The A-Zs of Hiring Glossary

Referral Bonus

What Is Referral Bonus?

Referral bonus is a type of incentive that an organization offers to its employees or customers for referring qualified candidates or new customers to the business. The bonus is usually awarded in the form of cash, gift cards, or other rewards.

Referral programs are a common practice in many industries, including tech, finance, and retail. They are used to attract high-quality talent and loyal customers, as well as to reduce recruitment costs and increase sales.

Referral bonuses can vary in amount and structure depending on the organization’s policies. Some companies offer a fixed amount for each successful referral, while others offer a percentage of the new hire’s salary or the new customer’s purchase.

Referral programs can also have different eligibility criteria and timeframes. Some organizations limit the number of referrals an employee or customer can make, while others have no restrictions. Moreover, some programs have a time limit for the referral to be considered eligible, while others don’t.

Overall, referral bonus programs can be a win-win situation for both the organization and the referrer. The organization benefits from attracting qualified candidates or new customers, while the referrer benefits from the bonus and the satisfaction of helping someone else find a job or a product/service they need.

Why do companies offer referral bonuses?

Companies offer referral bonuses as a way to incentivize their current employees to refer qualified candidates for job openings. This can be a cost-effective way for companies to find new talent, as employee referrals often result in higher retention rates and faster hiring processes. Additionally, referrals can help to diversify the candidate pool and bring in individuals who may not have otherwise applied for the position.

How much can you earn from a referral bonus?

The amount of a referral bonus can vary depending on the company and the position being filled. Some companies offer a flat rate bonus, while others may offer a percentage of the new hire’s salary. In general, referral bonuses can range from a few hundred dollars to several thousand dollars.

Referral Bonus Dos And Donts


  • Make sure your referral program is easy to understand and access for both existing and potential customers.
  • Offer a valuable incentive for both the referrer and the referred.
  • Clearly communicate the terms and conditions of the referral program to avoid confusion or disputes.
  • Promote your referral program through multiple channels, such as email, social media, and your website.


  • Don’t limit your referral program to only existing customers. Consider opening it up to anyone who may be interested in your product or service.
  • Don’t make the referral process complicated or time-consuming, as it may deter people from participating.
  • Don’t promise incentives that you can’t deliver on, or that are not valuable enough to motivate people to refer others.
  • Don’t neglect to track and measure the success of your referral program to ensure it is effective and worth the investment.
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