One of the most common tactics to get referrals I see people use is Contests. And at first glance, it makes a lot of sense. You want to incentivize people, and giveaways seem like a good idea. But in reality, Contests are the worst thing you could do.

And here’s why:

When your customers refer you to their friends and family, they don’t do it as a gift or favor to you. (Even if you think that’s the case.) No. They refer you because they want to make a gift to their friends.

Secretly, your customers want to look like heroes and feel good about it. And THAT is their reward.It’s what I call the social reward of referring.

We all experience it whenever we recommend something good to people we care about. But when you introduce a bounty for bringing people in, it turns that whole referral into a transaction. And it cancels out the “feel good” part about it. And what’s worse… Your referred friend stops feeling good about the recommendation as well. And starts questioning whether it was genuine in the first place.

An example? Say, you refer your dentist to one of your friends. And because the dentist has put on a giveaway contest, you can now win a Yeti Cooler when you refer. But here’s the thing…

After all your talk about how great the dentist is, how you really trust them, how you’ve always had only great experience, how they’re caring and gentle, and everything is so amazing… After all this, your friend walks in the door, signs up, becomes a patient and is immediately handed the same promotional material you got…

The one that says, “Refer a friend and win a Yeti!” Can you imagine your friends’ reaction now? Why they’re going to start questioning your real motives? Did you refer because the dentist is great… or because you just wanted that Yeti cooler!

See what I mean?

To really get good at orchestrating referrals, you need to understand the drive behind why people refer. It’s always, always, always because of the social reward. We all want to look like heroes in our friends’ eyes and feel good about it. Take that social reward away with a contest… and your referrals will start losing their power and become just another transaction.