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Our agency has been working hard to break into the huge medical market here in our area for both web design and SEO. Our last client was from a referral from a guy who has about 15-20 years experience in the medical community here. He used to work at the local hospital doing IT work and now has a computer business w/ 80% of his clients in the medical field.
We want to pay him a referral fee for sending us qualified leads. He'll actually talk to the doctors (who listen to him) and then give us the name/number so we can follow up.
What is that worth - 5% or 10%? We've paid commissions in the past to freelancers, etc...but they always do some kind of work - getting copy, providing artwork, etc. I just don't know what the "going rate" is.
Thanks for your help!
On a $10K project is $1,000 not too much to pay for that kind of referral (considering that's exactly what we get w/ regular "word of mouth" referrals anyway for FREE)?
If that's the going rate - that's cool. (I may go into the "referral" business!) :) Has anyone actually paid 10% for a referral?
Thanks for the feedback!
If you are trying to break into the medical market, this sounds like the most efficient way. Commissions can be higher, and first jobs can be used as loss-leaders, in order to get doctors talking about your company and referring for free.
Once the snowball is rolling, you won't need the commissions anymore.
I have done affiliate programs that pay anywhere from 5% to 75%.
If you won't get the client without him - pay him a generous amount.
I would gladly pay people 50% commission on my profit if that is a new customer I would never get on my own.
Depends a lot on your profit margin and many things.
His referral is actually worth much more if he can get his foot in the door where you can't. It's much more effective than sending out random mailings or other cold-call types of marketing. He's giving you credibility by the referral. Pay him nicely.
If this guy can provide you some good clients, (which it seems he can with his experience in the medical line) you should be generous in paying the referral fees.
Just make sure though, as Marcia said, that you pay only for the original fees and not the residual fees.
Keep this guy happy and you would see huge advantages for you in the medical market - which you have been working hard to break into.
If you still find it difficult to pay $1000 from $10 K, you can even consider raising your $10K pricing to $11K and pay that guy $1000, you get your complete $10K this way.
Don't think it in terms of what you'll be paying him but in terms of what you'll be getting and it'll be easier for you to decide.