Throughout my career, I\u2019ve always maintained that when selling is done right, it\u2019s one of the most purely beneficial and enjoyable ways to make a living that there is. And then there are times that I\u2019m disappointed in the ethics of my profession. Such an instance happened a couple of weeks ago, and it centered around a referral.<\/p>\n
A small business consultant whom I have known for some time called me and said, \u201cHey, Troy, I have a referral for you. A client of mine really needs some sales consulting help, and I feel like you\u2019re the right guy for it.\u201d I thought that sounded good, and we talked. The more we talked, the better it sounded \u2013 until the other shoe dropped. Within that shoe was a misunderstanding of what referrals really are and what they should be.<\/p>\n
The consultant, after we had discussed it for awhile, said, \u201cBy the way, I\u2019ll need a referral fee on this one.\u201d I should point out that I\u2019ve referred him a few pieces of business over the years, and never asked for a fee. I don\u2019t do that. It\u2019s against my ethics. However, I asked him how much he\u2019d need, and when we figured out what the project would be worth, his fee (had I chosen to pay it) would have been slightly more than $1,000.<\/p>\n
I explained to him that I neither pay, nor accept, referral fees, because I think they introduce an ethical issue into the transaction. Over the years, I\u2019ve paid referral fees five times (the last was about six years ago), and every time, the deal has gone sour due to ethical or communication issues on the part of the referrer. I also reminded him that he had done business from my referrals \u2013 which I never charged him for. He still responded that he was pretty committed to needing the referral fee.<\/p>\n
I asked him if, should I not pay the fee, he was going to find someone else who would pay it? He hesitated and then indicated that he would do so. \u201cEven though,\u201d I asked him, \u201cyou have told me that you feel like I am uniquely qualified to solve your customer\u2019s problems? Is $1,000 that meaningful to you?\u201d He grew quiet, and then said that his \u2018new business model\u2019 required these fees. I thanked him for the thought, but told him that if the business could be bought by anyone for $1,000, that I didn\u2019t want it. I asked him one final question, which I\u2019ll get to in a moment.<\/p>\n
What\u2019s disappointing to me isn\u2019t the fact that I won\u2019t get the business; I\u2019m doing well. Nor is it the fact that I\u2019ve referred him business for \u201cfree\u201d in the past. I might do so again. He\u2019s good at what he does. What\u2019s so disappointing to me is that he\u2019s willing to sell out his ethics at all, never mind for such a small amount. You see, a referral to me involves certain ethical guidelines. Let\u2019s look at that.<\/p>\n
When you refer another service provider to your customer, here is what you are saying: \u201cI know you have a need that needs to be solved, and I can\u2019t solve it. However, I care about your well-being, and based upon my experience, I know someone who can solve your needs \u2013 and I stake my credibility upon their work.\u201d<\/strong><\/p>\n Wow. That\u2019s a heavy statement, isn\u2019t it? Notice that, nowhere in there did it say, \u201cBy the way, I\u2019m getting paid for solving this problem.\u201d In fact, the other question I asked the consultant was, \u201cDoes your customer know that your referral depends on who pays you?\u201d He got very, very quiet when I asked this question. The truth, I suspect, is that if the customer knew, it would greatly damage his relationship.<\/p>\n When a true referral is made, here is how the three parties involved should perceive the referral:<\/p>\n Referral provider:<\/strong> \u201cI\u2019m doing a good thing here, because I\u2019m solving a problem for a customer (and hopefully deepening my relationship because of it), as well as helping a friend or trusted associate to grow their business. Hopefully, I\u2019ll get a referral back.\u201d<\/p>\n Referral recipient<\/strong>: \u201cThis is great! I\u2019m getting a new customer, and the person who is giving me a referral is showing a lot of confidence in me. I need to see if I can generate a referral back for them, to help them as they have helped me.\u201d<\/p>\n Customer:<\/strong> \u201cBoy, that saved me a lot of trouble! This salesperson (or associate) whom I trust and respect is introducing me to someone he trusts and respects; I should value this new person\u2019s work and input highly.\u201d<\/p>\n Now, here\u2019s how the parties involved perceive the transaction when a fee is involved:<\/p>\n Provider:<\/strong> \u201cWell, I can get some cash out of this, which I wouldn\u2019t have if the customer found his\/her own solution.\u201d<\/p>\n Recipient:<\/strong> \u201cI can buy this business.\u201d<\/p>\n Customer<\/strong>: \u201cBoy, that saved me a lot of trouble! This salesperson (or associate) whom I trust and respect is introducing me to someone he trusts and respects; I should value this new person\u2019s work and input highly.\u201d<\/p>\n Did you notice that the customer\u2019s perspective didn\u2019t change? That\u2019s because nobody told the customer that it wasn\u2019t a true referral.<\/strong> Hence, the customer doesn\u2019t know that it\u2019s a cash transaction instead of an expression of trust. In many cases, if the customer did know, it would greatly affect the success of the transaction \u2013 or even kill it. In fact, if the customer does learn that a fee was paid for the referral, his trust in both<\/strong> parties tends to drop significantly.<\/p>\n When people want a \u2018piece of my action\u2019 for introducing me, my first thought is to wonder how much business that person is actually doing on their own; my experience has shown me that the value of a referral fee pales in comparison to the value of a reciprocal referral. However, people who charge for referrals seldom receive referrals of their own, and the reason is simple: Once the fee is paid, the obligation from one party to the other has been completed.<\/p>\n In many professions, referral fees are illegal, precisely because of the conflict of interest inherent in the process. Even in professions where they are not illegal, I would strongly recommend neither charging them nor accepting them. A good rule of thumb is this: If you couldn\u2019t proudly relate the details of the referral to your customer, maybe you shouldn\u2019t do it.<\/strong> Throughout my career, I\u2019ve always maintained that when selling is done right, it\u2019s one of the most purely beneficial and enjoyable ways to make a living that there is. And then there are times that I\u2019m disappointed in the ethics of my profession. Such an instance happened a couple of weeks ago, and it centered around a referral. A small business consultant whom I have known for some time called me and said, \u201cHey, Troy, I have a referral for you. A client of mine really needs some sales consulting help, and I feel like you\u2019re the right guy for it.\u201d I thought that sounded good, and we talked. The more we talked, the better it sounded \u2013 until the other shoe dropped. Within that shoe was a misunderstanding of what referrals really are and what they should be. The consultant, after we had discussed it for awhile, said, \u201cBy the way, I\u2019ll need a referral fee on this one.\u201d I should point out that I\u2019ve referred him a few pieces of business over the years, and never asked for a fee. I don\u2019t do that. It\u2019s against my ethics. However, I asked him how much he\u2019d need, and when we figured out what the project would be worth, his fee (had I chosen to pay it) would have been slightly more than $1,000. I explained to him that I neither pay, nor accept, referral fees, because I think they introduce an ethical issue into the transaction. Over the years, I\u2019ve paid referral fees five times (the last was about six years ago), and every time, the deal has gone sour due to ethical or communication issues on the part of the referrer. I also reminded him that he had done business from my referrals \u2013 which I never charged him for. He still responded that he was pretty committed to needing the referral fee. I asked him if, should I not pay the fee, he was going to find someone else who would pay it? He hesitated and then indicated that he would do so. \u201cEven though,\u201d I asked him, \u201cyou have told me that you feel like I am uniquely qualified to solve your customer\u2019s problems? Is $1,000 that meaningful to you?\u201d He grew quiet, and then said that his \u2018new business model\u2019 required these fees. I thanked him for the thought, but told him that if the business could be bought by anyone for $1,000, that I didn\u2019t want it. I asked him one final question, which I\u2019ll get to in a moment. What\u2019s disappointing to me isn\u2019t the fact that I won\u2019t get the business; I\u2019m doing well. Nor is it the fact that I\u2019ve referred him business for \u201cfree\u201d in the past. I might do so again. He\u2019s good at what he does. What\u2019s so disappointing to me is that he\u2019s willing to sell out his ethics at all, never mind for such a small amount. You see, a referral to me involves certain ethical guidelines. Let\u2019s look at that. When you refer another service provider to your customer, here is what you are saying: \u201cI know you have a need that needs to be solved, and I can\u2019t solve it. However, I care about your well-being, and based upon my experience, I know someone who can solve your needs \u2013 and I stake my credibility upon their work.\u201d Wow. That\u2019s a heavy statement, isn\u2019t it? Notice that, nowhere in there did it say, \u201cBy the way, I\u2019m getting paid for solving this problem.\u201d In fact, the other question I asked the consultant was, \u201cDoes your customer know that your referral depends on who pays you?\u201d He got very, very quiet when I asked this question. The truth, I suspect, is that if the customer knew, it would greatly damage his relationship. When a true referral is made, here is how the three parties involved should perceive the referral: Referral provider: \u201cI\u2019m doing a good thing here, because I\u2019m solving a problem for a customer (and hopefully deepening my relationship because of it), as well as helping a friend or trusted associate to grow their business. Hopefully, I\u2019ll get a referral back.\u201d Referral recipient: \u201cThis is great! I\u2019m getting a new customer, and the person who is giving me a referral is showing a lot of confidence in me. I need to see if I can generate a referral back for them, to help them as they have helped me.\u201d Customer: \u201cBoy, that saved me a lot of trouble! This salesperson (or associate) whom I trust and respect is introducing me to someone he trusts and respects; I should value this new person\u2019s work and input highly.\u201d Now, here\u2019s how the parties involved perceive the transaction when a fee is involved: Provider: \u201cWell, I can get some cash out of this, which I wouldn\u2019t have if the customer found his\/her own solution.\u201d Recipient: \u201cI can buy this business.\u201d Customer: \u201cBoy, that saved me a lot of trouble! This salesperson (or associate) whom I trust and respect is introducing me to someone he trusts and respects; I should value this new person\u2019s work and input highly.\u201d Did you notice that the customer\u2019s perspective didn\u2019t change? That\u2019s because nobody told the customer that it wasn\u2019t a true referral. Hence, the customer doesn\u2019t know that it\u2019s a cash transaction instead of an expression of trust. In many cases, if the customer did know, it would greatly affect the success of the transaction \u2013 or even kill it. In fact, if the customer does learn that a fee was paid for the referral, his trust in both parties tends to drop significantly. When people want a \u2018piece of my action\u2019 for introducing me, my first thought is to wonder how much business that person is actually doing on their own; my experience has shown me that the value of a referral fee pales in comparison to the value of a reciprocal referral. However, people who charge for referrals seldom […]<\/p>\n","protected":false},"author":73,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1649,1814,1866],"tags":[],"_links":{"self":[{"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/8906"}],"collection":[{"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/users\/73"}],"replies":[{"embeddable":true,"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/comments?post=8906"}],"version-history":[{"count":2,"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/8906\/revisions"}],"predecessor-version":[{"id":8908,"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/posts\/8906\/revisions\/8908"}],"wp:attachment":[{"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/media?parent=8906"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/categories?post=8906"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.enxmag.com\/twii\/wp-json\/wp\/v2\/tags?post=8906"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nIn this case, I lost the business, but kept my ethics and dignity. You might occasionally lose business, too, by staying \u201cfee free\u201d with respect to referrals \u2013 but isn\u2019t your integrity worth more?<\/p>\n","protected":false},"excerpt":{"rendered":"