One business 'introducing' another - how much to pay?

Barclayloan_query

I've recently started up my own business offering a service to individual clients - I'm trying to tap into other markets and one idea I had was to 'join up' with another business that is not in direct competition with me whereby they can promote my service in return for a cut if one of their clients uses my service.

The business I had in mind is a hairdressers who offers bridal packages, my service could be something the brides-to-be would be interested in but has nothing to do with hairdressing so wouldn't be in direct competition with the hairdresser.

I charge £35 an hour and would estimate that potential clients may want anything from 1 to 30 hours - so potentially £35 or as much as £1050.

Any ideas what sort of % the going rate for an 'introducer' is? Or is a flat fee more the norm? I wanted to have a figure in mind before I approach the other business so would be grateful for any thoughts.

CKhalvashi

Could you afford to live with a 10-15% discount on your takings?

This is the realm of figures I'll quote when passing on work.

CK

Pennywise

The big question is can you give work back to the hairdresser from your customers - i.e. is it a two way street?

No money needs to change hands if you can give potential work to eachother. It's simple, clean, no hard sell. This is the way that works best in my opinion & experience.

Eg, I happily pass on details of IFA's, solicitors, virtual assistants, book-keepers, web designers, etc., to my clients as and when either they ask for names or when I identify a need. Those IFAs etc gave their clients my details when they're asked, and so on. If I find myself passing details of a particular person and they never send me any clients back, then I'd probably stop referring to them.

I've been doing this over a decade and it works surprisingly well. Clients are a lot happier when it's made clear to them that there are no back-handers, referral fees etc. When money is involved, there's always the suspicion that a referral is being given to the highest bidder which doesn't build customer confidence. I've never paid, nor received, any commissions or introducers commissions.

Barclayloan_query

Thanks both, that's very helpful. I could easily live with a 10-15% discount as my ongoing outgoings are minimal. Thinking about the figures involved I'm not sure it's worthehile to the other business to get involved though as in the worst case scenario if the client only had 1 hour then they would get £5.25 from the introduction, as it's just me I can't take on a high volume of clients so whilst if all clients booked for 30 hours they would be quids in that can't be guaranteed.

In answer to the Q as to whether it's a two way street - unfortunately not. I would imagine that 99% of the population have a hairdresser already and would only be interested in a recommendation if they weren't happy with their current hairdresser.

I still think the bride-to-be market is something that I should/could tap in to but perhaps a re-think is needed on how to introduce my services to brides-to-be!

phill99

The minute a business goes down the route of introducing another business to their clients simply because of a fee base, that's the minute a wrong relationship starts.

I would be very reluctant to have this kind of relationship. If I introduce company x to my customers because I got paid and something subsequently goes wrong with company x or their performance is poor, then it comes right back at me.

You should be developing working relationships with allied businesses so that you all benefit. You should be recommending another company to your liens and them you, not for financial gain, but because you genuinely believe that your client would benefit. You only want to be recommending companies that you know are professional and can deliver, otherwise it may be a business relationship that you may well regret.

CKhalvashi

phill99 wrote: »

I would be very reluctant to have this kind of relationship. If I introduce company x to my customers because I got paid and something subsequently goes wrong with company x or their performance is poor, then it comes right back at me.

You should be developing working relationships with allied businesses so that you all benefit. You should be recommending another company to your liens and them you, not for financial gain, but because you genuinely believe that your client would benefit. You only want to be recommending companies that you know are professional and can deliver, otherwise it may be a business relationship that you may well regret.

In practice, though, this doesn't always work as planned.

We used to pick up the scraps of work from other companies, and then we've seen these companies going bump around us, and lovingly bought the assets/contracts for pence in the £.

If the companies were to go into administration in this form of relationship, this is one of the few options available to salvage your own reputation, especially on a small (which we were at one point) business level.

CK