I give and get a lot of referrals. In fact, just this week I referred a company I had just met to my business banker, who has been a great resource for us. I was happy to do it, happy to be able to help my new contact, and certainly happy to give my banker the opportunity. Now in the interest of full disclosure, the new company is a prospect, but I have done the same, many times before, for companies and individuals that were not prospects.
Recently we’ve had three different people ask about compensation for referrals that lead to business. I have to confess, I was a bit surprised – I had never thought of doing that before.
I’m happy to give referrals without any expectation of getting something in return. Especially, in the kind of economy we’ve had for the past year or so, I feel like anything any I can do to help a good business prosper is a positive contribution, and besides, it just feels good! We’ve gotten so many referrals over the years, so I also feel a bit like I’m paying it forward. I also like to refer business in which I have confidence.
I wonder, is there a “conflict of interest” if you are receiving payment? I can’t help but wonder, what do others do? Do you pay for referrals? Do you expect something in return?
Judi---I subscribe to your philosophy in that "what goes around, comes around"....or "Referral Karma" as you call it...I may even use that term...and give you credit of course...do you want a small fee for use of that term :)
ReplyDeleteJudi, I agree with your approach. The whole idea of referrals in my book is that it's a two-way street. Even if we don't trade referrals back and forth with specific contacts, if we deal with people who have a referral state of mind it all evens out over time. Sometimes we give a referral and sometimes we get one. I've never asked for a referral fee -- although it's quite a common practice in the PR world -- and have found offers of referrals for a fee somewhat uncomfortable. Are they making the referral because I'm the best one to handle a piece of business and protect their reputation (if a referral goes bad it's often the referrer who takes the heat) -- or is it just to add a little to their revenue stream?
ReplyDeleteProvacative post. Hope some others weigh in.
Donna - I'll send you a bill for the fee :-) j/k
ReplyDeleteEllie - I also want to be referred for the quality of our work AND I want to be able to refer the best person or firm for the job with out any other motive. I also wonder if my clients would take my referrals seriously if they knew I was getting a fee.
A few years back, not only was I asked for a fee for referral, but for a piece of the business as well: something like 10% of the first job, or even a recurring fee for a year on that piece of business. I would think that makes for a more complicated accounting and the temptation, of course, to pass the extra charge to the client.
ReplyDeleteSo, NO to referral fees! And as we say in French: Que le meilleur gagne!
(That the best one wins :-)
Hi Judi,
ReplyDeleteGood to meet you at last evening's NewMediaHaven.
Your blog about fees for referrals caught my attention. Referrals are a business's life blood - but it certainly can get awkward when it comes to addressing their monetary value.
Few businesses use effective, measurable means of growing their referrals. Yet these referrals are the "Golden Fuel" for growth. (http://bit.ly/yecJh)
YouGottaCall's "Connection Engine" facilitates referrals while benefiting charity. This takes away the awkwardness & perceived inequity in giving and getting referrals while allowing you to track your best referral sources.
- - Tim
Hi Tim,
ReplyDeleteSounds like a win-win-win (for the business, the client and the charity) to me!