Comments on: You Be The Coach For Referral Fees

By: Alicia Arenas

Alicia Arenas — Sat, 06 Feb 2010 15:59:25 +0000

Pattie – I think we are beginning to see a clear delineation in some industries. Thank you for sharing the perspectives from the mental health & dispute resolution areas!

Matt – thank you for your comment. Giving credit or having a referral discount seem less nefarious than giving people cash. I like your creativity.

Jennifer – I love your firm stand and I agree with you. We work in a marketplace full of ulterior motives and hidden agendas. Why allow 10-20% to taint anyone’s opinion of our ethics or not. Thank you for your comment and welcome to the Sanera blogging family!

Sam – I think your parallel between “kickbacks” and “referrals” is interesting. Another word for it could be “bribe.” I’m curious, what would your association say to someone giving you a thank you gift for a referral or a discount/credit as Matthew Egan noted above? Thank you for sharing your insights with us.

By: Karen

Karen — Thu, 04 Feb 2010 22:32:10 +0000

I’m actually faced with a referral fee situation right now and would appreciate advice. My best friend introduced me to another person with the intention that we would all write a book together. While she will write some of the book, she will not write the lion’s share of it. The other party is finding the publisher, etc. so doing some heavy lifting. Now my friend is asking me for a finder’s fee — even though she will profit from my work. Should I pay it — and if I do, how much? She is also asking for top billing because the book was her idea — although it’s not a unique topic. I value her friendship — but is a finder’s fee appropriate if she is part of the project?

By: Sam

Sam — Wed, 03 Feb 2010 03:51:18 +0000

You can them “referral fees” but most people call them “kickbacks.” Where I come from (the wedding industry, in the South) they are considered extreeeeeemely unethical. In fact, every wedding planner association I know of requires that their members sign contracts promising to never ask for or accept kickbacks.

It may be common to some people, but that doesn’t make it okay. When someone asks you for a vendor referral (or worse yet, when they PAY you to help them choose vendors), they’re trusting that you’re referring people based on the quality of their work, their customer service, their dedication to their work, and their general awesomeness at what they do… NOT how big of a kickback they’re going to slip you under the table if the client hires them. To me, that is blatantly slimy and dishonest and unethical.

By: Jennifer w A Regal Affair

Jennifer w A Regal Affair — Wed, 03 Feb 2010 03:33:08 +0000

I do not ever expect a referral fee nor have I ever accepted one. In my line of work (event planning), my referrals are strictly based on the client’s: budget, personality, style and whether or not the person can do the job the client wants. It is so much more than just doing the job. I create teams and build on the synergy to create teams who deliver dreams (weddings) or can all come together to complete a large production project (conventions & meetings).
Anytime a vendor has offered a referral fee, I’ve asked they pass it on to the client as a discount. The client appreciates it and so do I. I love that they offer it, I just refuse to accept it. I choose to price my services based on what I want and NEED to make. At no time is a referral fee part of this number. If you choose to charge your worth, there is no need to ask for or accept a referral fee.

I always want the clients I work with to know I’ve recommend vendor A, B and C because they are capable of doing the job and are a good fit; not ever because I can make 10-20% more.

Bottom line – unless you are disclosing these fees to your clients, it isn’t fair to them.

By: Matthew Egan

Matthew Egan — Thu, 14 Jan 2010 20:51:00 +0000

Referrals are a huge part of my business. It’s funny, because as much as I am a Search Engine Optimizer, and I do get a lot of hits to my site from Google, I feel like people are hesitant to just call a web guy they haven’t heard something about first. Especially while I am still somewhat new in town and am building my personal brand.

So that said, referrals are my world.

Sometimes I will do some work for someone, and let’s say I would have charged them a thousand dollars. They may pay some small amount up front, if anything, and through future referrals they earn the work I put out there. There is a lot of risk to that, as someone who may think they’re well connected, might never produce a solid lead, but I like to to think you shouldn’t let that discourage you from being generous when and where you can.

What I tell my clients, much more than my friends is that if they refer a client to me, I’ll record a 10% credit in their name, and if they require future services they’ve got that credit saved until they use it. For many business owners, I feel like they come back and update their site or create a new AdWords campaign for example, because they have that credit. They may wind up spending more than their credit, but it’s having that credit that keeps me in their mind, like a Gift Card to Best Buy, you’re not exactly going to waste it!

I have passed on a “referral discount” as well, where instead of paying the referrer I’ll pass savings on to their friend instead, this way they “got their friend a deal”.

Great discussion Alicia, I appreciate reading these comments, especially because referrals are such a big part of my business.

By: Pattie Porter

Pattie Porter — Thu, 14 Jan 2010 01:25:07 +0000

I know that we spoke about this issue of referral fees. In several industries including mental health, coaching and dispute resolution, for example, referral fees are considered unethical and is even part of the Model Standards of Ethical Practice. Each person needs to check their professional industry’s standards regarding referral fees.

By: Alicia Arenas

Alicia Arenas — Tue, 12 Jan 2010 20:24:02 +0000

Thank you for your comment Debi! So another issue around referral payments is the perception they could evoke in the eyes of the client. I’m curious, what if the client doesn’t know about the payment? I appreciate the discussion.