Should We Get Paid For Referrals?

By: Joe Crisara

Should We Get Paid To Refer?

I recently wrote an article that was very popular about the 7 Things That Customers Never Want To Hear. In the article it stressed that clients never want to hear, “We don’t do that kind of work.” My suggestion was that we refer someone or find someone to do work for our client that we ourselves are not qualified to do. Recently a client asked a question about whether we should get paid for referrals or just provide them at no cost to our clients.

Your Level Of Service Is Key

The truth is that both getting paid to refer someone and providing this information for free are both acceptable depending on the amount of involvement on your part to coordinate the third party work. You can do it either way. Here are three different ways to attend to using someone else to serve a client when you are not qualified to do the work.

1. Passive Referral – In this way you are giving a number of a service provider to your client and having them call on their own to perform the service. I would not expect or require any type of payment for this type of service since all you provided was information and the client had to do the work themselves.

2. Active Referral – This method is if YOU call on the clients behalf to schedule to call FOR the client. Let the service provider know that you are actively involved in helping this client through the situation. This might result in a finders fee or may not. It really depends on the time you are taking to actively explain the problem and if you will return to check on things for your client. If you spend a substantial amount of time to make the connection, you should charge for this service in some way. If all you did was dial the number and hand the phone to your client then it is just part of your service that has already been paid for.

3. Subcontract It – The most active participation on your part. You call the provider, get the prices for the work and then charge the customer for the service of the other company and your fee to coordinate and supervise the project. Charging anywhere from 10% to 30% profit for low supervision jobs is normal. If you have to show up and actively supervise or design the project then as much as 60% may be in order depending on the time needed on your part to supervise the quality of the work. One note of importance is to get a certificate of insurance from the provider if you are subcontracting them. (Ask you insurance provider about how to do this)

Yes referring other companies to your client can be an opportunity to profit by creating “above and beyond service to your client. At the very least it is an opportunity to supply your client with timely information on services they need that you do not provide.