Monthly Archives: May 2013
Should you pay referral fees? That question was recently posted at LinkedIn on the Business Consulting Buzz group:
Referral Fees for Independent Consultants?
Interested in your opinions: As an independent Consultant, would you be willing to pay and/or receive referral fees?
Here is my reply:
As consulting engineers, we are concerned that referral fees might be perceived as conflicts of interest. As such, we do not accept (nor pay) any fees from the vendors serving our technical community.
When asked for vendor recommendations, we give clients at least two. If asked for our preference, we will share that with an explanation. Our vendors understand that no fee is expected, but we hope that the courtesy of a recommendation will be reciprocated.
We do, however, pay a referral fee to marketing partners for consulting business. These currently include a manufacturer’s rep (we are on their line card), and a training firm (we are in their catalog.) We also have agreement letters in place.
The percentages vary from 10 to 30% of the fee, depending on the effort. 10% is for a qualified lead that we pursue/close; 20% for a purchase order; and 30% for collecting the payment and sending us a check for our share. We pay referrals only when we get paid, and only on the fee (not expenses, as we do not mark up client expenses.)
Also, we don’t partner with consulting colleagues. We tried sub-contracting for a while, but it was more hassle than it was worth. When appropriate, we simply pass along leads with no strings attached. We make sure our clients understand that no money changes hands on referrals, and that we are out of the loop. In other words, we passed along a name — please make your own business decisions.
Hope this helps. Feel free to contact me. Been at this consulting gig 30+ years, happy to share, and still learning…
If you are on LinkedIn, you may want to join this group. If you are not on LinkedIn, what are you waiting for? LinkedIn is where the professionals hang out.
© 2013, jumptoconsulting.com. All rights reserved.
Another quick question from reader C, that generated the grist for this post. Thanks, C!
I’m going to a networking event for small business/non-profits, and it has occurred to me that I need a quick elevator speech.
Like “Hi I’m C from … we help people view and analyze their data by using maps”
Most people know that they need a database but most don’t know that you can actually take that data and view it in a different way.
I realize that I need a quick attention grabber – that describes what I do without getting too technical because it is definitely technical.
What do you think?
Here is my reply. Incidentally, C is consulting on the side (always a good way to start), but to protect her confidentiality, I haven’t included full information. Don’t want to jeopardize the day job.
I agree that an “elevator speech” can help — although I doubt that anyone ever got any business in an elevator 🙂
I’d focus it a bit. WHAT you do, WHO you do it for, and HOW it will improve things for the client. Emphasize the results, not the technical details (you can always explain that later.)
What about this? “Hi, I’m C. My firm helps non-profits better organize, analyze, and use their client/member databases. This helps improve both services and contributions.”
By the way, “contributions” are important — most non-profits constantly struggle with their revenues. You could add “small businesses” to the non-profits, but it sounds like you are targeting non-profits at this time.
If/when asked for more details, then you can explain using mapping technology that was developed for government applications, and how you are now applying it to non-profits and small businesses.
Keep it simple. Maybe a phrase like “You own customized Google Maps…” or some such thing. I love simple analogies, and often explain my consulting practice as the “Ghost Busters” for electronic systems.
I also agree that you need to be careful of getting too technical. (I say that as an engineer who loves technology, and who could spend all day and all night talking about it.)
Technology is just a tool to solve problems. Or, as the old saying goes, “Last year, millions of quarter inch drill bits were sold. But not because people wanted quarter inch drill bits, but because people wanted quarter inch holes!” Focus on the results, and how things will improve.
Finally, you should consider offering a range of services. Initially, you could offer to “do it all”, taking the data, massaging it, and then advising the client on how to best use it. Perhaps even setting up a database if the don’t have one already.
Make it as easy as possible for them to use your expertise. As they become proficient, you could even offer to train someone in their organization on how to use the data themselves.
Some clients just want solutions, while others want to eventually bring the expertise in house, so be prepared to give them both options. Think like an accountant — you can just do the taxes, or you can handle the bookkeeping and other details as well.
Hope this helps,
PS to Blog Readers — If you have a quick question, drop me an email – which may get answered in a future post (disguised of course.)
PPS – Been a little lax on this end which will probably continue as I take some vacation time. But stay tuned — more stuff coming!
© 2013, jumptoconsulting.com. All rights reserved.