional ploys that reward people for sharing coupons. Let's be clear; that isn’t advocacy. It’s bounty-hunting.

The single biggest reason why advocate marketing is more effective than any other marketing is this: It’s more credible. Consumers are bombarded by advertising messages everyday, so their growing distrust of ads isn’t surprising. But a recent study, sponsored by Alterian, showed just how grim the numbers have become. 95 percent of respondents didn’t trust advertising. In the era of social media, people look to their friends, online social networks, or third party review sites, for opinions on what smartphone to buy, which restaurant to dine in, or what beauty product to use.

Getting your trusted advocates to deliver authentic messages about your products or services may be the only way marketers can reach jaded, distrustful buyers. But the key is to keep it authentic.

Here are five reasons why brands shouldn’t incentivize customers to recommend products and services:

1. It’s inauthentic. Advocates don’t have anything to gain personally from recommending brands, and that’s why people trust them. If you give people cash or freebies in exchange for recommendations, not only are you compromising your brand credibility, but you’re also destroying the trust between advocates and their networks. In fact, people are less likely to buy a product if they find out that the recommender is being paid for the referral, according to a study by ETH Zurich.

2. It’s unnecessary. If you’re trying to get average customers to refer leads to you, you may need to stoke them with cash or coupons. But advocates aren’t average customers. They are genuinely enthusiastic about your brand so you don’t have to pay or prompt with some sort of perk. The only reward advocates want is the validation of knowing that they’ve helped a peer. In fact, according to a recent Zuberance study, only 1 percent of advocates recommend after being incentivized with rewards or discounts.

3. It turns your customers into spammers. We all have that one friend who constantly shares deals from daily deal sites on Facebook and Twitter. Why? Because if he or she gets three friends to buy the deal, that person get theirs for free. This frequent spam causes us to tune them out, possibly defriend or unfollow them. But it also devalue the effectiveness of their recommendation.

4. It creates unwanted expectations from your customers. If you continue to offer rewards or money to customers fortheir referrals, you’re conditioning them to always expect something in return. The minute you stop compensating them, is the minute they stop showing the “love.” Customers who you need to pay or provide freebies to aren’t real advocates. They’re mercenaries.

5. It’s lame. If your company or product isn’t very remarkable, it makes sense that you might have to pay people for recommendations. Before investing in inauthentic advocacy, focus on improving your company and products so it’s worthy of true praise. Do you think Apple has ever paid their customers for a recommendation? Absolutely not. Their products are brilliant, and therefore they’ve created millions of genuine Apple advocates.


I don’t believe in dangling incentives and rewards in front of customers to get recommendations. However, I do think advocates deserve to be recognized and thanked. Here’s an analogy I like to use that illustrates the difference between saying "thank you" and buying advocacy.

The last time you were a candidate for a job, you probably contacted former colleagues and asked them if they would serve as a reference. I doubt you said, “If you give me a good reference, I’ll buy you a bottle of wine.” That would seem tawdry.

However, it is entirely appropriate to thank your references once you land the job by giving them a gift. (I’m partial to the 1997 Silver Oak Cabernet, just in case you’re wondering.)

The same thing applies to your advocates. Giving them something special after they’ve recommended you is entirely appropriate. Stick to the moral high road and keep your advocacy strategy authentic. True brand advocates are more trusted, more influential, and more effective in driving real business results.