Should You Offer Commissions For Customer Referrals?

As a small business owner you may find yourself in a situation where you want to partner with another business but they are asking for a commission on your services. You will want to be prepared to handle such a request BEFORE you find yourself in this situation.

Whenever someone asks you for a commission in exchange for marketing your product or service, it is basically an affiliate or referral program. This can be one of the most powerful forms of marketing because it promotes word-of-mouth marketing. Who better to refer clients or customers to you than someone who fully understands the value of the services you have to offer?

Often these people are your current satisfied customers, or as is the case with this question, they may be strategic partners. Strategic partners are those individuals or businesses who agree to refer business to you, sometimes in exchange for you doing the same for them, or perhaps for a commission. Either way, it is important to make sure it is a win-win situation for both sides.

If you consider these individuals or businesses are in effect doing your marketing for you, then you realize paying a referral incentive or commission is merely a marketing expense.

When you consider that referred customers are "warm leads" and are a lot more likely to purchase from you than a "cold" prospect because they come with an endorsement from someone they trust, then you see even more how valuable this referral marketing can be.

My suggestion is to approach this as a potential business partnership. Make sure they completely understand the benefits you can provide to their customers and let them know you would like to design a mutually beneficial partnership. Before you offer to pay them a commission, find out what is important to them.

What are they looking for that you can possibly help them to get? In this case the potential partner IS your target audience so know them and approach them with a relevant proposition. Be willing to pay a referral fee or commission if that is all they are interested in, but also be open to other ideas.

I have negotiated some amazing partnerships just by spending some time talking and brainstorming with potential partners. In other cases I have straight affiliate/commission partnerships. It all depends on the partner and how we determine we can BEST HELP EACH OTHER to be successful.

(C) 2005 Debbie LaChusa

20-year marketing veteran Debbie LaChusa created The 10stepmarketing System to help small business owners successfully market their business, themselves, without spending a fortune on marketing. To learn more about this simple, step-by-step program and to sign up for her FREE audio class and FREE weekly ezine featuring how-to articles, tips and advice, visit http://www.10stepmarketing.com

---

Community Involvement Networking

It is important for you to join at least one... Read More

Work that Room, Baby!

Networking, schmoozing, making connections. Call it what you want, it's... Read More

How to be Known

Why business relationships are formed with certain people?If you go... Read More

Give People Something to Talk About!

My husband and I tried an experiment one night. We... Read More

Are You Building Relationships Online?

How's your relationship?I'm not prying into your personal life, so... Read More

Sticky Situations: Nametag Best Practices

Because a person's name is the single context of human... Read More

How to Find Participants for a Trial Run

Why is a network meeting the best place to get... Read More

You Can?t Spell Networking Without Serendipity

"Fear not to entertain strangers for by so doing some... Read More

10 Terrific Tips to Talk Your Way to the Top

What is "the top" anyway? According to society, "top" has... Read More

Acknowledging Referrals! What?s in It For You?

I grew up in a household where saying thank you... Read More

Giving the Gift of Your Name (The Networking Factor)

Although, this is about giving the gift of your name... Read More

Increasing the ROI on Your Networking

Networking requires an investment of time, money and effort. Here... Read More

Lesson 61 - When Does Aggressiveness Turn Into Annoyance?

The StoryWhen attending conferences, conventions, or private events, it's guaranteed... Read More

Is The Company You Keep Hurting Your Business?

When you look at your friends, it's like looking into... Read More

Are You Leveraging Your Business Network?

Just yesterday I received an email from a colleague telling... Read More

Networking

Put join a networking group on your to do list... Read More

Sell For Yourself Or Sell For Your Boss?

First of all I would like to start this article... Read More

Networking: Breaking into the Buzz

Breaking into conversational groups is one of the things people... Read More

Five Best Ways To Build A Network

I have been working from home on the internet for... Read More

Why Cant I Start A Conversation With You?

One out of every ten Americans has a fear of... Read More

Measuring Value for a Networking Group

How do you measure a group's worth to your organization?It... Read More

Networking: What the Heck is a Ryze?

If you're new to the internet marketing club, you may... Read More

Alliances: More Than A One Way Relationship

What is the biggest advantage of forming an alliance?Everyone has... Read More

Social Network Software

My neighbor ? a lovely man I've known, and have... Read More

Joining Industry Specific Organizations Has Many Benefits

Recently, while providing an up-and-coming Virtual Assistant (VA) and small... Read More

Networking to a New Life

Research shows that talking to strangers -- not people in... Read More

Strategic Networking: Take the Shortest Path to Success

Do you use Ryze or LinkedIn to promote your web... Read More

Effective Networking

The process of finding out about a job, getting interviewed,... Read More

Client Attraction Technique #2: Networking

One of the most cost effective ways of generating leads... Read More

Follow-Up with Your Contacts

What happens when you meet a potential client at an... Read More

Five Stumbling Blocks To Successful Networking And How To Overcome Them

The ability to connect with people is essential to success... Read More

Create a 10 Second Introduction From Your USP

You can generate a ton of business by networking, whether... Read More

Where to Find a Cash Windfall of $10,000 - $1,000,000 - You Never Knew You Had

There is a rather famous true story called "Acres of... Read More