Do you pay for referrals?

May 31st, 2011 by Bob Bly

For decades, I have made it a practice to refer my clients to vendors who can provide services those clients need ? and that I don?t offer myself.

?I have also made it a policy never to accept a referral fee from any vendor, though many offer it, and some even argue with me when I turn it down.

?I do not accept referral fees for this reason: my primary mission is to give my clients the best recommendations I can ? and that means being totally objective.

?It follows logically that I make recommendations that are the best for my client, not the most profitable for me.

?And yes, sometimes what?s good for the client is not good for the vendor.

?For instance, I have many people calling who are eager to pay me thousands of dollars to write a promotion for them.

?In many instances, I turn them down, advising that their idea won?t work or their product won?t fly.

?By telling them this, I am saving them from financial disaster ? but I am also talking myself out of a nice, fat copywriting fee.

?Even worse, my recommendation that they not proceed is based on my nearly three decades of marketing experience.

?Therefore, the advice is valuable to them ? but I am not getting paid a dime for it, as they have not engaged me on a consulting basis.

?I want my clients to know that the advice I give them is always in their best interest ? and if I took referral fees from vendors, it would create a potential conflict.

?I sincerely believe I would always recommend the best vendor for the job ? not the vendor who paid me the highest commission.

?But could I ? or the client ? be 100% certain I was always motivated by their best interests, and not a juicy referral fee?

?The reason I bring this up is that PF, a copywriter, recently contacted me asking for referrals.

?But unlike the many other copywriters who want referrals from me, PF was offering me something in return ? a free lobster.

?Or rather, a $50 gift certificate to a Web site selling Maine lobsters for each new client I referred to her.

?Now, while I am against taking referral fees, I do make it a practice to send a small thank-you gift to people who refer business to me.

?So if it?s OK for me to send a small gift to a referral source, it seems like it should be OK for vendors to send small gifts to me when I am their referral source.

?Now, I don?t want them to do it. And I openly discourage it.

?But, if a nice gift arrives in the mail, I usually don?t send it back. I keep it and thank the vendor for it.

?I don?t think a small gift influences who gets my referrals ? except, PF?s free lobster offer sticks in my mind.

?Actually, I don?t eat lobster, which I know is unusual.

?Any food that comes in its own armor is not for me ? and truthfully, I don?t even like the texture or taste.

?But ?.

?My oldest son Alex loves lobster ? and a $50 lobster would put a smile on his face.

?So when I am asked for a referral to a copywriter these days, by clients who can?t afford my fees or to wait until I am available, I find PF?s name popping up in my mind first.

?Should you take ? or give ? referral fees from and to other vendors?

?That?s up to you.

?But my position on this issue is: make your recommendations ?pure,? unbiased, and objective ? and let your clients know it.

?That way you get something far more valuable than the referral commission the vendor wants to pay you.

?You get your client?s trust ? and a reputation in your industry as someone who is honest and trustworthy.

?That?s something ? unlike a lobster ? that money can?t buy.

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6 responses about “Do you pay for referrals?”

  1. Joanne Black said:

    I agree with you 100%.. Since I consult and train on referrals, I am also adamant on this topic. People refer people they know and trust. Our reputation is on the line when we refer. We refer only top people and the best for our clients.

    That being said, there are some organizations that have a written business arrangement to refer each other (Like an alliance) and that is ok—but only if the parties disclose.

  2. Ivan Walsh said:

    Hi Bob,

    I don’t like the idea of being in debt to others.

    When others pay me – or offer to pay me – I feel I’d end up in their debt.

    Like I said, I like to stay neutral and not get indebted to them.

    Hope that makes sense.

    Ivan

  3. MedicalHealthWriter said:

    I love this blog post. I live and work in the Middle East, where commissions seem to be the name of the game especially in the corporate world. I’ve never liked the concept of paying for referrals. However, sometimes it’s better to go with the flow than fight the system. I just completed the Certified Networker Program by The Referral Institute, which helps small business owners such as myself, to find referral partners where there is a win – win situation without the payment thing involved. So far so good!

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    I agree with Ivan Walsch! You know what, this same issue is common with bloggers. There are now so many people who argue with bloggers because they accept fees for promoting a company’s products.

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