Referral Fees?

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Many businesses use a similar type of rewards to existing clients/customers as a way of promoting word of mouth advertising to bring in new clients/customers. Our gym does it. My dentist does it (he's a good dentist to - email me and I'll give you his name ;-D). I've gone to a mechanic that does it.

I think that it is a valid marketing tool under certain circumstances and if discussed ahead of time.

With your existing client, you might explain that your hourly rates were not set to account for that type of overhead. I would imagine that the client who would ask for this (was he serious or halfway joking?) is the same client who would have tried to talk you down some from your original estimate to begin with.

If his referrals result in some good business for you, I don't think that there is anything wrong with you doing something (assuming no public contracts or monies involved) in terms of credit toward fees or some other gift of some value, for him - if that's what you choose to do.

Some would consider it good marketing. Others might consider it courtesy. But be careful, in other circumstances, and depending upon the value of the gift, that good marketing could be considered an illegal bribe.


Edit: A client doing this for an outright fee is wrong. Unless this client is a marketing professional and is assisting you to increase your business as a legitimate service provided by his business, it's inappropriate.

Commenting on Jim's point below, if the client is acting as a middleman between you and other clients, then Jim is right, it's a violation. If this client is just directing prospective clients your way, then it is only a referral and not an offer to procure surveying. That would not be a violation.

[Paul Goebel]

I don't see anything wrong with exchanging referrals with trusted associates, but doing this for a fee gives me the creeps.

[Jim Frame]

If the referral is perceived to have monetary value, the inference is that the referral will result in billable work for the referee. If the client asking for the referral fee isn't a California licensed professional, he/she is in violation of §8726(i) ("procures or offers to procure land surveying work for himself, herself or others"). In that case, the licensee paying a referral fee is guilty of aiding and abetting the procurer.

I'd diplomatically explain to my client that I'd be exposing my license to sanction if I were to pay a referral fee.

If the client is a licensed practitioner, then you have to decide whether or not payment of a fee is in your best ethical or business interests.

(It gives me the creeps, too.)

.

[goodgps]

Wasnt there an article in some publication, say , a couple of months ago, where the author pointed to law or code of ethics, discouraging "finders fees" ?

We just tossed a bunch of publications so i cant go back and look it up.
I actually disagreed with the authors point of view, as being unAmerican.

Oh yeah ! the article had to do with over charging and then kicking back fees to the job finding agent.
I prefer to obtain jobs by reputation rather than by how much I will kick back to a referrer.

When asked to add a referral fee to a contract (by a referrer) I add his "fee" to the front portion of the job. Usually the client shops around for a better price and sometimes will call our office in the process. We then give out our regular price. [ We only do this for the "cold call" job referal places]
What gives them the right to broker my services without permission then extort finders fees.?

[goodgps]

Oddly enough I just recieved a call from an individual offering to refer My company to their clients . . . .for a fee of course.
Somebody must be watching our thread ;~)


"I have not seen, nor do I know of anyone, getting or giving kickbacks for referrals. Something's wrong in River City..."

Greg, as my dad puts it, "when you've been around long enough, you'll see lots of things you never thought existed"
Double check River City 8^)

"good"