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Another Business Asks for a Referral Fee

Discussion in 'Business Operations' started by Tn Lawn Man, Mar 22, 2005.

  1. Tn Lawn Man

    Tn Lawn Man LawnSite Senior Member
    Posts: 479

    I refer some of my customers to other businesses all the time. It is obviously for things that I don't do like fences or irrigation.

    Well I had another business (that I haven't referred anyone to by the way, but is trustworthy in their information) run into me and say they had someone looking for lawn care. I said great, and then they asked for a referral fee if this customer signs up for regular service with me.

    Assuming that their referral customer signs up and stays with me for at least a few months, what is/should be a reasonable finder's fee to pay this business for say a $120 a month customer?

    Thanks for the help
  2. Mueller Landscape Inc

    Mueller Landscape Inc LawnSite Senior Member
    Posts: 489

    It depends on what your customer acquisition cost is. Or maybe what your referral fee is for existing customers who refer your company to their friends and neighbors. Right now I pay $90.75 per new customer. That is advertising cost averaged. I give $20 off of service visits to any current customer who refers business that begins service. If this company is going to refer lots of customers that are in your service area, I would offer $30 referral fee if they sign up.
  3. JustMowIt

    JustMowIt LawnSite Senior Member
    Posts: 367

    This is an ongoing thing for LCO's. We get a lot of calls for mowing outside our area, or for acreage lots that we do not do & in the past we gave them away! This year we started our affiliate program whereby we found guys in designated areas willing to live with the way we sign up customers ie credit card, pricing etc.. When a customer calls, we look up the size of their lot, sign them up, send the customer a welcome letter & schedule in the LCO's name, with copies to the LCO and charge the LCO credit card for $75. We are then out of the loop. This is excellent for us, & our affiliates love it, because it is a customer, not a name we dropped.
  4. Soupy

    Soupy LawnSite Gold Member
    Posts: 3,125

    Start referring that guy some work and charge him for it. He will soon regret wanting to charge you.

    I can't believe how greedy people are.

    Now if you are referring lawn care like Justmowit then it is a matter of recouping your advertising dollars. But if this guy didn't advertise your service and all he is doing is dropping a name then tell him your not hiring sales staff at this time.
  5. 65hoss

    65hoss LawnSite Fanatic
    Posts: 6,360

    I don't and won't do it. I don't charge a referral fee and I wouldn't pay one either.

    Had a few homeowners in the past won't deals or payment if they could get me other neighbors for aerating work. They were greedy sob's that were asking. I didn't do it and I didn't even do their work either.
  6. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    A referral fee? F*** that.
  7. Lux Lawn

    Lux Lawn LawnSite Silver Member
    Posts: 2,267

    I would give him a referral for a referral thats it... pass out each others business cards, i'm sure you both come in contact with a lot of people.
  8. Team Gopher

    Team Gopher LawnSite Platinum Member
    from -
    Posts: 4,041

    Hi Tn Lawn Man,

    This is a great post. It does go to show you how important good will is in business. The more you refer out to others and don't charge them a referal fee, the more they will potentially refer jobs to you. It is a great concept and builds strong business bonds.
  9. Mueller Landscape Inc

    Mueller Landscape Inc LawnSite Senior Member
    Posts: 489

    I would gladly give a referral fee for a ideal customer in my area. And that would probably guarantee that the company doing the referring would continue to refer their potential customers to us. It's like having an additional sales staff.... it's good business. Gaining new customers cost money. If you know how much money, how could you pass up a new customer for less than what your own acquisition cost is for gaining a new customer?
  10. Kelly's Landscaping

    Kelly's Landscaping LawnSite Platinum Member
    Posts: 4,353

    My ex boss wants to pay me a fee for planting work I send his way so I think I may help him out. For me itÂ’s easy to just say no sorry not interested. And he knows I do this and it drives him nuts to think I just dump the lead but with out an incentive I have no reason to get involved hence the reason he has now offered a %.

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