phrase your wording carefully if you are offering discounts as there are two approaches. Either a percentage discount on the original fee or a % discount on an adjusted fee.
For example. client x introduces two new clients that you take on.
Do you offer two reductions of (say) 5% to the clients original bill or a 5% reduction to the original bill and then a further 5% reduction to the reduced bill. The second option is obviously the better for you as the client will never get to a stage where they pay nothing.
Add to this that not all clients are equal so work into your wording that the % discount will be a % of the lesser of the clients fee's or the fee's of the client that they introduce.
Finally ensure that the reduction relates to payments receieved so again work into the small print that the dicounts are paid upon payment by the client introduced.
Some people offer a one off introduction fee but my approach is that the fee reduction will keep being applied for as long as the introduced party and the introducer remain with my firm.
hope that helps,
kind regards,
Shaun.
p.s. just edited out the line about getting the ball rolling as I write too slowly and it already was rolling as Kris beat me to it.
-- Edited by Shamus on Thursday 18th of July 2013 11:12:47 AM
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
i was thinking about offering existing clients a reward if they referred any new clients to me ,and was wondering if anyone else offered this and if so were there any benefits from it .
I offer it in certain parts of my business. Some of the benefits for me are:
Firstly, it's cheaper than getting new client through conventional methods and offers a fantastic ROI.
Second, my existing clients know how I work, and will no doubt discuss this with whoever they refer. This means the new client normally needs less training than if they came from elsewhere.
When it comes down to the nuts and bolts I work things slightly differently to Shaun. I offer the referrer one full months payment from the person they refer, 100%. It's as a credit to their own account, rather than a cheque. This works for me because the part of my business which I offer this everyone pays exactly the same every month.
I accept Shauns point that it can be more difficult if people are paying varying amounts. I also try not to wrap people up in too many clauses. I wanted the scheme to be simple and straight forward. After the second month with me, I send them some referral cards. This way they know how I work and know that they like my service before I ask them to refer people to me.
I don't know how you monitor it Shaun, but does the ongoing discounts not get a tad confusing, surely you'd need to do a separate calculation every month?
You are right, the hardest part is tieing the referals back to the referee. I give clients codes and use vlookups to link clients but the sequence throws things as the discount changes dependant upon the sequence meaning that date has to be part of the sequencing.
actually, glad this thread came up as its a spreadsheet thats become a bit of a mess over time and could do with an overhaul and this thread is just the prompt that I needed.
Annual client discounts are easy. For monthlies I don't change clients standing orders but forward adjust discounts to the following year (incentive there to stay with me).
Your right though, whilst its managable it can get complex from my perspective but from the clients it still seems simple and is easy to explain how their fee's have been calculated to them.
Mmm, now how am I going to explain away when one of them reads this and realises thay the 5% on the 2nd referral isn't actually 5% but 5% of 95%.
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I offer the referrer 10% of the new clients first bill (I choose the highest bill in the first year, if they new client pays any piddly bills in the meantime - usually the year end bill). If the referrer is a client, I will deduct the commission from their next bill, posting a sales invoice and purchase invoice to sales commissions, and netting off. If the referrer is not a client, I pay them a cheque, and post the purchase invoice.
