A 2025 study by Demandsage found that 65% of new business opportunities come from referrals and recommendations. More than 90% of consumers trust word-of-mouth referrals more than other forms of marketing.
Yet referrals don’t always happen on their own. That’s why tax professionals need a clear plan – from incentive programs to everyday client conversations – to consistently generate and manage referrals.
A referral incentive program is a system that rewards your clients for sending referrals. Rather than waiting for referrals to happen, you provide incentives that motivate customers to send them.
For example, Harry’s, a direct-to-consumer grooming brand, used a tiered referral system for early access sign-ups:
Within a week, Harry’s gained 100,000 email signups – all before the product even launched. While the incentives were physical products, referral programs for tax preparation can work in similar ways, using gift cards, discounts, or entries into a drawing.
Referrals are particularly effective for tax preparers because clients often view their tax advisor as a trusted source, making personal recommendations highly valuable.
Your customer referral incentive program must be clearly stated. Clients need to understand what types of referrals you want, and the incentives that they will receive.
Too often, referral incentive plans are confusing for consumers, and people simply don’t participate.
Start by defining the goal of your incentive program. That goal could be a specific number of referrals (50 new 1040 clients), or a revenue amount ($15,000 in new revenue).
If you want referrals to specific types of clients, include that goal in your plan. The type of referral you want may drive the type of client who provides referrals.
For example, if you want referrals to clients with trusts, you can focus on higher-net-worth clients who know other wealthy individuals with trusts.
Finally, decide on the incentives. You may offer discounts, gift cards, cash bonuses, or a combination of incentives. Using tiered incentive structures may boost client participation.
You can maximize client attention by launching the program at the beginning of tax season. Your clients are more likely to open emails and other communications when they’re thinking about their own tax return.
Keep the process simple by minimizing the steps required to receive the incentive. Consider automating the process so that clients only need a few clicks to make a referral.
Increase your chances of getting referrals by launching the referral program in multiple ways.
You might email clients, add a landing page to your website, and mention the program during client appointments. If you use social media, you can work referral program promotions into your posts.
Train your staff on how to handle incoming calls, texts, and emails regarding referrals. They should be prepared to answer questions and promptly thank clients who provide one.
You can motivate clients by putting a deadline on the referral program. When a client sees that a deadline is approaching, they are more likely to take action.
When you receive a referral, have a system in place to thank the client immediately. Your fast follow-up shows the client how much you value their referral.
You can ask for a referral in a variety of ways using email, in-person conversations, and other methods.
A great time to ask for referrals is when a client is happy with your service. When you solve a problem for a client and they thank you in person, it’s a good time to ask for a referral.
Work referrals into each client interaction. Don’t ask for a referral each time, but make sure that the client sees referrals mentioned in an email, newsletter, or marketing flyer.
When you’re emailing updates on tax law or reminders about filing deadlines, you can end the email with a reference to your referral program.
Offer a variety of incentives and carefully track how clients respond to each one.
Use this data to refine and launch future referral programs that are more likely to engage your clients and drive results.
Testimonials demonstrate how you provide great service and motivate clients to offer referrals. Use at least one testimonial in all the marketing materials you create.
Encourage clients to post reviews about your business on Google or Yelp. If a client wants to post, provide pre-written messages that they can use.
No one likes to be pressured, and asking for referrals at the wrong time (or too often) can damage client relationships. Avoid these common referral program mistakes.
You need to build trust and confidence with new clients, so don’t ask for referrals right away.
Wait until you’ve delivered your service and established a positive working relationship.
If you ask for referrals too often, a client may think your business is struggling. What you see as tenacity may come across as desperation to the client.
Stay away from offering alcohol or other incentives that some clients may judge as inappropriate.
Don’t ask for referrals if a customer has recently had a frustrating experience with your business. Check state and local regulations to ensure that your referral plan complies with their guidelines.
Clearly state referral incentives so clients are clear on what they will receive for each referral. Keep the plan in place for a year, so that your marketing efforts send the correct message and you avoid client confusion.
When you provide a pleasant experience, you’ll receive good participation when launching a new referral campaign.
When you build a referral network, you create a system to drive more revenue to your tax practice each year.
One of the first steps to developing any referral network is to create your ideal client profile. You can also create numerous client profiles, such as businesses in specific industries, gig workers, or high-net-worth clients.
Developing a well-defined client profile is key to making it easier to focus on growing your referral incentive program. You can also update your client profile over time to better match the evolving needs of your business.
Discussing your ideal client profile with your referral partners can help increase the success of your referral marketing program.
Attempting to grow your business through a referral network is next to impossible if you are unable to keep your clients happy with your tax preparation services. On the other hand, happy clients are one of the most effective marketing tools to help you gain new customers.
You can keep your existing clients happy by meeting their needs, helping them solve their tax problems, and making sure they stay in compliance with applicable tax laws.
Use these different methods to ask for referrals.
Assume that you’re sending an email after resolving a client issue and you’ve received positive feedback. You could ask the client if they know of anyone else who is dealing with a similar tax issue.
You learn during a client conversation that a friend has just moved to town, taken a retirement distribution, or bought a new home. You can offer to help the client’s friend with any tax-related issues.
Let’s assume that your firm wants to add more home builders and remodelers as clients. If you already work with clients in the industry, mention your plan for adding new clients.
Many of these situations cannot be planned. Be prepared to discuss referrals when the opportunities arise.
As discussed above, include testimonials in your marketing materials. You can also discuss your staff’s total years of tax experience and specific areas of expertise.
These messages will reinforce client trust in your business. When the client sees your referral request, they may take action.
You can also grow your business through your professional network. Here are some frequent sources of referrals for tax preparers:
Implement a system to consistently network with these professionals.
Your tax preparation business can reach more new clients using a referral incentive program. Growing your business through a referral network takes time, so stay consistent and don’t expect immediate results.
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Scale your tax practice by asking for referrals and partnering with Sigma Tax Pro.
