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We found that product discounts were the best incentives, and allowed us to partner with the outsides sales reps in reporting it.
Caveats to keep in mind:
Make sure your URL for filling out the testimoninal is simple (I wouldn't recommend doing any paper "send ins" as for our first few they incited major headaches).
Generate follow up emails for those people who do fill out the testimonial and consider offering them an elite opportunity further down the road. We often made stellar customers part of our KOLs, then would assist with organizing dinners at tradeshows, etc for follow up.
I think you could also look to Marketo's model of customer referrals. They do a great job. 🙂