Referral programs

Hi all -

Does anyone have a referral program that has been lucrative? Percentage off for the referring party?

When I first started (many years back), I had a $10 referral coupon with each tax return prepared. Basically the referrer got $10 knocked off their next year's tax prep and the new client got $10 off when they paid me for the first return.

It worked well to a point until I got junk referrals and even though I did not "engage" with the person referred the referrer expected me to give them the discount though the fine print said otherwise. When this became a problem, I stopped it completely.

I'm trying a very generous 40% referral commission this year. 40% of all new client fee referrals. To give $25 or $50 gift cards or discounts won't get much attention. 40% I feel may result in clients making the extra effort in solidifying the connection. And if new client comes back next year the referral fee is now a more reasonable 20% per year. It's a win/win situation. So far I have had some good feedback however I wont know for sure until later in tax season when I can make a better assessment.

Let me ask you. Since you are giving 40% discount, have you adjusted the pre discount price so that the net is about the same to your bottom line.

We have a CPA shop in town and his bills have a much higher than average price on the top line and then he shows a 20 or 30 pct discount as "loyalty discount". He swears that it works because people fee something special was given to them.

Example a 1040 std deduction, 2 W2 and a few 1099-Int would have a top line of $350 to $450.

You are not clear about referrals?

Most answers seems to respond to the notion that you are trying to get more referrals from existing clients.

As I understand OP post, you may be looking to refer out business and looking for a a rebate?

Although you asking about a percentage off for referring party makes me think I may be wrong.

Either way I am interested for OP question trying to build a bigger book by referrals and any rebate/kickbacks that vendors may provide.

I'm looking to build my own book up, mostly, by recently partnering up with a local guy that provides payroll service. He doesn't do taxes, though, and wants to refer folks to me but I think it's only fair if there is some sort of incentive. From time to time I would refer out but don't expect a fee for providing the lead.

I was thinking two fold - a discount to the referrer on next year's prep and a discount to the person who was the lead that did decide to go with my service. My concern is exactly what was pointed out, people tend to take advantage of things or feel entitled to a discount. I just want to do something that financially makes sense and is not a waste of time and money.

I think a one time10% referral fee seems reasonable. I would be willing to pay that on collected invoice.