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Referral Commission

 
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Old 01-27-2013, 11:08 PM   #1
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Referral Commission


Hi I recently started my own excavation company, I've been on the business for 10 years, but I don't have too much sales experience, I've heard of people give referral commission. Do any of you know if it would be effective to offer commission to realtors or contractors to get jobs? and if so how much of a percentage would you recommend I offer?

Appreciate your input, thank you very much
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Old 01-27-2013, 11:31 PM   #2
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Re: Referral Commission


Everybody has different thoughts on this, I think the conversation with the people is more important than the commission. They are going to refer you or not, the commission doesn't seem to matter, to me.
Point is, they will refer you if they are comfortable that you won't make them look bad. Think in terms of how they take a risk to their reputation if they refer you and you don't call the customer back, or are rude, etc.
What you really want to convey is how you will make them look good, not bad. If you convince them of that, they will never need a dime from you. If you embarrass them, they won't recommend you again, even if you are sending cash their way.

So, how are you going to show your contacts you will make them look good?

Just my opinion.

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Old 01-28-2013, 04:28 AM   #3
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Re: Referral Commission


Well-worn subject, but every time a sub offers me a kick-back to get a job, I wonder how much he's overbidding to have that slack. And there are surely exceptions, but the guys who offer me a kick-back aren't generally the ones who will help my reputation.
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Old 01-28-2013, 06:09 AM   #4
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Re: Referral Commission


Thow em out the door if they want a commission, you'd be better to hire a salesman
Everytime you talk to the referral guy he'll have his hand out, at some point he's going to think you have a job because of him and the relationship will melt down.
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Old 01-28-2013, 08:12 PM   #5
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Re: Referral Commission


I don't wholly agree with the above responses. I understand the points being made, but it's not always better to hire a salesmen. As for the referral it's up to you. Commissions for a roof or excavating a lot might be entirely different.

I do agree that the reputation part is very important. It doesn't matter how much you would pay me if you would hurt my reputation.
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Old 01-28-2013, 08:48 PM   #6
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Re: Referral Commission


agreed
there's me , the electrician , plumber, tile guy, a/c guy , drywall guy ,the painter etc.
we`ve all worked together for years
we refer each other , not for money , but to help each other out , and know we`re giving our clients a good referral.
that's the way it should be.

you get enough people who know you , and respect you , you get all the referrals you need.
but you have to give back
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Old 01-28-2013, 10:08 PM   #7
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Re: Referral Commission


Quote:
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... but you have to give back
True dat
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Old 01-29-2013, 12:15 AM   #8
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Re: Referral Commission


Absolutely reputation is priceless, nothing beats doing the job right and having good relationships with your peers. To clarify, since Realtors work based on commission it might be a good idea to offer commission for referral. For instance where excavation is needed in newly developed areas, where a realtor is the contact to the new land owners. But by reading your responses most of you advise against that, what would be a good way of approaching realtors and contractors? What would you recommend for reaching new land owners?

Thanks again, all the best
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Old 01-29-2013, 12:37 AM   #9
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Re: Referral Commission


Quote:
Originally Posted by EWorth
Absolutely reputation is priceless, nothing beats doing the job right and having good relationships with your peers. To clarify, since Realtors work based on commission it might be a good idea to offer commission for referral. For instance where excavation is needed in newly developed areas, where a realtor is the contact to the new land owners. But by reading your responses most of you advise against that, what would be a good way of approaching realtors and contractors? What would you recommend for reaching new land owners?

Thanks again, all the best
I think you are exactly correct. Like I said, commissions are not a bad thing. People work years and years to develop their contacts and relationships. That's worth something and it's not wrong to compensate based on that. Realtors for instance would be a good example.
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Old 01-29-2013, 01:03 AM   #10
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Re: Referral Commission


Working stiffs like me have never asked for a commision.

Archys (That I dont have a relationship with) , decorators, realtors expect one. I wont say I havent or wouldnt pay one.

My sparky turned me on to almost 100 k in remodels last year. I gave him a Ruths Chris gift card, a night at the Driskell hotel, and $100 credit toward the hotel bar and kitchen. Cost me $600. He tried not to except, but not hard.

He appreciated it as much as I appreciate the work. He had a great time with his wife , and thats what it is all about.

That was by far my most extravagant gift for a referral to a sub. But a nice GC to a restaurant or a good bottle says a lot. He probably wouldnt of took cash. In fact I know he wouldnt.
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Old 01-29-2013, 01:20 AM   #11
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Re: Referral Commission


Quote:
Originally Posted by Jaws View Post
Working stiffs like me have never asked for a commision.

Archys (That I dont have a relationship with) , decorators, realtors expect one. I wont say I havent or wouldnt pay one.

My sparky turned me on to almost 100 k in remodels last year. I gave him a Ruths Chris gift card, a night at the Driskell hotel, and $100 credit toward the hotel bar and kitchen. Cost me $600. He tried not to except, but not hard.

He appreciated it as much as I appreciate the work. He had a great time with his wife , and thats what it is all about.

That was by far my most extravagant gift for a referral to a sub. But a nice GC to a restaurant or a good bottle says a lot. He probably wouldnt of took cash. In fact I know he wouldnt.
That's what I do. I give gift cards depending on the referral size. No cash and no promises of future gratuity.
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Old 01-31-2013, 05:43 PM   #12
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Re: Referral Commission


We offer a $100 gift card with a signed contract. I was just talking about this to a new sales man. I said lets take it out of you commission and I said lets say you commission is 10% and you offer this refferal 5% and the job is $50,000. You would make $2500 and he would get $2500 for giving you a name. Seems like way too much money for not doing anything.
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Old 01-31-2013, 07:07 PM   #13
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Re: Referral Commission


They should be happy that they have a happy customer and not looking at the "What's in it for me".
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Old 02-05-2013, 12:06 AM   #14
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Re: Referral Commission


I work with a contractor matching service that charges referral commissions for projects won rather than selling leads:
http://www.contractorconnect.net/

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