As an absolute minimum, ensure that you thank anyone who makes referrals to encourage them to continue to do so in future.

Don't wait to see if this actually leads to business, as what you are looking to reward is the referral process. The more referrals you have the greater the likelihood of gaining new guests.

Consider what other tangible incentives you might give that are of high value to the person making the referral, but don't cost you the earth. Naturally you'll want to ensure that the cost of the incentive does not outweigh the life time value of the referral.  But bear in mind what you give as a thank you may also be a way of adding to the life time value of the person making the referral too.

The nature of this incentive will obviously depend on where the referral came from.

For guests they might include such things as a gift, discount off their next meal, a room upgrade, an invitation to an exclusive event. Perhaps team up with one of your joint venture partners; this could be services or maybe branded products. A win–win–win for you, your joint venture partner and the customer.

For corporate users make the incentive something your guest can benefit from personally. It's little incentive for them if it is something they'd normally put though business expenses. So can you offer something as a thank you which will encourage them to come back on a personal visit and maybe bring their family and friends too?

For suppliers, joint venture partners or other local businesses you may want to look at alternate ways to say thank you. This might be an opportunity to get in front of some of your other customers or guests through promotional activities or hosting joint special events. Talk to them directly to see how you can return the favour. Just by asking the question will in itself show you appreciate the referral.

Encourage your staff too to make referrals. Let them show they are proud of where they work. The reward obviously needs to reflect the value of the business; recommending your restaurant to a friend doesn't warrant the same level of recognition as inviting a friend or relative for a wedding show round and subsequent wedding booking.

What might appeal to them may be dependent on the profile of your team. A cash bonus might work for some, but is soon forgotten whereas a couple of tickets for a show or concert, or a night in a sister hotel or meal with a JV partner will be far more memorable – and visible to other team members too to encourage the same from them.

Once you have a referral system in place, keep track of where and how you're getting successful referrals. This will enable you to find out what works and what doesn't, so you can continue to refine the process.

Caroline Cooper is a business coach with over 25 years experience in business and management development, and founder of Zeal Coaching, specializing in working with hospitality businesses, and is author of the 'Hotel Success Handbook'
www.zealcoaching.com