Rarely does customer loyalty pay, but for Simon Goodwin recommending friends and family to his energy provider has so far netted him almost £4,000. The photographer, from east London, switched to green energy company Ecotricity in 2011. He discovered the company paid £50 in vouchers for referring a friend and set up a link to it on his business website. Almost four years and 75 referrals later, he has earned £3,750.
The vouchers are for organic goods website Ecotopia, so won’t be everyone’s cup of (Fairtrade) tea, but they suit Goodwin. He uses them occasionally to buy clothes but mainly to buy food, some of which he donates to a food bank where he is a volunteer.
“Because of my job I’m sometimes meeting hundreds of people a week,” he says. “I obviously don’t mention Ecotricity when we first meet, but the topics of energy costs and the environment frequently come up in conversation, so I often end up mentioning my supplier.”
Ecotricity’s scheme is one of thousands actively promoted by financial services, utilities, consumer goods and even recruitment companies who are happy to pay for valuable word-of-mouth referrals. Not all of these are actively promoted by the companies and not all of them allow unlimited referrals. Some reward the referrer, some both referrer and recipient.
There is very little point in signing up to a company purely on the basis of the “refer a friend” rewards you could net further down the line, but it is worth checking if the companies you are already considering do offer such an incentive as it could end up, as in the case of Goodwin, being more lucrative than you imagine.
You should also ensure you are suitably impressed by the company’s service or feel strongly that its products are impressive before trying to entice friends and family – or you could find yourself becoming unpopular.
“Refer a friend is a cost-effective marketing channel, as word-of-mouth is a very powerful form of advertising, although personally I always feel it’s less genuine if there’s a financial incentive attached for the referrer,” says Andrew Hagger, financial expert at moneycomms.co.uk. “Just because a friend or family member suggests a new account, insurance or energy provider and there’s a cash incentive at stake for both parties, don’t feel pressurised or that you have to sign on the dotted line there and then.
“Take time to check out the details and terms and conditions before committing yourself, as the deal may not be suitable for you and could end up costing you a lot more than the initial referral fee that’s up for grabs.”
If you don’t have lots of friends or family willing to switch provider to get you a reward, there are a couple of websites, refermehappy.com and ireferyou.co.uk that will find “friends” for you to refer to. However, some of the offers appear to be out of date so check before you join.
WHO OFFERS WHAT
We’ve looked at some of the deals that are available at present and shortlisted the best of the bunch:
Rewards by value
Telecoms and TV Sky TV subscribers will receive a £75 voucher for referring a friend – and the friend gets one too. The choice is between Tesco, Marks & Spencer or a Compliments voucher that can be spent in more than 150 high-street stores.
Energy Utility Warehouse offers £150 for the first five referrals (starting at £10 for the first and increasing £10 each time) and £20 thereafter. The rewards are paid out as shopping vouchers for Sainsbury’s, Amazon or John Lewis four times a year. It will also send an extra £10-worth of shopping vouchers every Christmas, for every friend who has been customer for at least four months.
Financial services American Express cardholders earn membership rewards points for themselves and for friends they refer. The amount differs depending on the card but a platinum card holder, for example, gets 18,000 reward points per referral while their friend gets 35,000 points as long as they spend at least £2,000 in the first three months. Points can be used for shopping and travel.
Groceries Not many people are recommending Tesco right now, as the supermarket makes this offer tricky to find on its website. But go to tesco.com/mgetm/friend.asp and recommend a friend (who then shops online with Tesco) and will you receive 1,000 Clubcard points, as will your friend. The points are equivalent to £10 or £40 in Clubcard deals. You can do this as many times as you like.
Rewards by best product
Telecoms and TV If you’re just after cheap broadband, Plusnet is often top of the table on price. It currently has a £2.50 a month broadband and calls package (plus £15.95 line rental) and is one of Which?’s recommended providers. Refer a friend to Plusnet and the company will knock 75p a month off your broadband bill for every month your friend stays with them or 50p a month off your phone bill. The number of people you can refer is unlimited.
Energy Ovo is one of the top rated energy companies on both price and customer service. Currently its average bill is £998 a year, according to uSwitch. Ovo customers who refer a friend net themselves £20 in Amazon vouchers, though the company says it is soon to extend this to a much wider range of offers. There is no limit on the number of referrals.
Financial services If you bank with Nationwide and recommend a friend, both of you receive £50. Nationwide’s Flex Account is one of the best buys for those who are in credit, paying 5% on balances up to £2,500 in year one and 1% thereafter. You can refer up to 10 friends a year.
Groceries Recently voted best organic supermarket at the Soil Association awards, Ocado has an Invite a Friend scheme that pays £40 in vouchers to share. You can invite a group of friends in one go using Facebook, or one at a time by email. Your friends get a £20 discount with their first shop when they spend £80 or more, as long as they order within 12 weeks. After their first shop has been delivered, you get a £20 voucher too.
