Good afternoon AW!
A (somewhat) cheeky customer of mine has referred a person to me who could be a good source of leads/clients. My client has asked, tongue-in-cheek if there is any kind of 'finders fee' or 'referral fee' that I would offer him.
Curious to know if anyone else does this routinely, and if so what do you offer?
At the very least, if it does pan out I'll be buying him a nice bottle of whisky.
Thanks in advance.
Michael
Replies (12)
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Not recommended
If you do a good job, you should get referrals without offering incentives, which may give the impression you in desperate need of additional clients.
Bottle of whiskey should do the trick and to me is nicer gesture than cash.
Hmm
if you are a member of one of the accountancy bodies check out the rules. At one stage this was frowned upon.
How much does it cost you to get a client
Do you measure how much it costs to get a new client. If you do then it easy to make the decision.
We offer all existing clients 10% or a capped amount off their accounting bill for any new client they introduce depending upon the fee level. I find that this works out at about 25% of the cost of gaining new clients through other means. The current client only gets paid when I do from the new client and potentially they can end up in a situation where I am paying them to do their accounts but I will have gained 11 new fees in this situation.
It works I am happy and the current and new client are happy.
I get 10%
I'm a freelance bookkeeper and only one of the accountants that I have ever dealt with, (and i've dealt with a few) offered me a finders fee of 10%. Guess where I point all my new customers if they haven't already got an accountant and/or looking for a new one!!! And yes, I do think they are good at what they do. They were found by recommendation of another bookkeeper.
20%
As a general rule if an existing client refers us to another client then we pay them 20% of any fees raised.
If they refer us to someone who can introduce us to potential clients then they get 10% and the other firm gets 15%.
We don't advertise this though as we aren't short of clients and don't want to sound desperate.
10%
I advertise that give existing clients 10% of any newly referred clients first year fee when it is paid.
I also say this at the meeting of any potential client.
Had a few referrals and havent yet paid anything over as no one as ever come back to me to ask about it. If they did would pay up.
MLR required?
I really hope I am misunderstanding that last sentence. I advertise that give existing clients 10% of any newly referred clients first year fee when it is paid.I also say this at the meeting of any potential client.
Had a few referrals and havent yet paid anything over as no one as ever come back to me to ask about it. If they did would pay up.
You have agreed to pay 10% on referral. You have had referrals but you have not paid 10%.
Like not paying a supplier who doesn't chase you this is, at best, ethically dodgy. It could also be considered a money laundering offence. If nothing else, think what it could do to your reputation if a client realises a few years down the line that you never paid the referral fee. If you aren't being honest with them about that, what else are you not being honest about?
Do the right thing and pay any referrals legitimately earned.
.
I used to do this, but it got too complex.
I tend to just say "thanks very much, I will remember" [or I will stick a note on the file and thank them again in 12 months] and try and be nice to them, regardless of whether I get a fee or not.
The trouble with offering cash is if you turn down the lead or they don't convert, the referrer tends to feel a bit miffed.
I think it depends where you are with your practice. If you are "anything that pays" in an effort to boost turnover, any sort of turnover, then a scheme will probably work. If you are at "I am only taking grade A clients that fit into these three niches" then it wont.
Yes
Referrals are one of the lowest cost methods of gaining new clients and all businesses including accountants should be actively using one. The referrer should be paid a worthwhile sum to make them do it again. The amount is up to you but I think it should be at least £100. If as per the original post the person is to be a serial referrer they need to be encouraged to refer and £100 cash should do it. I would pay them out of my own pocket. However payment would only be made once the client has signed up, no payment made for a referral that doesn't convert.
Also when taking on a new client you need to say to them that you expect them to give you referrals and as long as they are happy with your work they will, you need to set the expectation at the start so you can later actively seek referrals from your client base. You can give them a % off their fees for the referral again if it converts.
What About Quid Pro Quo?
In other words, could you refer a client to them in return? (I presume they aren't a competitor)
A good new client is worth far more than any referral fee. I mean, that's why you're grateful for their referrals!
I am rather gobsmacked at all these referral fees.
My clients recommend me because I do a great job at a reasonable price.
I occasionally refer people onto others if their accounting is too complex for me or they need a different set of skills - I would only ever recommend a firm that I had complete faith in that would do a good job.
I think it's morally and ethically questionable to refer clients for a fee; I wouldn't ever countenance being on either end of this.
And as to the accountant who advertises a referral fee and then doesn't pay it - shame on you.
It's hardly any surprise that our profession has such a poor reputation.
@rawa363
Cash - out of your back pocket ! What on earth are you doing in these days of Money Laundering and The Bribery Act.