What Do You Think Of Spotters Fees?
Spotters fees have been a traditional by-product of real estate agents. In fact, spotters fees can help you make additional cash by referring property owners to Realtors, or even calling in accidents. But how about spotters fees for freelance writers?
What gave me the idea was an event that happened to me yesterday. I received a phone call out of the blue from a magazine editor up north. She had been referred to me through a local young man who also happens to be one of my readers. Jylan Wynne, a 15 years young and very talented web designer was kind enough to refer my services to this lady, after she inquired with him for a local writer.
Jylan must have heard the bells tingle after I wrote a post on Going Offline – Breaking Into Magazines only a couple of weeks ago.
This led me to think that it would be nice to hand out some kind of spotter fee to people who refer us to new clients. Not only is this free marketing, but it could potentially be a huge pool to wade in and splash around.
The question though is, what do you think about posting a spotter fee (or referral fee) upfront on your site? I know that Lea Woodward and her hubby Jonathan do that on Project Woodward. At least they used to. I thought it was a groovy idea to garner some more referrals, but at the same time I feel a little self conscious about the implementation.
I have no problem to pay someone a 10% referral fee for bringing me new clients. I think it is in the interest of all and a win-win situation.
But at the same time, I’m not sure whether it is the right thing to do. Therefore I’m willing to listen to your feedback.
What do you think? Would you happily refer more clients to someone you trust as a professional, knowing you can make a little money on the side, or do you think this is preposterous and more of an ego boosting affair?
Just to let you know. I’m taking Jylan out for pizza dinner sometime next week or the week after, since his recommendation made it possible for me to be published in an offline magazine.
Thank you Jylan. You rock.
Monika
About the Author: I'm a passionate freelance writer and problogger. To further build my business I'm also in the process of building my own niche empire which pays me residual income.
Cath Lawson | Aug 27, 2008 | Reply
Hi Monika – I wanted to offer people cash for passing work to me when I had my fire and flood restoration business. But they wouldn’t let me do it, as they said it was unethical.
The fee was only intended for homeowners and I didn’t see any harm. But I can see how it could be dangerous to give money to businesses for referring you.
I think the one pitfall is if someone referred you to XYZ company to do some work for them and XYZ company knew you were offering upfront fees, they might be put off giving you work. It’s harder to take a recommendation seriously when folk know you’ve been paid for it I suppose. So maybe it’s not a good idea to put it on your website.
But, I don’t see the harm in letting people know you’ll give them a bit of cash if they pass work to you. I read about a car salesman who offered cash to all his customers if they got someone else to buy from him. Trouble is, your customers are businesses, so it would depend if they’d feel comfortable doing this.
It’s a tough one isn’t it? But it does go on all the time. We used to have to give some insurance companies a percentage of what they’d paid us back again. It was supposed to be for their staff bonuses or something, but I thought it seemed very shady.
TDMV | Aug 27, 2008 | Reply
Monika
Nothing wrong with promoting yourself, even if this would include a referral fee. However, and I tie in here with the previous comment by Cath, of course it would make you -or anyone else for that matter- feel uncomfortable. That’s probably because it feels like a bribe. However, there is a -thin- line between the two ways of doing business, we should all be clear that they are not the same!
To avoid sending out the ‘wrong message’, I would suggest setting up a seperate page where you can put all the business info, and explain how you do business. I think nobody would be offended, neither the one’s who do the referring for you (after all, they have to look for the info, which means they really want to help), nor the potential new clients you get.
Theo
Writer Dad | Aug 27, 2008 | Reply
The best relationships are those when each party feels as though it’s getting a good deal. You’re getting a good deal because you have a new client; the referrer is getting a good deal because they’ve helped out two parties and made a bit of money, and the client has a good deal because they have the awesomeness of Monika working for them. I don’t see anything on this site that suggests it’s charity. It seems to me that putting it on the site is just being upfront. Good luck with whatever you decide.
Lea Woodward | Aug 28, 2008 | Reply
LOL – we’ve rebranded our professional/commercial stuff to Kinetiva recently so Project Woodward is now only our personal brand (in case you’re confused why the site has totally changed and there are no real services/products offered on there!!).
Monika – my advice would be to do what feels comfortable to you in a way that feels comfortable. We primarily added it to our site as a place to send people to who were already sending us referrals just to clarify and put in writing what they’d be getting – not as an incentive for new people to send us referrals…which I think is the gist of what some of the other commenters were saying.
I can honestly say that I don’t think it encouraged anyone who wasn’t already referring to us to do so – and the referrals largely come because our clients have been happy with our services. The money is just an added bonus that none of them expect – and I don’t think encourages anyone to refer who wouldn’t otherwise do so.
Wendi Kelly-Life's Little Inspirations | Aug 28, 2008 | Reply
Realtors, at least in Illinois and I think Nation wide in the states can’t give a realtor referal fee to someone UNLESS they have a real Estate License.
However, it is ok to give them some type of token gift of appreciation to say thank you for the referal. It gets dicey. The very best business in the world is bult by referal and by not taking or giving cash bonuses you are ensuring that any referals you get are genuinely do to the service you provide. At the same time, I always wanted the chance to say thank you.
IT is an interesting situation.
Virtual Impax | Aug 28, 2008 | Reply
I agree with Lea. A referral fee wouldn’t encourage me to recommend you more highly than I already do.
For me, making referrals when a commission is involved is more like an affiliate sale. If you don’t handle it in that manner, it can get “messy”.
I used to pay HANDSOMELY for referrals. Then, one client watched as I did several projects for a colleague whom he had referred to me. He began asking for his referral fee for each and every project. I felt like when I won the 2nd job, that was on my merit, not his referral. However, since I hadn’t set clear boundaries up front, I ended up paying the same healthy “finder’s fee” on subsequent projects.
If I were ever going to engage in paying for referrals in the future, I’d make it clean and call it what it is – an affiliate sale. That way, affiliate commissions are paid when a sale is made through the affiliate link and the software can do the accounting part of it!
Monika | Aug 28, 2008 | Reply
@ Cath: It is a tough one as I can see both sides of the coin. To be honest, I’m not sure I would feel comfortable putting this on my site. Previous clients have also turned down a referral fee after I offered it to them spontaneously.
Your story about your past flood restoration business sounds interesting too. I think what is hard is that if I heard this being done by a business, like in your case a car salesman, my alarm bells would go up because I would deem it unethical. On the other side, as a business owner I would love to give something back in return for a referral.
It really is a catch 22, don’t you think. I realize it happens all the time. But for some reason I’m not comfortable promoting myself like this because I don’t want people to feel uneasy about recommending my services.
They should do it from the heart.
Monika | Aug 28, 2008 | Reply
@ TDMV: Your recommendations make a lot of sense Theo. You are right, if someone went looking for this info purposely they wouldn’t feel bad about the fee I guess.
Your idea is definitely one that could work for service providers and business people alike, although at this stage I don’t think I would do it myself.
Despite the logical implementation I’d still feel self conscious about doing it if that makes sense. Perhaps it will be nicer for those who do end up referring me to be given a surprise cash gift instead?
I’m going to contemplate your suggestions though, thank you.
Monika | Aug 28, 2008 | Reply
@ WD: “the awesomeness of Monika working for them”.
How lovely.
Thank you, that was very sweet. I do see what you mean though. I could well be a win-win situation but to be honest, Cath’s comment made me think even more about implementing this.
Since she has already tried something similar and it didn’t work out particularly well I tend to think that most people would probably not feel comfortable with this being carried out.
I’d hate to think that I was looked upon as a person who bribes others, because I would never do this.
For now I won’t change anything because I wouldn’t feel comfortable with that decision. Maybe somebody will come up with a system that will take the “sting” out of this particular idea.
Monika | Aug 28, 2008 | Reply
@ Lea: Thank you for clarifying this. I admit I was a little confused by your re-brand. I understand what you did and think that in that case it is a great way to clarify the situation like you said.
I did wonder how this would have worked out for you. But you made it clear that it was merely a bonus for the people already pleased with your services.
Your comment actually makes me feel a lot better. I was worried whether I left business on the table by not doing it but at the same time didn’t feel comfortable. I also take the gist of most comments here is more so to let nature take its course, without trying to interfere and I actually feel very good about this.
Thank you for helping me to understand this better. Hope you are enjoying the LIP life.
I’m with you in my thoughts, traveling the world.
Monika | Aug 28, 2008 | Reply
@ Wendi: I’m like you. I love to say thank you and give something in return. On the other hand, I realize that we all give and take every day. So in some ways, I’m already paying it forward by helping others and others then help me.
I actually like that thought very much. More so than making the whole deal thing stilted and unnatural.
The one thing I’ve learned from this great discussion is that we all seem to want things to stay natural. This is really awesome to see.
Thank you Wendi for also explaining the situation about referral fees by Realtors.
I think here in Australia the law is somewhat more relaxed as some local real estate agents used to advocate this to the public. I’m not sure whether they still do because I have lost touch with them (they used to be clients where I worked).
Monika | Aug 28, 2008 | Reply
@ Kathy: Oh, I could hug you right now.
You probably know why too.
Your story about your experience tells it all. It actually makes the whole thing crystal clear to me. I understand that it would have been very frustrating to see that happen with your ex-referral client.
Naturally, most of us want to give in return, but like you said, if people get greedy and want a hand when we offer them a finger it changes something that was meant in good steed to something ugly.
I think you did the right thing.
@ All: Thank you guys, you really helped me to see the picture more sharply. As I mentioned already, I won’t be doing this anytime soon.
Instead, I will continue to pay forward and trust the universe to send some goodness my way too.
Leanne Magraith | Aug 28, 2008 | Reply
Call me old fashioned (and perhaps naive in terms of business) but I prefer the
“you scratch my back and I’ll scratch yours”
approach rather than money.
I also like the old fashioned matey
“I owe you one” (favour that is)
And the back scratching/favour doesn’t have to be returned immediately either. It can be banked and used later on at the discretion of both parties.
I guess this only works well when there is genuine goodwill by both parties.
Alex Fayle | Someday Syndrome | Aug 28, 2008 | Reply
In the Professional Organizing industry referral fees are common. Because organizing is face-to-face for the most part we pass business back and forth a lot. But if someone has spent years building a reputation, they want to be compensated for that, which makes sense. When passing business along we are always very clear about what our referral fee policy is and then the other organizer can either accept it (and the referral) or not. Sometimes it’s a one-time fee, other times it’s for the length of the client. Depends on the policy of the referring organizer.
For the workshop I’m about to launch, I’m planning on offering a healthy affiliate fee for anyone who’s willing to promote and sell the product for me, but that’s a different sort of arrangement.
Cheers,
Alex
TDMV | Aug 28, 2008 | Reply
Looks like all noses are pointing in the same way, on this one. Just a final note. Whatever the deal is, be upfront. Whether you pay -for the first referral- or ‘owe a favour’ isn’t really important. Just be clear straight from the start, and nobody gets hurt. Same thing goes the other way too. If someone is doing you a fabour, ask what they expect in return. I’ve seen too many ‘favours’ turn ugly: I always ask if there is hidden bill somewhere
Wendi Kelly-Life's Little Inspirations | Aug 28, 2008 | Reply
I agree with the commenters who have said the the number one thing is to handle the issue with upfront integrity. Wether you are calling it a referal fee, an affliate sale, or a back scratch, just let people know what the rules and expectations are.
I know that when I have been to a few sites where they have said…This is an affiliate link….
If I like the place I am at I am more then happy to use that link because I WANT to support that person. It IS like a referal from me and I want to refer them even though I am not getting any discount from it. I hope that made sense..this is an early one cup of coffee comment…
I am less comfortable with “back scratch” relationships because It’s hard to know what the expectaions are. To me, my good will has no limits and I don’t attach strings to my favors, friendships or referals.
Davina | Aug 29, 2008 | Reply
Hi Monika. I prefer one good turn deserves another. It would feel odd to offer spotters fees on my site. I would send a thank you and keep my ears and eyes open for any way I could send business back to that person.
Jylan Wynne | Aug 29, 2008 | Reply
Hey Monika, great article and thanks for the mention, I was glad to be able to help you!
Hope you enjoy the writing jobs.
Cath Lawson | Aug 29, 2008 | Reply
Hi Monika – I agree, Theo’s recommendation is a good one. You could pull it off without blatantly advertising it to potential customers.
Then again – offering a gift at the end might work too. I’ve done that. Folk don’t feel as uncomfortable accepting a small gift as they do accepting cash. And it doesn’t feel like a bribe if they’re getting it afterwards.
Monika | Aug 29, 2008 | Reply
@ Leanne: I see what you mean. I guess I kind of do that automatically. It’s not that this is spoken but rather returned with love out of appreciation. Does this make sense?
I wouldn’t feel comfortable to live by this saying, as in upfront arrangements. But when they are made naturally, without expectations I am fully for it. Did you mean it this way Leanne?
Monika | Aug 29, 2008 | Reply
@ Alex: Those are interesting concepts. I guess when doing business offline, face to face situations like these are more defined. Since we can ask and answer on the spot, the lines will be drawn more clearly, opposed to posting something online.
Thanks for mentioning this Alex. It is good to see that the lines of referral can be straight up like this.
Monika | Aug 29, 2008 | Reply
@ TDMV: Yes Theo, I think you are right. I also see where you are coming from with the ugly part. Perhaps it is because once we have this understanding we “expect” things, which of course makes them unnatural. This can only cause problems.
I like being clear for sure. Being upfront is half the battle I think. I wish I would understand what you are blogging about. LOL. I so wanted to come and say hi on your blog but not knowing what you write makes it a little harder. Sorry.
Monika | Aug 29, 2008 | Reply
@ Wendi: I hear you. And your point about letting people know upfront about affiliate links is a great one. I have to admit that I have not done this all the time, although I hardly ever use these here anyway.
But I see where you are coming from with this and will from now on do the same. Thank you for that.
As for back scratching, I’m a bit like you in that regard. I don’t like this if it is staged. However, if it is natural I have no problems, like i mentioned in Leanne’s comment above.
Monika | Aug 29, 2008 | Reply
@ Davina: Good idea. I think that would work well with me too. Interestingly enough, we seem to think of the people who are kind to us first anyway. Therefore recommending them to others isn’t hard at all.
Monika | Aug 29, 2008 | Reply
@ Jylan: Hey, I have to thank you my friend. I look forward to our pizza.
BTW, got the article sent today. Woohooo.
Will catch up with you tomorrow, Sat.
TDMV | Aug 30, 2008 | Reply
lol Monika
Off topic: My blog (business) is all about death & dying. I run the Dutch Natural Death Center: not at all related to your subject
But, it’s the thought that counts, so thank you 
Pretty soon I’ll start in English as well; will let you know so you can ‘come over’ and have your say
Leanne Magraith | Aug 30, 2008 | Reply
@Monika: Yes I did mean when the arrangement was a natural one created without expectations.
I enjoy helping people out and get a lot of satisfaction from that. If they want to return the favour thats nice and if they don’t thats fine too because I am just happy to have helped them out.
I am bit of an idealist I suppose. I am not sure how long I would last in a cut throat business – not very long I suspect!
Rita | Aug 30, 2008 | Reply
Monika,
An interesting post indeed. I am absolutely AGAINST spotter’s fees. I feel that people should network with those both inside and outside of their fields.
Additionally, the problem I have seen with “spotter’s fees” is that people I know who offer them get besieged by other’s mediocrity. This results in a tremendous amount of work on the part of the person offering them, as they have to parse through things that are not necessarily to the benefit of the offerer.
In my jewelry business, I do NOT offer any type of spotter or finder fee. But it is clearly stated on my card that if a person holds an “event” in their home, where they invite a minimum amount of friends, I will give them a percentage of that evening’s sales. BUT, I am constantly getting calls from strangers who are friends with people who have bought my jewelry, and would like to “take a look.” Whether they buy or not, I hand-write a thank you note to the “referrer.” Most people are shocked to receive them.
Just one opinion…
Rita
Melissa Donovan | Aug 30, 2008 | Reply
This is a really, really good question. I’ve actually given this some thought recently. I think that it depends on your business model. Outright advertisements that you pay referral fees might come across as desperate or tacky (harsh words, I know). Clients might feel like they were only referred to a service provider because of the earning potential rather than quality of service.
I think that in this case, what you got was some good old fashioned word of mouth marketing. When I find a service or product that I love, I always tell people about it, and not because I expect the company to pay me for my free advertising. It’s just part of our culture, helping each other.
For example, I recently wrote a blog post about one of my favorite poets. Imagine my surprise when two days later, I got her book in the mail. She sent it to me as a thank you. It REALLY made my day and I thought it was a perfect show of gratitude, but I never expected it, not at all (I was totally surprised).
Another good way to thank someone for a referral is to return the favor and send some business their way next time you have the chance. A lot of my clients have asked for web development and programming referrals, for example.
And I for one, would not complain about getting some yummy pizza (that sounds awfully good right now). Yum.
This is getting long, but I have to throw this out there. I’ve done some outsourced work (freelance writer has tons of jobs and distributes them to other writers). This model has pros and cons, but what I like about it is they get the gigs, deal with invoicing and clients and I get to do my thing — write.
So I’ve been thinking about this: for someone to work as an agent for freelance writers. Not a company that employs writers on the clients’ behalf, but someone who works on the writers’ behalf, getting work and dealing with clients. Like an account manager. Anyway, it’s just an idea.
Melissa Donovan | Aug 30, 2008 | Reply
I think that’s the longest comment I’ve ever written. Hehehe.
Rebecca Leigh | Sep 1, 2008 | Reply
Very practical and useful post and discussion – as always!
Can someone clarify how referral fees, affiliate fees etc might work if you have an informal partnership with another service provider?
If I am connected with a web design company for example and sometimes they refer clients straight to me and other times they want to package the writing with their own services as a single cost (subcontracting I guess) then what kind of cut should they get in either circumstance?
Rebecca Leigh | Sep 1, 2008 | Reply
Oh, and, what if you send some business back their way?
Monika | Sep 2, 2008 | Reply
@ TDMV: Holy moly, that is off topic for sure. Interesting subject you run there Theo. Not sure what exactly this would involve on your end, but when you start in English I will visit to learn.
Thanks for clarifying this.
Monika | Sep 2, 2008 | Reply
@ Rita: Thank you for sharing your take on this very interesting subject. I understand your way of offering an unexpected thank you card is the subtle approach to saying thank you. Your model on home sales is similar to the direct selling business model.
There you also give the host a present, depending on the overall cut of sales.
Monika | Sep 2, 2008 | Reply
@ Melissa: Your surprise present was what it’s all about I think. Giving people without them expecting, weighs so much more than a pre-arranged deal doesn’t it?
I also like your thoughts on the agent. I’ve actually dabbled with these kind of thoughts not so long ago and think it could work well if the setup is done correctly and the marketing is sound.
Much like actor agents, or agents for musicians, I believe agents for freelancers can create a sound business.
What you said about natural marketing though makes sense. We do it all the time, don’t we? We recommend movies, restaurants, travel destinations, shops, etc.
Monika | Sep 2, 2008 | Reply
@ Melissa:
And thank you for that too. Loved your contribution.
Monika | Sep 2, 2008 | Reply
@ Rebecca: Good question. Unfortunately I am in no position to answer this question. Hopefully somebody else will though.
I suppose the cut could be discussed upfront by both parties. Also, not forgetting to honor each others profit margins if you were to walk that line.
It’s a good question though ans I would be interested to see if somebody has got any suggestions.
Kelly | Sep 3, 2008 | Reply
I would happily refer more clients to someone I trust as a professional. Knowing that I can make a little money on the side is just another benefit I can get beside helping my relation to get the best service. An d by luck, who knows the professional I refer will treat me pizza
Monika | Sep 8, 2008 | Reply
@ Kelly: LOL. Yep I can, even if you live overseas. Hehehehe…Hey, that’s an idea actually. “Refer me clients and I send you a dominoes voucher for 10%” LOL, too funny.
Kelly | Sep 11, 2008 | Reply
Monika : Your statement give me an idea. Why don’t you develop it to something like affiliate marketing? …But, I’m not sure if it is sound like a good idea to you.
Monika | Sep 11, 2008 | Reply
@ Kelly: Mmmhh.. do you mean like “Become an affiliate of The Writers Manifesto Inc? LOL, that sounds rather posh doesn’t it?
I’m not sure to be honest. I think the idea could work since I don’t know of any writer who has actually done this before. I kind of like the idea … a lot. But I’m not sure whether it is me at all?
I will think on this a little more though. Thank you for your suggestion. Very generous of you.