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Referral Business Fee?

Discussion in 'Lawn Mowing' started by MOW ED, Feb 4, 2000.

  1. MOW ED

    MOW ED LawnSite Fanatic
    Posts: 5,028

    How would you determine a price for giving another Lawn Care Operator some referral business.<br>My business is full and I do not want anymore but have requests, how should I price this referral business if I steer the potential customer to one of my business associates (competitor doesn't seem right since I only compete if I want all the business). How do you do it?
  2. Lazer

    Lazer LawnSite Bronze Member
    Posts: 1,446

    Bid it same as existing business. Sub out the mowing to a quality start-up guy and do the fertilizer & chemical applications myself.
  3. Nilsson Associates

    Nilsson Associates LawnSite Member
    Posts: 243

    Lazer answer is a good one. But if you must sell the leads, a few thoughts:<br>a. Like Lazer said, keep the lawn care app accounts, they're valuable, worth about 100% of the yearly annual gross.<br>b. Sell the mowing part only .. mowing is about 50% of the total gross sales annually<br>from an account.<br>c. Bid all the work on the account, later sell the mowing for a flat fee, like $100 per account or higher if you can get it.<br>d. If you want to maintain &quot;control&quot; like Lazer said, sub out the mowing, you do the billings to customer, pay sub yourself to help keep the sub &quot;away&quot; from your customer.<p>Nilsson Associates, Consultants
  4. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,839

    I can see the point for the above responses. But there are some instances where that's not a good idea. <p>In my case, we have tons of little suburbs around Portland. I only do work in 3 of them. They are all very close. Connected like once city, in reality. We NEVER do work outside of our area. But since the phone books, etc. cover other cities as well, we do get calls from time to time for work in cities we don't cover. In that case, I sell those leads to friends of mine who DO service those cities. <p>Typically, if a lead turns into an account, my friend's give me one month's pay for it. Works well for both of us. He gets a year-round account that he'll have for years and I get a nice referral bonus for it. I do the same for others if they give me accounts. <p>Another case where this is good is referring jobs that you don't do. We don't get too far into landscape design and installation. Sure, I'll plant some flowers and small trees and even lay new sod once in a while, but for the most part, when someone calls asking for a bid on a big landscape design or installation job, I refer it to my buddy. That's all he does. He's done it since 1979 and he's killer at it. He pays me 5% for every job I send his way. Plus, since he doesn't do maintenance at all, he sends me all the maintenance when he's done with the installation. Works out very well for both of us. <p>The key to either of these methods is when you get a call like this, take down the information anyway. Then tell them you will have the right person get back to them shortly. Otherwise, I find that when I tell people &quot;Oh, you need to call this guy at xxx-xxxx&quot; They only actually do it like 30% of the time. When I take down the info, I pass it on 100% of the time. <p>----------<br>Jim Lewis - Lewis Landscape Services<br>http://www.lewislandscape.com
  5. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,839

    Oh, I guess another reason one may have to sell off a referral, other than the reasons listed above, is if you want to get rid of a certain type of customer. For instance, a year or so ago we went to taking only year-round accounts. I still had 20 or so clients who just wanted seasonal work. I managed to convince some of them to convert over to our year-round service. But those that didn't I sold to another landscaper who was just starting his business. He was happy to service them, even if they were only seasonal. <p>----------<br>Jim Lewis - Lewis Landscape Services<br>http://www.lewislandscape.com
  6. Ron

    Ron Guest
    Posts: 0

    Jim, can you give us an idea of what you charged for those seasonal customers the newcomer bought from you?
  7. Lee Homan

    Lee Homan LawnSite Member
    Posts: 163

    Hey Jim,<p>Do you have any advise on referring other people to do the work if you don't know any in the business? Thats my problem, I want to get away from landscaping and landscape maintenance and concentrate on mowing and treatment applications but I don't know anybody personally to recommend. Would 5% be appropriate on repeat business like landscape maintenance or just for the first time? I even thought maybe 10% but I don't know how an established landscape company would look at that, might think they don't need my business.<br>Lee<p>
  8. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,839

    Ron, I charged about $50 per customer I think. Which was about 1/2 what they paid per month. <p>Lee, you need to make some friendships in the business. Call around. Introduce yourself and tell them what you are trying to do. I wouldn't call guys with big yellow pages ads. They got plenty of customers and it's often hard to get a hold of the guy in charge anyway. Call the guys with the small ads. They want business but can't afford a lot for advertising. Call the guys who are advertising in your local Classifieds for this type of work. Stop by when you see a landscaping crew working and see if you can catch the owner there. Again, focus on smaller companies. They are ambitious but lack much immediate capital. And with a deal like this, they can pay you with the money they get from the customer.<p>Find the best deal you can get. I have one friend who will only pay me $20 for a referral that turns into a regular account. Another pays me a full month's pay (over $100). Guess who I send business to. Make them bid against themselves too. And then take whoever is most honest and whoever will pay the most for them. <p>As for percentages, I am not sure what you are referring to exactly. But like I said above, the landscape contractor friend of mine pays me 5% for any landscape installation jobs I send his way and the landscape maintenance guys give me anywhere form $20 to $120. Just depends on what you can get. Get as much as you can. <p>----------<br>Jim Lewis - Lewis Landscape Services<br>http://www.lewislandscape.com
  9. jeffclc

    jeffclc Guest
    Posts: 0

    I don't know if a name of a person interested in service is of any value. If someone were to call you on the phone and say&quot; I've got a list of 5 people that are looking for a lawn service, and I want to sell the list to you for $100&quot;, would you grab your checkbook?<p>Now, if those leads generate good accounts, then there is a value. I have some assoiates that I deal with on a recriprocating basis. I work in one town, and at times get calls from adjoining areas that I don't service. I know of others that service those areas. If I get a call from one of those areas, I put them in contact with my assoiate from that area. He in turn does the same for me. No money is exchanged between us. <p>I also do this with people that do some different types of work than I, eg. retaining walls, stump grinding, tree work. I scratch his back, he scratches mine.

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