How can I collect a referral fee when recommending a potential client to another in my field?
I cannot take on any new students (clients) for my music studio right now. How do I make an income from all the referrals I'm giving away???
Some industries prohibit this, usually licensed professionals. That said, if you are good and develop good business offering to do it for those who need more should be easy. Develop arrangements in advance and formalize them.
I would google company who take on clients for the over flow and scroll to the but tom of the page and become a affiliate if they have one and if they dont then find another company.
What a wonderful problem to have, Dina. You've gotten great advice about setting a fee and having a contract. I want to help you build your relationship with your referral partners.
Most of these arrangement fail because the expectations and responsibilities haven't been discussed in advance. Before you approach your potential partners get clear on these questions:
1. What is the most critical thing you give your music students?
2. Can your partner offer that or something similar?
3. How do you want your students to feel working with another studio?
4, What will you do if a student is dissatisfied with the referral
5. How do you want to be paid and on what frequency?
6. How will you publicly talk about each other?
7. What happens if there. Is a dispute?
8. What happens if the partner fails to pay?
Referral arrangements demand a lot of trust between partners because you are essentially vouching for your partners quality experience. Make sure the person feels good to you.
As for getting paid, well, I'd track the referrals sent over the month, then send an invoice for the amount. Your partner can adjust the number for those who didn't join the studio and pay it via PayPal or Dwolla.
My question for you is, have you considered adding more staff instead of farming the work out?
Find a studio that you feel comfortable referring your clients to. Go talk with them and understand what they do, how they do it, so you can confirm that they will treat your clients the same way you would. Then think about negotiating a mutual referral fee. That is, when you're at full open you refer clients to them and vice versa. Plus, it provide opportunities for potential future collaboration. Never hurts to have competitors as partners. Keeps you both informed and "on your toes.".
Hi Dina, I have found for me I ask the people and businesses your are referring to if they are interested in referrals (I bet they yes) and then you could ask what ti is worth to them if a referral makes a purchase. Then let them know who you are and what you do and why might refer business to them.
Consider working on agreement between those in your field that you know and are sending referrals. Start with a basic agreement that works both ways and then build on that agreement as you expand your circle of influence. A morning coffee and snack on the way to work that includes conversation with people you may consider entering into such an agreement is a good way to create the discussion.
Work with a Partner you can TRUST very important and set out the guidelines and expectations so there are no surprises......
There was a time that I engaged in referral fees; it was short-lived for a variety of reasons. It sounds as if your practice is very full; I'd say you are not giving anything away (that is, you cannot service these folks anyway). By making a referral you are building good will. How important is that extra income? There will come a time when you seek referrals as well- good will is quite likely to keep that pipeline full.
You'd have to negotiate that in advance with the recipients of those referrals. Maybe they'll agree, maybe they won't. But you should have no expectation of getting paid without prior agreement.