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Way back in 2020, I had the wild idea that the referral rate of a fleet was merely a measurement of a fleet’s popularity with drivers. Sounds crazy! I know!
My assertion was (and probably still is) that few fleets truly measure the real costs of turnover if they don’t consider referrals in the equation. However, the cost of hiring is connected to turnover. The more drivers we lose, the more we have to spend to hire new drivers. And referrals are connected to hiring costs. The lower our referral rate, the more we spend to bring on those additional drivers. Turnover and referral rates are at the very least loosely linked. But is there more to it than that? Could those 2 numbers be more closely related?
Net Promoter Score
You may have heard of this. This is what all the smart people believe to be the best measurement of a brand’s popularity. It’s a brilliantly simple concept. If one is willing to go out of their way to recommend a brand to someone, they must really love that brand. Especially since humans are wayyyyyyyy more likely to talk about negative experiences than positive ones. We are as much as 3 times more likely to leave negative online reviews than positive ones.
But back to NPS. The more people that are willing to recommend your brand, the better your brand reputation is. The NPS would call these brand ambassadors. And the business world truly believes in this brand ambassador idea. Two-thirds of companies on the Fortune 1000 list use NPS surveys to find out just how many brand ambassadors they have. The business world truly believes that being recommended is a true measurement of a brand.
What Does NPS Have to Do with Trucking and Referral Rates?
Now many of you have already guessed where I am going with all of this. The NPS uses this question as its basis. “How likely are you to recommend [insert company] to a friend or colleague?” This is basically asking “how likely are you to make a referral?” If the likelihood of a referral is how the business world measures its brand’s popularity, why would our referral rate not be a reflection of our popularity with drivers?
In a recent survey by Truckers News, the most popular way for a driver to research a fleet was by talking to other drivers. The second most popular method was looking at online reviews from other drivers! Almost 70% of all research done by drivers is just finding out if other drivers would recommend your fleet! All signs point to your referral rate being the truest measurement of a driver’s sentiment towards your brand.
“Oh but, David. You silly goose! Don’t you know that we pay our drivers to give referrals?”
Yes, I agree. There is a confounding variable in my theory. Fleets do pay a lot of money for referrals. This monetary incentive could be affecting a fleet’s referral rates and obfuscating the true sentiment of drivers. The idea being: “This driver isn’t really a brand ambassador, but after the money they get from making a referral.”
So, I decided to test this theory.
We surveyed over 200 fleets about their referral rates, what they paid for referral bonuses, and how they paid out those bonuses.
Here are the results of that study:
Average Referral Rate
Average Referral Bonus
Most Common Form of Payment
*Referral rate is the percentage of total hires from referrals.
We saw bonuses as low as $500 and as high as $4,000. Some fleets paid all up front and some paid in installments. Some only paid the bonus after the referred driver had stayed for a certain amount of time. And now for the real kicker. . .there was no statistical relationship between referral rate and any other factor!!!!
That’s right! I had our data scientists look through all of the data, and they couldn’t find anything. This would indicate that paying a bigger bonus or paying the bonus upfront isn’t what makes your referral rate better or worse compared to other fleets. It would seem that your referral rate is a direct result of how your drivers feel about you.
Obviously this isn’t the final word and more study and research needs to be done. But I believe that research would only reveal the simple fact is that when drivers like a fleet, they recommend that fleet to a friend and colleague.
I’ll end with a little anecdote. I was speaking with an experienced driver the other day and asked her about this very topic. She had this to say. “I do like referral bonuses. They are nice. But right now I’m having an issue at our fleet with a terrible fleet manager. Until this gets sorted out, I won’t give a single referral. This would only tarnish my professional reputation, and the money isn’t worth doing that to myself or to a fellow driver.”
Maybe We Are Measuring the Wrong Thing.
I can’t tell you how to immediately increase referral rates or that a myopic focus on referrals is the silver bullet of recruiting. But I can tell you that the more referrals you get, the less you will spend hiring drivers. I can say that the higher your turnover, the more you will spend on hiring drivers. Maybe those two facts are inextricably linked.