By : Martha Retallick
There’s much to be said about building your business through referrals. For one thing, it’s a lot cheaper than advertising and less time-consuming than cold calling. And there’s nothing like having clients who think enough of your services that they’re willing to recommend you to others.
If you’re thinking about starting a referral fee program, this article is for you. Let’s look at the pros and cons.
The Pros
It doesn’t take an in-depth reading of today’s economic news to understand that times are tough. So, the prospect of receiving a monetary reward from a referral to you could mean a lot, providing a great deal of good will. It might make the difference between your referrer’s being able to pay a bill or two, or her needing to contact the creditors to ask for more time. Or it could make for a nice date night for your referrer and his wife – their first in a very long time.
Referral fees can also serve as the seeds you plant for repeat business. And repeat business from satisfied clients is a lot easier to get than new business from people who’ve never dealt with you before.
If the above reasons make sense to you, then your next decisions will be:
1. How much of a referral fee should I pay? Should it be a fixed amount or should it be based on a percentage of the closed sale to the client to whom you’ve been referred?
2. What about future sales to that client? Should they also be covered by referral fees?
The Cons
Years ago, I patronized a dental practice that gave $25-per-referral discount cards to patients. The goal was to build the practice by offering the $25 discounts to patients who’d referred others. The new patients got the same discount.
This practice was quite assertive about promoting the discount cards. I found that I could hardly get settled in the chair before the “care to share” card pitch started.
I always took the cards, but never gave them to anyone. Why not? Well, to be honest, I didn’t think the dentist ran a very good practice. Instead of pushing “care to share,” he and the staff should have improved the quality of their work and made the practice referable.
Next on the “con” list is this question: How will the people who are sent to you react if they find out you’re paying for referrals?
For example, imagine your new client going to the same restaurant where your referral fee recipient is dining with his wife. They’re really enjoying their date night. The wine they ordered with dinner has loosened their tongues to the point that your new client overhears mention of your very generous referral fee. On Monday morning, you get an angry phone call from the new client, who’s now a former client. And find yourself on the receiving end of harsh words like “bribe” and “kickback.”
Or people might regard your business the way many online affiliate programs came to be viewed. Long story short, Internet users got very savvy to affiliate links. If they thought the product or service was good enough to buy – they’d go ahead and do so. But they’d be sure to remove the affiliate coding from the link before going to the sales site. You may also have clients who are forbidden from accepting any sort of gift. In many countries, government agencies are very adamant about this sort of thing. If you think that keeping your referral fees quiet will avoid trouble, think again. Bribery has been at the root of many a political scandal, including the one that brought down U.S. President Richard Nixon’s Vice President Spiro Agnew.
Before he became Vice President, Agnew had held various offices in the state of Maryland, including the governorship. Agnew developed quite a reputation for taking bribes from construction contractors, and that continued even while he was in the White House. Eventually, the law and the news media caught up with him, and Agnew was forced to resign the vice presidency in 1973.
So, there you have it. The pros and cons of referral fees. Want to learn more? Figure out how to get more referrals and increase referral business.
Job Vacancy , Indonesia Job , Job Indonesia
There’s much to be said about building your business through referrals. For one thing, it’s a lot cheaper than advertising and less time-consuming than cold calling. And there’s nothing like having clients who think enough of your services that they’re willing to recommend you to others.
If you’re thinking about starting a referral fee program, this article is for you. Let’s look at the pros and cons.
The Pros
It doesn’t take an in-depth reading of today’s economic news to understand that times are tough. So, the prospect of receiving a monetary reward from a referral to you could mean a lot, providing a great deal of good will. It might make the difference between your referrer’s being able to pay a bill or two, or her needing to contact the creditors to ask for more time. Or it could make for a nice date night for your referrer and his wife – their first in a very long time.
Referral fees can also serve as the seeds you plant for repeat business. And repeat business from satisfied clients is a lot easier to get than new business from people who’ve never dealt with you before.
If the above reasons make sense to you, then your next decisions will be:
1. How much of a referral fee should I pay? Should it be a fixed amount or should it be based on a percentage of the closed sale to the client to whom you’ve been referred?
2. What about future sales to that client? Should they also be covered by referral fees?
The Cons
Years ago, I patronized a dental practice that gave $25-per-referral discount cards to patients. The goal was to build the practice by offering the $25 discounts to patients who’d referred others. The new patients got the same discount.
This practice was quite assertive about promoting the discount cards. I found that I could hardly get settled in the chair before the “care to share” card pitch started.
I always took the cards, but never gave them to anyone. Why not? Well, to be honest, I didn’t think the dentist ran a very good practice. Instead of pushing “care to share,” he and the staff should have improved the quality of their work and made the practice referable.
Next on the “con” list is this question: How will the people who are sent to you react if they find out you’re paying for referrals?
For example, imagine your new client going to the same restaurant where your referral fee recipient is dining with his wife. They’re really enjoying their date night. The wine they ordered with dinner has loosened their tongues to the point that your new client overhears mention of your very generous referral fee. On Monday morning, you get an angry phone call from the new client, who’s now a former client. And find yourself on the receiving end of harsh words like “bribe” and “kickback.”
Or people might regard your business the way many online affiliate programs came to be viewed. Long story short, Internet users got very savvy to affiliate links. If they thought the product or service was good enough to buy – they’d go ahead and do so. But they’d be sure to remove the affiliate coding from the link before going to the sales site. You may also have clients who are forbidden from accepting any sort of gift. In many countries, government agencies are very adamant about this sort of thing. If you think that keeping your referral fees quiet will avoid trouble, think again. Bribery has been at the root of many a political scandal, including the one that brought down U.S. President Richard Nixon’s Vice President Spiro Agnew.
Before he became Vice President, Agnew had held various offices in the state of Maryland, including the governorship. Agnew developed quite a reputation for taking bribes from construction contractors, and that continued even while he was in the White House. Eventually, the law and the news media caught up with him, and Agnew was forced to resign the vice presidency in 1973.
So, there you have it. The pros and cons of referral fees. Want to learn more? Figure out how to get more referrals and increase referral business.
Job Vacancy , Indonesia Job , Job Indonesia
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