Professional Peer Referrals

Word of mouthFor those that have jumped the fence into the world of consulting, the question invariably comes up on what is a qualified referral worth? Thanks to the Bay Area Consulting Network, I’ve found the first of what may become a body of reasonable guidance:

Fee sharing may range from 0 – 40% and should always be negotiated between the consultants prior to beginning a common venture.

1. REFERRAL FEE: When one consultant provides the introduction to a prospective client to another consultant that subsequently turns into a project.
  • 5% referral fee – for simply providing a sales lead or client introduction with no additional participation in the business development. If a referral fee is expected, specify so when you pass on the lead. (In some cases, you may not wish a referral fee.)
  • 10% referral fee – for working actively with another consultant to develop a project, after having provided the sales lead; the referring consultant would not have an active role in the project, once secured.
These fees apply to the first project. A 5% referral fee should continue to apply to other work done for that client for the first year following the referral.
2. CONSULTANT SUB-CONTRACT FEE: When a consultant has developed a project and then offers an active role on the project to another consultant, a consultant sub-contract fee is due to the consultant who is the project developer/project manager. 25-40% sub-contract fee – due to the managing consultant for providing the opportunity and managing the project and client relationship.
These discussions are usually very quiet, very sly. I’d love to hear back if you’ve found (or are part of) a network that has defined referral practices. Clearly articulated practices are a reflection of our values, and referrals are a perfect time to communicate the value of a great opportunity.
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4 Responses to Professional Peer Referrals

  1. Rick Turoczy says:

    I often opt for the “it’s all good karma until I get pissed” technique. This technique being:

    1) I gladly recommend other consultants for work that I am either incapable of performing or not interested in performing.

    2) I quietly wait for a little quid pro quo or the offer of a finder’s fee (but this request is neither verbalized nor formalized).

    3) At some point, I get mad, claiming that I’ve been “taken advantage of,” even though I never formally asked for some form of reimbursement.

    4) I figure I have enough karma points, and I move on to recommending another consultant with the same skill set, who actually throws me some work, as well.

    Sound familiar?

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  3. I’m not experienced in consulting referrals, but often people can’t always return a referral favor. Or it might be a few months or years before they’re able. You just have to trust that good will come back to you in some other way. Refer to the best, not who pays you back. Because whoever you refer to is a reflection on you.

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