Start a Referral Program to Increase Sales

Start a Tutoring Business Referral Program

The best type of marketing for a tutor is word of mouth. That’s when your current client, Sally, tells her sister-in-law, Sue, how awesome you are at tutoring and then Sue decides to hire you as well. Word of mouth is ideal because your clients, past and present, will tell people about you whenever they get the chance so long as you do good work as a tutor.

You can’t force your clients to spread the word, but you can encourage them to! That’s where starting a referral program comes in.

Offer a gift to clients, past and present, who refer new clients to you

Make sure you don’t give them the gift until after the new client signs a contract or makes a payment. You don’t want to make it easy to potentially be ripped off by a bad apple. Be creative with the gifts you give. Perhaps it could be a gift card, or a gift basket, whatever you think your client would appreciate. Make sure the gift doesn’t cost more than $25 after tax because you can deduct the gift as a business gift expense on your taxes (in most cases, consult you tax adviser before filing your taxes). This deduction can be a maximum of $25 per person per year, so if you give a $50 gift card you can only deduct $25 of that cost. Furthermore, if you send a client two $25 gift cards because he referred two new clients to you, you can only deduct $25 of the total you spend on that client throughout the entire year. Always save your receipts!

Price the referral program gift based on what you gain

If you charge $30 per hour for tutoring, you can afford a better gift for referrals than a tutor who charges $10 per hour. If a new client will schedule an average of 4 one hour long sessions a week for 2 months, that new client is worth 32 hours of tutoring. Multiply that by your hourly rate and you will learn the approximate value of each new client you get. Here’s the formula:

Client Value = [(average hours per week) * (average total weeks tutoring) * (your hourly rate)] – (expenses)

Expenses are whatever it costs you to tutor, such as gas to get to the tutoring location, books, tutoring resource costs, stationary, writing utensils, etc. If you’re on the lower end of the hourly rate spectrum, consider offering a cheaper reward for referrals, such as movie tickets or something. On the higher end you can get more lucrative and creative with it.

A final Note on Tutoring Referral Programs

Make sure you let your clients, past and present, about your referral program! If they don’t know it exists, you won’t benefit from having one, so get the word out there! I used to have the details for my referral program on the back on my business cards and then I’d give clients extra cards to pass on to their referrals. However you decide to do it, good luck!

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