If you presently have a referral fee that you pay anyone who sends a new client your way, how do you determine the payout?
In the past, I've offered certain associates 10-15% of the total site cost, payable when a site is launched and I've received the final payment from the new client. I was curious as to what other designers pay associates whenever they refer a new client to them. I'm not talking a sales staff member who gives them the rundown or collects data, but an associate who simply passes contact info on to you or has someone contact you about a site, and you make the sales pitch yourself.
I belong to some referral groups where I don't pay any referral fees, but to get referrals from sources outside these groups I have paid referral fees before. I may handle it differently than others, but I look at referral sources as a valuable business generation tool, but it must be good quality leads that don't require I spend 6 months trying to close the deal.
First, I have a classification system of 1-14 in terms of the quality of a referral with a "1" basically being that the person gave me a name and maybe phone number, but doesn't really know the person they are referring or have spent any time qualifying the lead. I wouldn't really pay a fee for this. On the opposite end is a 14 where it is basically a closed piece of business before I ever contact them. They have basically been sold by my referral partner and all I have to do is walk in with a contract and they sign it. I would pay 5-10% of the total contract based on the dollar amount of the business for a referral like this.
However there is a pre-step in here that I use, which is that when I come across someone I think could be a good referral partner I spend a little time "training" them. I meet a few times for breakfast or lunch on me and tell them about my business and what a good referral is and what is not. I give them a one page document that explains my business and what to look for in a potential referral. In other words I build a relationship with them and train them what to look for. First, the referrals they deliver are much higher quality as a usual thing and second I pay a small fee. In my experience I found the fee doesn't serve as the motivator as much as a decent relationship with them and my ability to return the favor someday.