Referral Fees? How much and how?

[I Love Spreadsheets]

Anyone had experience of paying referral leads for sales leads?

I carried out a couple of experiments which both fell flat on their face (One was to give away £50 for each successful sales lead and one was to give away 10% of the value of the orders)

So I have been back to the drawing board and looked at the cost of my successful sales leads that I generate through other avenues and decided to up my referral fees to 25% of the sales generated.

My transactions are normally between £1000 and £2000 so this would normally mean payments of £250 to £500.

Is this too much? What is the best way of promoting this scheme?

 

[marketingquotes]

Hi There,

What kind of sales leads are you looking for?

Regards,

Marketing Quotes Support

 

[S-Marketing]

Anyone had experience of paying referral leads for sales leads?

I carried out a couple of experiments which both fell flat on their face (One was to give away £50 for each successful sales lead and one was to give away 10% of the value of the orders)

So I have been back to the drawing board and looked at the cost of my successful sales leads that I generate through other avenues and decided to up my referral fees to 25% of the sales generated.

My transactions are normally between £1000 and £2000 so this would normally mean payments of £250 to £500.

Is this too much? What is the best way of promoting this scheme?

I rarely recommend these types of techniques. Any percentage or commission based marketing methods are poor as they continually take profit from you. Much better to use techniques with an initial cost but no ongoing loss of revenue.

If your idea was a success you could find you were giving away a quarter of your T/O for absolutely nothing.

These techniques aren't so bad if factored into a scalable business, but with a business such as yours, where income is limited to how much work you can do, you could find yourself working for a couple of hours every day before you even see any money.

 

[I Love Spreadsheets]

Sorry, I wasnt sure if I should include that or not as I didnt want it to seem like an advert.

I'm looking for sales leads in to companies that need Excel Spreadsheet or Access Database applications building or fixing. I also provide office automation solutions where I save clients time by getting one program to speak to another.

I would look after the technical side of things and can provide services on a white label basis so the referrer doesn't need any technical knowledge.

The idea is once the work was done for the client and the client had paid in full, I would then pay the referrer their 25%

 

[I Love Spreadsheets]

I rarely recommend these types of techniques. Any percentage or commission based marketing methods are poor as they continually take profit from you. Much better to use techniques with an initial cost but no ongoing loss of revenue.

If your idea was a success you could find you were giving away a quarter of your T/O for absolutely nothing.

These techniques aren't so bad if factored into a scalable business, but with a business such as yours, where income is limited to how much work you can do, you could find yourself working for a couple of hours every day before you even see any money.

I hear you but I think I have taken that in to account. In the busy part of the year I spend 10-15% of T/O generating sales. In the dead period that we are coming in to I can spend 35%-40% or T/O generating sales.

So the hope is that I wouldnt be losing anything as the extra business it generates shouldnt cost me anymore to generate than my other sales generation methods.

My thinking is I'm moving a cost from one pile to another whilst paying for proven results rather than speculating on results

Hope that makes sense. This referral idea is new to me hence all the questions

 

[S-Marketing]

I hear you but I think I have taken that in to account. In the busy part of the year I spend 10-15% of T/O generating sales. In the dead period that we are coming in to I can spend 35%-40% or T/O generating sales.

So the hope is that I wouldnt be losing anything as the extra business it generates shouldnt cost me anymore to generate than my other sales generation methods.

My thinking is I'm moving a cost from one pile to another whilst paying for proven results rather than speculating on results

Hope that makes sense. This referral idea is new to me hence all the questions

Yes, I see your point. In a dead period anything you can do to get some money coming in is a good idea.

From my point of view it is better to plan ahead and ensure that you don't have quiet periods though. If you are the only person providing chargeable hours I cant see it can be difficult to find enough clients to fill your time.

Looking at what you do, I cant see that there is a medium sized business in the country with an accounts department who couldn't see an improvement in productivity by using your services. If you have quiet periods I would say that its due to a fairly significant flaw in your marketing.

What are the marketing and sales techniques you use that cost such a high percentage of your revenue?

 

[I Love Spreadsheets]

Stretchy, some background so you know why I'm in this position.

Last year we discovered that there was a natural downturn in people starting projects because of the summer breaks etc. We see a large peak before and after this period, so it does even out. You are right, almost all businesses would benefit but no one wants to commit over the summer while people are off etc.

My plan to counter this fell by the wayside when my daughter fell ill last year and I had to basically shelve the basis for 6 months (She is A1 ok now thank god). So this year I had to basically rebuild the company from scratch again and there is little reserve left in the tank as a result.

Our core marketing (10%-ish) is spent on PPC things like AdWords etc, in the dead period things get more social so I end up going to lots of networking events, stands at business events etc. I also invest a lot of time on social media and this time has been allocated in to that 35%-45%.

 

[S-Marketing]

First, best wishes to your daughter. Family illness can test the best business mind. My brother is being released from hospital tomorrow after 6 months of Chemo and other associated unpleasantness.

Your putting a cost on the time you spend on social media and other such marketing is to be applauded. If I had a pound for every time I read on here that social media marketing was 'free', I would probably be retired.

I am slightly confused. You seem to be doing all the right things, yet still struggle to pack your diary. I understand the concept of things going quiet at this time of year, but it shouldn't be difficult to overcome.

Personally I think its most likely the perception of what you are offering that's letting you down. I look at your website and think 'excel spreadsheets, why would I pay someone to do that? I can do that myself.' You need to find a way of communicating to me the benefits of what you do, and also the fact that your knowledge and abilities of Excel are 100 (if not 1000) times mine.

I'm pulling this thread further and further away from the point now, apologies.

If you were my client i'd be going right back to basics and setting up your entire marketing mix from scratch, from pricing, product and target market selection, right through to your promotional activities. You have a very useful and rare skillset. Don't sell it short by giving away 25 % of your revenue just to get the work.

 

[Homer J Simpson]

What about asking those that you've worked for if they know of anyone else who could benefit form your service ?

Could they either give you their details of give them yours ? If so, maybe offer something to your existing/past client who refers someone who then uses you ?

 

[Homer J Simpson]

Not sure how you drum up business, but maybe offer a free consulatation to business and if they have simple(ish) things that could be automated with a macro, do it for them for free, but make your spreadhseet expire after a one month 'free trial' after which they will realise just how much they needed it or how much they could save from the automation of that and additional tasks.

I've seen a report that used to take two days to produce and email out to about 100 people, get done in about 4 hours after macro automation, including automated emailing (which was very clever).

 

[I Love Spreadsheets]

Stretchy - Sorting out the marketing was one of those things that was on the list to do when the reserves started to run on low (great minds think alike). It is something that I will be coming back to when the funds are in place.

Currently everything to do with the company (website, webdesign,copy etc) is all created by myself with no outside help. That will be changing this year

Homer - We send out regular newsletters to all our clients asking them to do just that and one or two of them have done that, however spreadsheets doesnt seem to be a natural thing to bring up in to conversation. I know they believe in my service as a have ton of glowing testimonials that customers allow me to use in my advertising.

I'm hoping the 25% incentive might encourage them to shoehorn the subject of spreadsheets in to their conversations.

On the time saving front that is exactly what we excel at (excuse the pun). Pepsi in Geneva had two graduates producing the same report over and over again each month. Lots of gathering of data and cutting and pasting etc. I reduced that to just 1 hour a month and those two graduates are back doing what they should have been doing - learning to run departments etc.

 

[Homer J Simpson]

But what about a free trial service, once they've seen the time/cost saving they should take up the offer.

It might be worth you trying to link this in with a franchise. I can't remember what the name of the company was but they basically offer a kind of 'no win no fee' service where they review the business and give them cost cutting advice/tools. I guess finding better suppliers, negotiating on their behald etc, but it might be something that they are not able to do which they could then refer on to you.

If the actual franchise is not interested in it, the people that have bought into & run their 'area' may be interested in putting leads your way.

They've be the perfect people to do this in my eyes as they're in the business cost cutting field anyway and no doubt speak to plenty of business owners. They might even just refer you and get 25% instead of letting a business they can't otherwise help save anything.

 

[S-Marketing]

Best of luck with it.The cost of getting the marketing sorted for a business such as yours is low, so if I were you i'd be prioritising it asap.

Equally if you decide that the figures stack up if you give away a percentage of revenue give me a shout. I'd be more than happy to generate the work using strategic marketing for a percentage of the additional revenue created. With the right marketing your services will sell themselves.

 

[S-Marketing]

Good advice there from Homer. Set up some good mutually beneficial strategic alliances with the right businesses, and you'll have work coming out of your ears.

You should also be thinking about adding some opportunities for scale to your business, which could be achieved in much the same way.

 

[John G.]

Anyone had experience of paying referral leads for sales leads?

I carried out a couple of experiments which both fell flat on their face (One was to give away £50 for each successful sales lead and one was to give away 10% of the value of the orders)

So I have been back to the drawing board and looked at the cost of my successful sales leads that I generate through other avenues and decided to up my referral fees to 25% of the sales generated.

My transactions are normally between £1000 and £2000 so this would normally mean payments of £250 to £500.

Is this too much? What is the best way of promoting this scheme?

You are doing fine with Market Testing the true value of a referral. It may be that you could also examine the potential inherrent in the Social Marketing sphere. Once setup and churning, leads cost zilch.

 

[I Love Spreadsheets]

Homer - we did have a free spreadsheet audit service for a while, where we would check spreadsheets for errors and suggest ways of speeding things up whilst making them more error proof etc. Not a lot of takers for that either. The "no win no fee" has put a seed of an idea in my head though, so thank you for that. I will have to put my thinking cap on tonight to work out how I will work it.

Stretchy - I shall do some research in to companies to go in to alliance with, sounds like that could have legs.

I would be very interested in hearing what services you could offer as well - could you drop me a line at [email protected] with what you can do etc and what sort of percentage you would want

 

[S-Marketing]

Homer - we did have a free spreadsheet audit service for a while, where we would check spreadsheets for errors and suggest ways of speeding things up whilst making them more error proof etc. Not a lot of takers for that either. The "no win no fee" has put a seed of an idea in my head though, so thank you for that. I will have to put my thinking cap on tonight to work out how I will work it.

Stretchy - I shall do some research in to companies to go in to alliance with, sounds like that could have legs.

I would be very interested in hearing what services you could offer as well - could you drop me a line at with what you can do etc and what sort of percentage you would want

Will do. I'd get your e-mail address off your post before you get spammed though if I were you.

 

[Homer J Simpson]

Another thought to help build up a 'following' is you could do some sort of podcast/youtube channel for 'how to's', things like match, vlookup etc to help people with some of the basics, it might help send business your way. if not it shoudn't cost you anything but a little time, even hosting would be free if you put it on youtube instead of your own site.

 

[Scott-Copywriter]

Put it this way: it's better to take some profit out of some sales, instead of no profit out of no sales.

You might have to give away a big chunk of income per sale, but you're likely to draw in many more sales which you otherwise wouldn't have had. That's why you see some businesses offering 50%+ commission. It's a big piece of the income, but with thousands of people marketing their products, there's a substantial profit to be made.

So, if you want to use affiliate marketing, don't be afraid to make it a lucrative offer. Getting just one or two good marketers to use your affiliate scheme for an additional source of income could result in many thousands of pounds for you in extra profit.

 

[Banksbroo]

I'd agree, taking a 25% cut out of profitable work is still better than speculative marketing which may not provide any live work. As long as your margins can remain profitable with offering 25% commission, I'd be happy in your position.
White labeling is a great incentive for other providers to use your services, but you'll also need to build some brand awareness for yourself. Some formal or informal partnering perhaps, where the client is aware it is you providing the service, but happy for it to be managed through their main IT service provider?
My specialism is Sage systems, and I have clients UK wide, I'll PM you more details.