Paying your Parents for Referrals

It’s a very tempting strategy—especially when you are doing everything you can to generate new student enrollment at your school.

A couple of years ago I was working with a school that was giving out large tuition discounts to current families that referred new families to their school. During my site visit I asked them if this referral discount was making a difference in their enrollment effort.

Their answer: “I don’t know.”

I was perplexed that they didn’t know. The only thing they did know was that this program was costing them some significant dollars in their budget. This referral discount could not be tracked to enrollment gains.

Recently, I saw a school advertising a $1,000 tuition discount to current families referring new families that enroll at their school. That’s a lot of money for a referral.

In fact, I see this strategy all the time—whether it is $50, $250 or $1,000 per family.

But does it really work?

I don’t think so. In my experience working with schools across the country, I haven’t found one school where this program is growing their enrollment through referral discounts.

I believe in the power of word-of-mouth marketing and your current parents are the best source of marketing your school. However, I don’t believe that you have to pay them to refer their friends to your school.

It’s likely that your current families are referring new families to your school regardless of whether or not they receive a referral fee. If you are paying for these referrals, you are using budget dollars that you don’t need to be spending.

Andy Sernovitz, in his book Word of Mouth Marketing, says: “Offering customers incentives to spread the word about your stuff is often a mistake, and here’s why: You make them feel dirty if they’ve paid for it…When you link a monetary reward to referring your stuff, you taint the person’s motivation for talking about it. It’s a kind of a bribe. Instead of being a friend for recommending a cool product, the person becomes a spokesperson for the company” (page 18).

He goes on to say, “It turns the friend-to-friend relationship into a salesperson-to-prospect transaction. Even good friends or family members are less believable when they’re working for rewards” (page 19).

Referrals should happen naturally when it comes to marketing your school. When your parents are satisfied at your school, they WILL tell their friends. You shouldn’t have to pay for it. If you are, then you might have bigger issues to deal with at your school.

Word-of-mouth referrals can’t be bought and referral discounts shouldn’t be part of your marketing strategy.