Do you or have you ever offered another business a referral fee? There is a new cupcake place opening in town, and they hate doing cakes (so I've been told). What is the typical percentage fee you've paid to others in the past? OR is this a terrible idea? I was also considering offering this deal to event planners so I can get my name out there. What do you think based on your experiences?
I haven't offered a referral fee to another vendor, I haven't come across that yet because my business is fairly new. However, for regular clients, if they refer a friend or family member, I apply 5% of the friends order to an account for my client. For example, if their friend places a $200 order, $10 goes towards an account for my client so they can either get a discount on their next order, OR, save them up for a free cake.
If you're dealing with a vendor, they're likely to refer more business to you, so you want to make it worth their while. I would offer at least 10% of the referals order to my vendor.
It may be a good idea for the two of you to work out a nice agreement. Will this be ongoing or just a now and then thing? If I don't do something, I don't expect a referral fee. I hope that a customer appreciates the suggestion and will remember me when she needs one of my products. Another CC member and myself refer to each other, but we don't charge. You never know what will turn into a sale. If you actually make her cupcakes and sell through her, that's a different story. If she wants a referral fee, base it on sales, not leads. And it must be realistic. Wouldn't you also refer to her? Then why exchange money? Just a few ideas.
I make cupcakes too, so there wouldn't be referrals to their business. I agree that they should only get paid if I make a sale from someone they sent to me. Incentives wouldn't be based on leads and would probably only happen every once in a while.
I do not give money out to anyone for referals. What I can do is if I trust the vendor, such as photographer, etc., I will refer them to my customers. That is all. We will refer each other, but give no money. It makes me think of kick backs, which I am strongly against. And there is cupcake place I refer people to, cause I don't do cupcakes. The owner and I get along very well.
Also, if I am a client and find out you give fees to each other for referrals, I wouldn't want to use you. I would take it as the only reason why they reffered someone is, cause they got paid for it, not based off if the person was a solid vendor. I have seen that happen alot as well.
I pay for advertising, but wouldn't pay a referral fee. I think you should go tell them you make cakes, if they ever have a client they don't want to make cakes for, they can send them to you. If they want to, they will, if not, they won't.
I had *1* wedding planner try to offer me the option of paying them to refer me to their clients a few years ago. I told them I don't need to pay people to recommend me, I bake amazing tasting cakes that look good too and if they are looking for that, they can recommend me. They are no longer in business. But I am.
Also, if I am a client and find out you give fees to each other for referrals, I wouldn't want to use you.
That's a good point. I also agree with what aligotmatt said. I guess if the cupcake place responds to my email, I will just show them my work and brings some samples. There's a bridal shop in my area that I can pay $25 a month to be listed as a vendor. I'm doing ok just by word of mouth. I'll save that money for the hundred other things I need to buy.
What others have said..referrals should be given and taken based on a solid relationship and trust with the other vendor.
I'd never pay a referral fee...There are people in my area who do referral fees and they have a bad reputation among other vendors for only referring based on who's paying them.