http://216.52.172.179/dispArticlePrint.cfm?ARTICLE_ID=10303

This article should clear up the issue- but you can choose to disregard the law and hope you’re never called up to answer for doing this prohibited act.

just my 2 cents…

I’ve not had that happen to me, but if it did, I would reply as follows:

“Well, I don’t pay for referrals because plenty of people refer business my way because they know I get great results for them and their colleagues. But I do usually go out of my way to thank my referral sources, since I’m grateful for their support.”

Let’s say if someone actually provided you a referral and the first thing he asked you after was, “do I get anything in return or money in return?” then what does one do?

I’ve had one referral do that so far and I’m just worried that in future there’ll be more cases like this.

It seems to me that the resounding theme is to make certain that your client knows how much you appreciate their referral efforts. As I usually write in the “Thank You” card: “A referral is the sincerest compliment for any business.”

Re rewarding government contractors (and private companies with similar guidelines): Have a conversation that goes like this:

“I really appreciate your support and referrals. Usually I send a gift to colleagues who send business my way, and I know that in your organization, that type of thing could get you into trouble. Could you set me straight on the rules?”

For instance, some agencies accept gifts but require they be shared by all. In that case, a gift basket can work.

But having the conversation is important. It lets the person know you are thinking about them, grateful, etc.

Also, there are plenty on non-money related ways to thank a referral source: keep them abreast of job openings; let them know about key industry events; send them articles; help them get published with a case study. Essentially look out for them and their aspirations.

5% “commission” as you do seems generous to me; after all, wasn’t it your own salesmanship which enabled you to convince the prospect to contract for a much bigger project? Plus, it’s not as though those gifts are tax-deductible.

It sounds like that’s certainly working for you though (if the fellow has since referred $100K to you, that’s a good sign!).

My question to everyone who rewards their referring clients: how do you handle referrals sent on by a contact in a government agency? Most (if not all) State and Federal agencies have very strict, clear guidelines against sending gifts to government employees. Yet, I should think those contacts deserve more than a card when they pass a lead on to you, right?

I’d be curious to hear your thoughts…

Thats not exactly paying for a referral.. thats rewarding a referral. Paying for a referral would be sending the guy $50 to pass your referral on.

I find that it is best to reward referrals imidiately after your initial contact with the referred party. I do so simply with a hand written thank you card. And if the client signs on with us I will usualy provide the referring party with a gift = to less than 5 percent of the total bill.

Durring christmass last year I sent a client a $2500 plazma tv for his referral of a $25,000 site. My wife flipped when I bought it because she thought she had stumbled across a present for US. (she was sore to see it go too) That client has since referred over $100,000 to us. His last “reward” was a box of Cohiba Cigars and season tickets ot the Lakers.

You dont have to buy plazma tvs for your clients… but dont send cash! If I give a rich client $100 for a referral, so what… hes rich… but If I send him a $100 bottle of wine, or send him and his wife to a $100 dinner or show… then I will be remembered the next time he hears “What I really need is a website”.