I have read on here that some of you have referral programs. I am considering this and wondering how effective it is for you.
What are your terms?
What is your return rate?
How do you keep track of it all?
I would really like to know all about how you do it please! TIA! 
I've done a referral plan for over 20 years. Alice is my bride. Alice sends Betty to me. Betty spends $2000. Alice earns $100 to apply toward her own invoice total.
Betty has to tell me that Alice referred her. I have a "referred by" space on my order form. Once Betty confirms her final order, then the "referred by Alice" note flags me to apply the 5% ($100) to Alice's bill. I have a space on ALice's invoice for "referral credit - Betty". That's pretty much all of the bookwork involved.
If Alice is already married and has no open balance, then I send her an invoice-type of document showing she has a $100 credit open with me.... a combination thank-you-card and you-have-a-credit-on-file notice. She can use it toward any type of cake, cookies, or catering. I do not formally keep track of these open credits. Alice needs to keep this document for her records until she uses the credit.
I can't tell you how many brides have used it, but I do know that each referred bride has been well worth my time and the referral credit. Would I pay a $100 finder's fee for me to get a $2000 (net $1900) sale? Absolutely! It's very popular among brides ... I've had co-workers fight over which one of them was the first to tell a new bride to "call Debi"! 
I had one person who questioned how much I would really do for free. He asked, "So if I sent you enough business to earn $1000 in free stuff, you would do a $1000 catering for free???" When I pointed out that to earn $1000, he'd have to have sent me $20,000 in business so for that kind of business, I certainly WOULD do a small catering for him for free, then he understood!
I keep it very informal and very simple. BUt what you end up with is a whole troup of folks out there drumming up business for you!
so because you are giving them a discounted part of your service instead of just giving them money, this doesn't qualify as a kickback right? I wanted to do something like this but was afraid of the whole illegal kickback thing/
so because you are giving them a discounted part of your service instead of just giving them money, this doesn't qualify as a kickback right? I wanted to do something like this but was afraid of the whole illegal kickback thing/
Ok.... I never considered this a "kickback", so I looked it up on Legal Terms (dot com).... see link below. The definition seems to imply some sort of 'under the table' transaction. This term is usually used when there is an illegal transaction going on ("If you can make sure I win this bid, even if I'm not the lowest bidder, then I'll kickback part of the payment to you")
http://www.legal-term.com/Kickback-definition.htm
Kickback:
An agreement, illegal in nature, where part of the purchase price or sum received is returned "under the table" so to speak. A kickback may be exacted by threat, coercion, or bribery.
I always viewed it more of a "finder's fee".... In previous corporate jobs I've had, we used this term in a number of transactions; it's more in line with a sales commission. See link and definition below.....
http://www.legal-definitions.com/finders-fee.htm?gclid=CNG-npepwYsCFR6AWAodqkJLGg
Finder's Fee Definition:
finder's fee definition a finders fee is the amount charged by a person, or agent, who brings together parties for a business opportunity. For instance, a realtor might charge a finders fee for brining a tenant to a landlord.
So I think you are not using the term correctly .... it's not an illegal "kickback"; there is nothing illegal in the actions of the 2 or 3 parties involved. It's a sales commission / finder's fee thing.
BTW, when I set up the LLC, I told my attorney of this policy and he was fine with it.
Great thread! I try to keep up with who referrs who, but haven't implemented any type of reward just yet. I'd like to know if anyone else has any ideas on this topic. I was also thinking of a type of frequent buyer thing where if someone places so many orders over a certain amount then they qualify for a free small cake or something.
thanks for the info. i wasn't implying that you were doing anything illegal. I wanted to implement something like this and make sure I didn't mess it up and get into hot water. thanks again
thanks for the info. i wasn't implying that you were doing anything illegal. I wanted to implement something like this and make sure I didn't mess it up and get into hot water. thanks again
Oh I didn't take it that way at all! I was just pointing out the different terminology that can get confusing. It's never a bad idea to double check things! 
Sometimes people offer us advice that is so off the wall ..... when I first got started, someone told me about cutting out the engagements and mailing the couple a letter of introduction with my card. So I started doing that. A co-worker told me "....it's illegal to advertise thru the mail!" Huh???? Good lord, look how much junk mail advertising stuff we get! I had to explain to her that it's illegal to use the U.S. Mail system to defraud people ... as long as I was providing what I promised, it was not illegal!
We call them "Kitchen Table Consultants" ...... those folks who sit around the kitchen table (usually over a canasta game) and claim to know everything there is to know when they don't know anything at all! (I think we've all got relatives like that! 
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