Looking at ROI, recruiting with networks is always going to have the biggest payoff. Talented candidates know other good people, and it saves time and money to ask them for recommendations.
That’s where refer-a-friend programs come in handy. While there are plenty of guides to corporate employee referral programs, there aren’t so many answers on agency recruitment referral schemes.
It’s all about getting more from what you have. A referral program can streamline agency operations (saving resources on sourcing and screening). At the same time, it adds to the value of your existing talent pools (bringing in more high-quality candidates fast).
Read on for some tips to launching your own referral rewards program.
How do referrals help recruitment and staffing businesses?
You might be thinking, “Recruitment is about relationships - it’s a consultant’s job to get out there and place more candidates.”
It is true that recruitment still depends on people and networking. And it can take recruitment consultants a lot of legwork to source, screen, and meet their targets.
But that’s the exact reason why referral programs are perfect for agency recruitment.
Take a look at the stats:
- About 7% of candidates are sourced from referrals, but they have a much higher conversion rate of 40%
- Referrals are the top method for candidates to learn about a job
- Time-to-hire averages 29 days for referrals versus 39 days for job boards
- 47% of candidates hired via referral stay in their role 3+ years versus 14% of candidates from job boards
Referrals make for higher-quality candidates, lead to faster placements, and those candidates stay longer when they’re hired. If you want value for effort in recruitment, referrals lead the way.
Other benefits of recruitment referral schemes
Reducing costs
Just getting candidates in the door can be expensive. For agencies, a key cost culprit is spending to post on job boards. And there’s the additional cost of consultants’ time as they hunt for new talent.
Setting up a referral engine adds to your talent pipeline without relying on more ad spend. Plus, it’s a multiplier: one candidate bringing some friends on board can later amplify the revenue from that original placement.
Together that means getting more deals done without adding to overhead.
Improving candidate quality
“Candidate quality” can be a vague term, covering anything from soft skills to technical mastery. But the real test of candidate quality is what makes a client agree to hire them.
Instead of sorting through piles of CVs from unqualified candidates, referrals from trusted talent can mean getting the right new hire for the job (with less effort).
When asked to refer a friend, most candidates would only vouch for someone whose work they respect. For recruitment consultants, that could save headaches trying to explain away more “bad fit” applicants to clients.
Speeding up time-to-hire
Not to abuse the “time is money” cliché, but in this case it is. Every day that a role stays open, your client loses on productivity and your agency is missing out on other roles to fill.
Referred candidates are a lifesaver here. A referred candidate saves time on sourcing, keeping consultants focused just on screening and placing applicants.
While still making time for due diligence and compliance, referral programs can help get from “CV sent” to “placement made” that much faster. And then it’s on to the next one.
Lowering churn
Let’s get real: you might take the cynical view and say that, once hired, candidate churn isn’t your issue.
But even if you’re Perm or Exec Search focused, client happiness is key. If you want to re-engage with key accounts later down the line, they’ll remember if your past candidates dipped out. Referred candidates stay about 70% longer than non-referred ones, and that’s a good chance to take.
And Temp recruiters have their own pain points on churn. It’s a strain on resources to replace a worker who cancelled just hours before a shift starts. With a solid referred candidate in that spot, it’s one way to lower that risk.
Tips to implement a referral program
Set goals
To get the best out of your referral program, be specific about what needs to improve.
You could look at setting targets to:
- Increase the number of candidates in your pipeline
- Reduce time-to-hire
- Increase number of placements
- Improve conversion rates
Offer incentives
Without buy-in from your agency’s teams, your referral program might not succeed. Plan for some time to meet with managers, design an incentive scheme, and get consultants on board with the new program.
On the candidates’ side, they’ll need a reason to join in. Cash incentives make the most sense here, since they’re easy to process through payroll. Try adding a one-time bonus, plus more incentives that stack up if the referred candidates stay on for a set period.
Promote the program
It’s not just about internal buy-in. For a successful referral program, you’ll need to find a way to reach the candidates already working with your agency.
Some ideas to start promoting your program are:
- Setting up a landing page on your recruitment website with forms to capture referrers’ information
- Organizing promotional campaigns on your agency’s LinkedIn page
- Having consultants include a link for referrals in their email signatures
- Adding info about the referral program in follow-up emails or SMS messages to candidates
Implement tracking
And then there’s seeing your success. Once the referral program’s set up, some metrics to start analyzing are:
- Time-to-hire
- Cost-to-hire
- Ratio of CVs sent to interviews scheduled
- Ratio of interviews scheduled to placements made
- Redeployment rates (for Temp / Contract recruitment)
For some more recruitment analytics inspo, take a look at our guide to the top 7 business development tips for recruitment agencies (plus 5 key metrics).
Pro-tip: Track redeployment rates with Vincere’s rec tech
In Temp and Contract recruitment, losing a candidate means extra potential walking out the door. While referral programs are useful for getting in more talent, there’s even more value in retaining and redeploying candidates.
Using Vincere’s Intelligence suite helps make the best of what you already have. The Temp & Contractors Dashboard comes with analysis to see what’s happening with candidates that just finished a placement.
The Redeployment Rate tells how many candidates have finished their placement and signed on for a new one - showing any gaps in potential contract renewals. And the Unutilized Rate lists candidates who recently finished a job, but aren’t lined up for any interviews or new roles yet. With these metrics and more, it’s possible to win back the talent you know.
Have a go at reheating those warm relationships and making more placements. If you’re a Temp or Contract agency looking for even more ROI, consider having a demo with us.
Final thoughts
It’s not just big businesses that could use referral programs, but staffing and recruitment agencies too.
Referral programs can promote candidate quality: they’re much more likely to get the interview, get hired, and stay there long-term. For both the agency and the clients, that’s a great return on value for a little thought up front.
At the same time, a referral program can help you cut down on costs. Metrics like time-to-hire and cost-to-hire go down when you can spend less resources on sourcing and screening activities.
Plus, with a recruitment technology platform like Vincere’s that tracks candidate redeployment and reuitilization rates, agencies can get even better return on your recruitment efforts.
With the right incentives, metrics, and structures in place, you can leverage a recruitment referral program to win big with less spend.