You Want Referrals, Pay for Them! 

I can’t imagine benefiting from a referral from someone without compensating them in some way. Yet, I have given dozens of referrals to others where I have not been compensated, thanked or even acknowledged.

The 4ProfitMarketingSM theory of referral compensation says that if you reward people who give you referrals, you’ll get even more.

It works!

When I stared my marketing consulting business over 13 years ago, the husband of a former colleague nonchalantly told me one day that he was a friend of an owner of a business he thought could benefit from my services. He offered to try to set up a meeting for me. He never mentioned any compensation and I never offered any. A few weeks later I held my meeting with a large men’s clothing chain in Chicago and signed a contract worth over $20,000 in the first year.

The evening I signed the contract I showed up unexpectedly at the colleague’s home and without uttering a word, handed her husband a check for $1,000.

His reaction was predictable. He said, “What’s this?” I said, “It’s my way of thanking you for introducing me to your friend. We signed an agreement this morning.”  He said, “I wasn’t expecting any compensation and I can’t accept this much.” 

I said, “If I gave you $50 or $100, you’d have been just as surprised and satisfied. But $100 won’t change your life or affect your lifestyle and you’d soon forget about it. But you’ll remember $1,000 and you’ll be able to do something special with it.” 

Then I said, (and this is the heart of the 4ProfitMarketingSM theory of referral compensation) “Hopefully $1,000 will make you ask yourself’, ‘Who else do know that could benefit from working with Ed?’”  I wanted my friend to think about what he could do with lots of $1,000 checks and refer me to lots of others. 

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