Are You Offering the Right Referral Rewards? Referral Bonus Benchmarks for the Staffing Industry

In the race for talent, referrals are a boost of adrenaline, generating 70% more good hires than non-referrals and making it easier to fill more jobs in less time. And what better way to spend your staffing agency’s recruiting budget than to pay people you know (your ambassadors) to recommend applicants?

If you’re just starting to take advantage of referrals, you may have a few details to iron out:

  • How much should your ambassadors receive for each qualified referral?
  • Should applicants also be eligible for rewards?
  • What is the best way to pay out bonuses?

To help answer these questions, here are some tips for rewarding referrals, including a look at average bonus amounts by industry.

Investigate your competition. Referrals should always be profitable. So, when deciding how much to offer ambassadors, look at your bill rate, your gross profit margin and the point at which your agency starts to make money. Paying out referrals should be exciting because you know you’re getting your money back and then some. But to keep ambassadors from sending referrals to your competitors, you need to know how your referral rewards compare to others in your industry.

Here are some benchmarks based on data collected from the Staffing Referrals platform:

Not surprisingly, staffing agencies hiring in the IT industry typically offer higher rewards (averaging $1,081), while rewards for industrial referrals tend to be on the lower end (averaging just $80).

But looking at the bonus amounts as ranges, you can see that some agencies are willing to pay ambassadors quite a bit more than the average. As you design your program, it’s important to understand where your agency fits into the mix. Are your bonuses on par with others in your industry? Will they be enough to incentivize high-quality referrals?

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Choose rewards that your ambassadors want. There are many ways to reward referrals — from giving out gift cards to adding extra employee perks to making charitable donations on the ambassador’s behalf. Sometimes all it takes is recognition in a company newsletter.

However, if you ask your ambassadors what types of rewards they prefer, they’ll probably say cash or a cash equivalent (like a gift card that can be redeemed at a place of their choice). It’s the simplest, most common way to incentivize program participation. The vast majority (96%) of surveyed employees at LinkedIn said cash bonuses are the most fitting reward for a successful referral. We conducted our own survey that showed similar results — more than 80% of respondents said they prefer a monetary reward over non-monetary options.

Here are a few other tips for optimizing your referral rewards:

  • Use a dual-sided referral program. Most agencies give a referral bonus only to ambassadors, but we’ve found that leads increase when you offer bonuses to both ambassadors and the applicants they refer. This is the type of referral program popularized by Uber and Airbnb. Dual-sided referral programs boost the trustworthiness of your ambassadors and strengthen the bond between ambassadors, applicants, and your agency. It’s a win-win-win situation.
  • Use a one-time bonus rather than ongoing or tiered bonuses. Some firms offer ongoing bonuses (e.g., the ambassador receives $1 for every hour the referred applicant works) or tiered bonuses (e.g., 50% paid out when the referral is hired, 50% after they’ve worked for three or six months). However, these typically don’t produce as many new referrals as bonuses that are paid all at once. They also overcomplicate the process and add to the administrative work required. The most effective strategy is simply to pay the ambassadors and their applicants a flat fee based on a specified milestone (e.g., after 30 days of work).
  • Always pay out rewards when promised. This should go without saying, but one of the most common complaints about referral programs is people not receiving their bonuses on time. Do what you say you will do.
David Folwell

David Folwell
David Folwell is the founder of Staffing Referrals, an automated referral management (ARM) platform.

David Folwell

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