This edition of "Stuff You Can Use" contains the second in a series of articles authored by Don Scholl. Again, it is offered in hopes that it will be of interest and use to practitioners in the accounting profession. Your suggestions as to how it may better serve that purpose are welcome. Please E-mail me with any comments. Current and back issues of "Stuff You Can Use" will be available soon in Adobe pdf format for download.

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The second article follows:


Many firms derive a major benefit from people referring new clients to them. A continuing concern, however, is how to appropriately recognize the referrals received and how to encourage more. There are, in fact, a number of recognition methods that seem to be successful on both counts. Here are a few ideas.

First and foremost, always respond promptly to a referral with a thank-you note.

This response should not be some kind of form letter which you had typed and then signed. I believe that a personal, handwritten note from you to the person who made the referral puts the response at a whole different level. It may take a little longer to do and you may need to work on your handwriting, but I think the effort is well worthwhile. Personal, handwritten notes have much more impact.

We all know that the best way to encourage referrals from people who are in a position to make them is to be able to give something back - to reciprocate. With this in mind, I suggest you make a consistent effort to look for opportunities to refer good clients to other professionals who may be able to render services to them.

Some words of caution are in order here, however. You need to be highly selective when referring business. You need to be sure that the recipient (individual or organization) will be able to provide the level and quality of services your clients have come to expect from you. The reason is that your clients will measure you by the success of that referred engagement.

Keep score
I strongly recommend that you keep score with respect to referrals. A relationship does not necessarily have to be on a quid pro quo basis, but when you are making referrals to other professional organizations, you should be able to measure a reasonable return from each one to justify continuing the association. If you don't think you are getting an appropriate response when you have made several good referrals to another organization, you might meet with the people concerned to discuss how they view the relationship and find out why you are not getting the response to which you think you are entitled.

Many firms take care to ensure that good referral sources are recognized by inviting them to various social events - the theater, sporting activities, a round of golf, etc., or by taking them to lunch, dinner, or some other function. But some referrers seem to be entitled to something more, and some firms' partners are struggling to find ways to appropriately recognize the outstanding support they have received.

Some unique approaches
In some instances, firms have selected specific gifts to be made to a particularly productive referrer. They have selected special clocks for the person's office, or ordered cases of fine wine to be delivered to his or her home. Other practitioners have inquired of the referrer's spouse about that individual's enthusiasms, and then bought a gift based on the spouse's recommendation.

These are recognition activities that go well beyond the sharing of a few pens or a set of coasters with the firm's logo on them. But sometimes there are circumstances where such response is warranted.

One of the more unusual approaches to recognizing referrals - the award of frequent flyer miles - was put into use recently by a local firm. As you may be aware, most major airlines now sell frequent flyer mileage coupons that can be used for various kinds of award programs.

The coupons, typically, are available in 500-, 1,000-, 2,500-, and 5,000-mile denominations, although they must, in most cases, be bought in some significant quantity, such as 150,000 miles an order (see table below). Still, if you are only paying two cents a mile for a minimum purchase, I think it is an affordable activity for most firms. One firm even published in its newsletter that it would be handing out 500-mile certificates for each referral received in 1996, and 1,000-mile certificates to some long-standing clients.

With the increasing enthusiasm of accumulating frequent flyer miles, this seems to be a particularly interesting way to recognize good referral sources and good clients. The main requirement here is that the recognition be prompt whether or not a referral becomes a client. And if the referral does, in fact, become a client, then, perhaps, one of the more spectacular responses just described would be appropriate.

Typical Airline Incentive Programs:

Alaska Airlines (800-984-9934) - Premiums --------.02 per mile - $1275. minimum purchase --------.02 per mile - $1275. minimum purchase America West (800-833-2292) - Merit Miles --------call for information American Airlines (800-771-5000) - AAdvantage Incentive Miles --------call for information Delta Airlines (404-715-9426) - Skymiles --------500, 1000 & 5000 mile vouchers --------.02 per mile - $1200. minimum order --------+ $75. administrative fee TWA (800-221-2000) - Appreciation Miles --------500, 1000, 2500 & 5000 mile certificates --------.02 per mile - $1000. minimum purchase --------+ $75. administrative fee TWA (800-221-2000) - Appreciation Miles --------500, 1000, 2500 & 5000 mile certificates --------.02 per mile - $1000. minimum purchase --------+ $75. administrative fee United (800-742-5825) - Reward Miles --------500, 1000 & 5000 mile certificates --------.02 per mile - 60,000 mile minimum --------+ $75.00 processing fee US Airways (800-883-1019) - Incentives --------500, 1000, 2500 & 5000 mile certificates --------.02 per mile - 50,000 mile minimum

Note: This article was originally published in The Practicing CPA.