How to Convert a NonPaying Referral into a Paid Referral

How to Convert a Non-Paying Referral into a Paid Referral

By Robin Elliott

In every talk, seminar or bootcamp I’ve delivered, people ask: “I have been feeding people business and leads for ages and I never got paid. How do I change that now, without offending and alienating these people who are my friends?”

It‘s a good question.

First of all, as a decent, self respecting capitalist and business person, you should get paid. And second, you don’t want to distance your business associates.

For years, you’ve been sending and referring business to people that has been worth, perhaps, tens or even hundreds of thousands of dollars to them. Now, you realize you have left a lot of money on the table unnecessarily. Here’s the best way I have found to turn this situation around with tact and finesse.

First, you identify the people to whom you want to continue sending business on the understanding that you will be fairly and adequately compensated for it. Then, you do some research homework (usually with their competition) to find out what their profit margins are so that your expectations are reasonable regarding the commissions you expect. These commissions could be once-off or an upfront payment with ongoing residual payments on all ensuing sales.

Once you are comfortable with the commissions you expect from referrals in the future, you set up a meeting with the person to whom you wish to continue sending referred business. At the meeting, this is what you say, even if you have never received any referrals from this person:

“You know, Bill, I have been having a good look at the Joint Venture opportunities in my business and I read something that really put me on the spot and I have to apologize to you. Up until now, I never offered you any compensation for any business you refer to me. I realize now that this is not fair to you. We all deserve to be paid for what we do, of course, and it was not ethical of me to accept leads from people without offering to pay a fair and reasonable commission. So, from now on, I will pay you 20% (or whatever is right and generous for you) on any business you send me. And of course, you will do the same, right?”

At this point, if your associate refuses to pay you for future referrals, or offers too little based on your research, don’t argue or fight. Simply agree and never send business again. Instead, find someone else to refer business to. Ascertain exactly how much your new associate will pay and how it will be paid. Be specific. For example, state an exact percentage gross profit or net profit. Also determine whether payments will be on all ongoing business or not, whether to include taxes, and at which point you will be paid (i.e., weekly or monthly, etc.).

After the meeting, send a copy of the details in writing. And include what you will pay!

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