Should You Charge Vendors for Client Referrals?

“Never underestimate the effectiveness of a straight cash bribe.” – Claud Cockburn

For decades, I have made it a practice to refer my clients to vendors who can provide services those clients need… and that I don’t or can’t offer myself. I have also made it a policy never to accept a referral fee from any vendor. Many offer it, and some even argue with me when I turn it down.

I do not accept referral fees for this reason: My primary mission is to give my clients the best recommendations and advice I can – and that means I have to be totally objective. Even when what’s best for the client isn’t profitable for me.

For instance, many people call me, eager to pay me thousands of dollars to write a promotion for them. But if I don’t think their idea will work or their product will fly, I turn them down, explaining why I won’t do the job. By doing this, I am saving them from financial disaster… but I am also talking myself out of a nice, fat copywriting fee.

When I tell someone not to proceed with a promotion, my recommendation is based on my nearly three decades of marketing experience. Therefore, the advice is valuable to them. But since they didn’t engage me on a consulting basis, I don’t get paid a dime for it.

I want my clients to know that the advice I give them is always in their best interest… and if I took referral fees from vendors, it would create a potential conflict.

I sincerely believe I would always recommend the best vendor for the job – not the vendor who paid me the highest commission. But could I… or my client… be 100 percent certain I was always motivated by their interest and not a juicy referral fee?

Now, while I am against taking referral fees, I do make it a practice to send a small thank-you gift to people who refer business to me. So if it’s okay for me to send a small gift to a referral source, it seems like it should be okay for vendors to send small gifts to me when I am their referral source.

I don’t want them to do it. And I openly discourage it. But if a nice little gift arrives in the mail, I usually don’t send it back. I keep it and thank the vendor.

The reason I bring this up is that PF, a copywriter, recently contacted me asking for referrals. But unlike the many other copywriters who want referrals from me, PF was offering me something in return for each new client I referred to her – a free lobster. Or, rather, a $50 gift certificate to a website selling Maine lobsters.

Actually, I don’t eat lobster, which I know is unusual. Any food that comes in its own armor is not for me… and, truthfully, I don’t even like the texture or taste. But my oldest son Alex loves lobster… and a $50 lobster would put a smile on his face.

So, did I take PF up on her offer?

Frankly, yes. I referred a few potential clients to her. But I tend to do that for new freelancers anyway.

Did the lobster bribe influence me unduly?

I like to think not. But I am human, and we all like to get what Michael Masterson calls “glicken” – a little something extra.

Should you take referral fees from – or give referral fees to – other vendors?

That’s up to you.

But here’s my position on this issue: Make sure your recommendations are “pure,” unbiased, and objective – and make sure your clients know it. That way, you get something far more valuable than the referral commission the vendor wants to pay you. You get your client’s trust – and a reputation in your industry as someone who is honest and trustworthy.

That’s something – unlike a lobster – that money can’t buy.

[Ed. Note: Bob Bly is a popular Early to Rise columnist, self-made multi-millionaire, and the author of more than 70 books. He is also the editor of  ETR’s Direct Marketing Masters Edition – a program to help you start your own successful direct-mail business.]