Choosing among referral tools may not seem like a big decision. They’re not a major investment, after all. But there is a lot at stake when you consider the lifetime value of your client relationships.

What’s more, a study conducted by Goethe University Frankfurt and the University of Pennsylvania found that customers who come via referrals are more profitable and loyal than those who come from other sources.

Plus, getting a referral is one of the easiest and most effective ways to beat out your competition.

So, which type of tool is right for your business? How do you decide among all the options out there?

We’ve put together this convenient comparison of a few of the most popular types of referral tools to help you answer those questions.

Magnets

Is there a more popular type of referral tool on the market than magnets? It seems like just about everyone uses them to get their business name and contact information into people’s homes.

There are many types to choose from depending on your needs. Some are similar to a business card in size and shape and typically include a logo or photo and contact information. Some feature unique shapes, such as the outline of a house, to reinforce the nature of your business. Others include calendars, sports team schedules, or other information for people to refer back to throughout the year.

Pros:

• High visibility. Magnets often earn a spot on the family refrigerator, home office desk, or other prominent location.
• Long shelf life. Promotional magnets stick around. Get it? In all seriousness, though, people usually hang onto calendar magnets for the year before tossing them in the trash can. Other types of magnets can last even longer.
• Low cost. Prices vary depending on factors such as size and quantity, but in general, magnets are among the most affordable referral tools you can find.

Cons:

• Not unique. There’s a good chance that anyone you send a magnet to will already have others on their refrigerator. If you’re really looking to stand out, this might not be the tool for you.
• Low value. Nobody is really going to get excited about receiving a magnet. And it’s unlikely to spark conversations with family and friends who see it.
• Limited space. Most magnets are small, which leaves little room to make your contact information—or the entire magnet for that matter—stand out.
• Easily ignored after a while. Despite the long shelf life, the actual impressions you get are relatively low. That’s because when people see the same thing day in and day out, it becomes part of the background. You don’t really think about it or even really notice it after a while.

Personally branded magazine

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This referral tool is a forty-eight-page, coffee table-quality publication that business professionals can customize with their photo, contact information, and even a personal letter.

It features articles on interior design, travel, technology, restaurants, and culture, and is sent to your mailing list every eight weeks.

Pros:

• High perceived value. American Lifestyle magazine looks more expensive than it really is. From a client standpoint, it looks like the business professional published his or her own professional magazine.
• Consistent touchpoint. Because a new issue is mailed every eight weeks, the magazine stays fresh throughout the year. That also means that you stay in front of your clients on a regular basis, maximizing the opportunities for referrals.
• High visibility. Magazines such as this often land on the coffee table, around where family and friends gather.
• Broad appeal. American Lifestyle magazine covers the topics that appeal to almost everyone who would be in your database. These include recipes, travel, and DIY projects. This gives you a reason to call or e-mail your past clients every other month to talk about an article or recipe and then ask for that referral.
• Often shared with others. Any time your referral tool is seen by others, you increase your chances of a referral. American Lifestyle often goes one step beyond and actually ends up in potential referrals’ homes through tear out cards with recipes or other shareable content. You can also leave a copy in a high-traffic area such as a doctor’s office to get prospects you wouldn’t have otherwise reached.
• Mailing included. Printing, production, and mailing are handled by ReminderMedia, publisher of American Lifestyle magazine, and are included in the cost of the magazine.

Cons:

• Address may be taken already. ReminderMedia provides mailing address exclusivity. So if another businessperson is mailing the magazine to one of your clients already, you won’t be able to use this tool with them.
• Maintenance required for optimal results. While sending the magazine is pretty turnkey, that doesn’t mean that it doesn’t require work on your part. To get referrals from American Lifestyle magazine, you need to follow up with clients, keep your mailing list up to date, and implement a strategy.
• ROI not immediate. American Lifestyle magazine takes time to work. You need to stay committed and stick with it until it pays off. It could take months or even a year.

Pop-By Gifts

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The idea behind a pop-by gift is to create an excuse to get a few minutes of face-to-face contact with your clients and sphere of influence. You pop by their homes to drop off your gift, and use the opportunity to ask for referrals.

You can either plan and schedule pop-bys, or keep a stash of gifts in your car for impromptu opportunities when you are in the area. In those cases, you have to avoid anything too large, perishable, or easily damaged.

Items such as coffee mugs imprinted with your contact information and branding, as well as seasonal gifts such as seed packets for the spring are good choices.

Some marketers and coaches swear by this type of referral tool. How effective it is varies greatly depending on the gift. Generally, the more expensive the gift, the more impact it will have, so finding the right balance is key.

Pros:

• Potentially high value. If you really want to wow a client, investing in a nice gift could be a good way to go.
• Flexibility. Pop-by gifts let you tailor your approach to each individual client. For instance, you can spend more on a nicer item for your best clients and choose a more affordable item for lower tiers.
• Conversation starter. Dropping off a gift is a great excuse to visit your clients face to face. From there, it’s easy to ask for a referral without sounding pushy.
• Memorable. Again, depending on the gift you choose, you can stick in your clients’ memories.

Cons:

• Expense. To move the needle with pop-by gifts, you need to either provide multiple gifts to each client throughout the year or invest in a gift valuable enough to be remembered and cherished all year long. Both will cost you, although you will likely make up that expense if it leads to a referral.
• Clients might not like what you pick out. Giving gifts to family and friends is hard enough. Choosing them for clients can be nearly impossible. At worst, the wrong gift could end up costing you a client (giving a bottle of wine to a former alcoholic, for instance), and at best, it makes no impact at all.
• Time and effort. There is certainly value in taking the time to meet face to face with former clients. But it doesn’t come without a trade off. You only have so many hours in the day. So make sure you account for the ROI of that time.

When choosing your referral tools, determine your specific goals, budget, and schedule. Then weigh all the pros and cons of each type to determine which best fits those factors.

Feel free to post tools you use to generate referrals in the comments section.