I was talking to a friend about an article I read recently, debating whether or not it’s ethical to pay people who refer clients and customers to you.
Here’s the article, by Corinna Gordon-Barnes: http://youinspireme.co.uk/2011/icky-to-pay-referrals/
The verdict was left to Corinna’s subscribers, many of whom were of the opinion that it’s unwise to pay people for referrals, because it encourages them to refer you even if you’re not the best person for the job – just because they’re getting paid.
My views on the matter are slightly different.
On the one hand, I agree that a whole Affiliate Marketing industry has exploded as a result of people promoting products and services that they haven’t used themselves, simply for the purpose of earning money. And to me, that’s unethical.
However, as an Affiliate Marketer myself, I believe that affiliate marketing can be done ethically. Personally, I only promote people I know personally and/or whose products and services I have used myself in the past or would like to use in the future.
I would recommend these people even if I didn’t get paid for the referral – and sometimes do anyway.
As a receiver of referrals, I think it’s simply a nice thing to do, to show your appreciation when someone refers a client or customer to you. Especially if that person (or people) is one of their own tribe – one of their friends, a family member, or a client.
They are putting their own reputation on the line, by putting their trust in you to deliver the goods. Because they know you can.
If you feel uncomfortable giving referral partners a cash fee, how about sending them a gift voucher for the same amount – usually around 10% of the sale.
A friend of mine, who referred her friend to me for career coaching, was delighted when I sent her a gift voucher as a referral gift. “I’m going to spend it on something special for myself”, she said.
How great is that? I enjoyed giving her the gift, and she enjoyed receiving it.
You see, the fact is: if you refer someone to me, it means that I don’t have to spend money marketing myself to attract that client. You’ve saved me some money. So why wouldn’t I want to thank you for that?
What goes around comes around. As long as you’re being authentic – as long as you choose your referral partners carefully, so you know they have the best intentions in referring you – then I believe it’s perfectly acceptable for people to pay for referrals.
Do you agree or disagree? Please feel free to leave comments below!