We are a small service focused res shop who have been getting a fair amount of referrals from the bigger shops who are so busy now that the don’t want to chase the smaller jobs that are our bread and butter. We have a good reputation locally for realibility, fair pricing and quality work so the seem to feel good about referring us. My question is should we do anything to formalize our referral relationship. I have the urge to stop by and thank these shops and give out a “Starbucks” card or something to show that we appreciate their confidence in us. My question is addressed to those of you in larger shops: Do any of you refer business you don’t want to others? If so what do you think is would you consider an appropriate “thank you” from the shop you referred business.

Cash is always a crowd pleaser...

Dnk..

stop by and thank them...it shows that you appreciate the referal,and that the people they send to you ARE going to you...
bill

Cash can be a crowd pleaser, but not always appropriate.

"happy anniversary honey, here's 50 bucks."

Okay, the relationship between you & your competitor and you & your wife might be a little different, but getting the cash into the right hands might be tricky.

I'm a small shop so I can't advise from that perspective, but if it were me I'd be concermed about two other issues. If I did stop by, would I be bothering someone who is also too busy to hear a thank you. And what if it is not well known throughout the company that your name is being given out? Not saying either scenario is likely.

All in all I think it is worth the risk to go with the Starbucks idea, but I'm still curious to see what others think.

A few gift cards seems reasonable. I might worry about them expecting something on a regular basis though. Not likely but you never know. If it were me I think I would just go with a simple thank you phone call.

PS, Not everyone drinks coffee.

I don't like Starbucks at all...
But that's me.

The reason I stated cash, because it allows that person to treat themselves to what ever they want. They pick it. And you don't look or feel bad purchasing something they don't need or like.


I have yet to find someone who doesn't like, or better yet, rememmber cash.

But if you know the person you are dealing with, and know what they enjoy, something other than cash, could be more personable.

Dnk....

All, thanks for the good thoughts. I especially like Jps1006 “the relationship between you & your competitor and you & your wife might be a little different…” I can assure it is VERY different.

Perhaps a bit more background then a question on taking this discussion to a much higher level.


The relationship between us started innocently enough. We all operate out of a small community on the edge of a larger city. We (the owners) got to know each other by being members of the same community organizations (Kiwanis, Chamber of Commerce, etc.) We would discuss common areas of interest – how’s business, problems with inspectors, etc. After a while, it became obvious that we really after the same markets – they do tract and upscale custom homes, we are focused on consumer service. That is when the referrals started coming. It has been good for us – it does not hurt your reputation than having another electrician tell them you are good. I don’t think it hurts them since they it was work they were too busy to take.

My question: Would it make any sense to approach the owners with a proposal that we would give them a referral fee based on size of job number or referrals per month, etc.? Comments? Warnings? Thanks

VinceR

Let me get this straight. They are giving you referals for free right? You would like to propose paying them for the referals? Are you nuts?

Here is what you owe them. Take care of the customers they send your way. It makes you both look good. If you do not it will reflect badly on you and them.
Stay feindly with the owner and thank him for the work. That's it.

Vince, call me crazy, but what you described has merger written all over it.....

Multiple Contractors in the same market, all with seperate overhead, tools, materials, ect?

You guys are referring each other to each other?

Join forces and make it happen...

Dnk....

I think a "thank you" at least would be appropriate.

I don't think I'd jump straight to payment for referrals - it could lead to an expectation.

Send 'em 2 "box-o-coffee"s, two dozen assorted donuts, a box of bagels, a thing of cream cheese, and a dozen assorted muffins just before start time - that way, everybody should find something they like, and a "thanks for the referrals" note will let them know why.

ETA - and a "box" of hot chocolate, for the non-coffee drinkers

[This message has been edited by DougW (edited 11-02-2005).]

Vince, I think I know where you are coming from. It's the result of a good business mind. You find yourself in the midst of a good situation and want to maximize your opportunity.

I would try to feel out the other guy's take on the situation. Stop by with what ever offering you choose. Don't go overboard with how great everything is working out. You appreciate the gesture. If they get the sense you are benifitting tremedously, the focus could shift to you and your profits. Keep it on them, how great they, etc. I'm not talking a big butt-kissing session here. I just think of it this way; what reason would keep them dong this? If they know it is putting money in your pocket, or they know that it makes your day?

Dnk, I had to laugh at your suggestion of cash and wonder if we are related. My dad's side of the family was big on cash and at Christmas time we'd all exchange cards with cash. Then we would joke about who came out ahead. I don't remember ever having to return or not use it though.... I can't argue with the universality. One thing I worry about though with cash is that too little could seem odd or insulting. If someone walked up to me and said they apprciated "x" and gave me $5, I'd still take it, but unfortunatly I might be thinking "$5 ain't gonna cover it" , but $5 for coffee and I'd be thinking about my next fix. Sometimes you get more bang for the buck without the cash.

But back to Vince, feel out the situation and don't attempt to formalize the situation until you see a real need to. If begining a relationship with these people is what started it, cultivate that, and if the need for a formal agreement arises, you could probably hammer out better terms with a "buddy". (not always true. good luck)

[This message has been edited by Jps1006 (edited 11-03-2005).]

Jps1006 -- You nailed it man! It is all about building relationships, looking for win – win opportunities to emerge, then landing them for the benefit of both parties. Where do I send the send the Starbucks card? VinceR

If it were me, a simple "thank you for that referral" would suffice. You do the same for him. Anything more than that makes it too mushy, and then it gets uncomfortable. Besides going overboard with all this makes you seem desperate. Business people do this for each other all the time without asking for anything other than the same in return.

I'd keep it simple & informal. I like references to be pure & unpaid for. If you see them at meetings, thank them with a big smile and handshake. Of course, if anyone wants to have a large new house wired, reciprocate with a reference for them.

Dave