Commission on referrals-funny situation, not sure how to handle

[riva]

I ran an offer a year ago with a machine I had. It attracted the attention of someone who loved the treatment and asked if I'd be interested in either offering him money for referrals or for free treatments. We came to an agreement whereby he would get either X cashback or 2*X in value of the treatment at 50% discount. Eg, I'd give him say £30 in cash or £60 voucher value for the said treatment at 50% off normal price. It worked out to be about the same value as it was for a rather expensive treatment.

I also came up with an offer just for his clients- which was more than my original offer by £30, which was on wowcher (they have buying power and hence justified the heavy discounting). We have been keeping an eye on his referrals so that we can reimburse him and I have also given him a free treatment as goodwill.

Since then, he has sent a few more- who buy off wowcher, meaning that I now pay the 40% commission to them and am supposed to pay him too, according to him. Although rightly they would not have found my ad. Some of his clients have not taken up the offer but have been redirected to our website and decided to book other treatments. One friend of his decided to go for my 'top' service which is hugely specialised and as such the cost is reflected. We have never discussed commission for this and its taken me years to become an expert and its not really something I discount or advertise (I'm one of a handful in the UK, also many foreign clients).

When we started out, it was only for the one treatment. I'm happy to pay a commission but not for the wowcher price as that's too heavily discounted (I have mostly paid for my machine with them though, so its worked for me). I feel that it should be an 'introduction' only as that's what a referral means. If they then book other services, I feel that its a reflection of the fact that they were happy- otherwise I will be paying out for years.

Do anyone of you do referral schemes? Is what I'm asking for seem reasonable ie fee on first referral only for the treatment in question and also happy for fee if they do other treatments. But not on discounted sites.

 

[Emily2]

I might be wrong but surely if the customer is now booking directly with you rather than through him it really shouldn't have anything further to do with him? It doesn't seem right to me. I did investigate advertising with Wowcher recently (as part of a possible arrangement with a local hotel. I'm mobile). I decided not to go anywhere near it as the discount offered and the payment to them would mean I was actually loosing money. If your agreement was for one treatment only why should you pay him for other services? Also if they come to you through Wowcher, then they aren't really referred directly by him are they? I think you are being more than reasonable.

 

[wonderwoman]

Honestly i don't know why you would do that? Referrals are great when they are free but if your paying out, your better off looking at your own advertising and concentrate on marketing in your own field than getting a client to have money back. (i would not do this)

I'm slightly concerned for you as i doubt you created a terms and conditions in place for your offers/referral scheme. I think you should renegotiate the boundaries there or stop altogether. Whenever i get a referral i always thank my client and give them the same service. I give them exclusive offers and little treats every year, but i don't go giving cash out. Money off certain treatments but that's the incentive. I dont get the commision for client referral, i think thats a bad decision. xoxo

 

[squidgernetball]

Many of us offer a refer a friend type treatment or deal but this all seems a bit vague. So has he referred people, but then pointed them in the direction of the Wowcher deal so they get a really good price but is still expecting commission at the original rate? I would suggest that you firstly cancel any arrangements unless they are clients paying full whack then you stick to your original deal - I'm guessing we're talking an expensive treatment here where a cash referral is quite normal. I would make him an offer for what's outstanding like one treatment or something you think is fair. It sounds like he may be a good person to keep onside if he is sending you referrals, and that it's Wowcher that has blurred the lines.

Vic x

 

[riva]

I'm simply on a steep learning curve- reading lots of american 'how to' books : ) and trying to put some of those advice to work in the UK.
Its simply a different market here.
So, yes, he has been pointing people to the wowcher deals- people who probably wouldn't normally see it- but I did request that they book directly as I can't make it work otherwise. A lot of these deals can lose people money and I really researched the viability before going into it. My machine cost close to 30k as its medical grade (my insurance shot up with having this!) but the consumables are very, very little. So I saw it as a way of paying for the machine with hopefully repeat bookings etc as results are so good. These deals are no good for low margin or high consumable type service- I've been hounded to run an offer for a medical pedicure- profit was so little I decided not to.
It was structured very loosely, with just an email detailing the terms. he was supposed to meet up with me a few times now- but it hasn't happened- he kept not coming round and I can't ever remember to take the initiative myself.
I really don't mind paying someone for referrals. I consider it to be an advertisement cost- but the referrer is paid- instead of a 3rd party. Eg, right now Wahanda takes 30% for say botox (it very marginally discounted- I use Wahanda as a location finder as most Londoners seem to use it to find services close to where they work). I'd rather pay a salon owner/therapist etc a commission. At least there's a face and I know we are both helping each other's bottom lines- provided they are happy with my level of expertise of course. Is this not how others see it?

 

[squidgernetball]

I'm simply on a steep learning curve- reading lots of american 'how to' books : ) and trying to put some of those advice to work in the UK.
Its simply a different market here.
So, yes, he has been pointing people to the wowcher deals- people who probably wouldn't normally see it- but I did request that they book directly as I can't make it work otherwise. A lot of these deals can lose people money and I really researched the viability before going into it. My machine cost close to 30k as its medical grade (my insurance shot up with having this!) but the consumables are very, very little. So I saw it as a way of paying for the machine with hopefully repeat bookings etc as results are so good. These deals are no good for low margin or high consumable type service- I've been hounded to run an offer for a medical pedicure- profit was so little I decided not to.
It was structured very loosely, with just an email detailing the terms. he was supposed to meet up with me a few times now- but it hasn't happened- he kept not coming round and I can't ever remember to take the initiative myself.
I really don't mind paying someone for referrals. I consider it to be an advertisement cost- but the referrer is paid- instead of a 3rd party. Eg, right now Wahanda takes 30% for say botox (it very marginally discounted- I use Wahanda as a location finder as most Londoners seem to use it to find services close to where they work). I'd rather pay a salon owner/therapist etc a commission. At least there's a face and I know we are both helping each other's bottom lines- provided they are happy with my level of expertise of course. Is this not how others see it?

I definitely see cash for referrals as quite normal in your line of business. I have taken payment from a botox/filler specialist a long time ago for referrals, and this is totally the norm.

Many salons do a recommend a friend scheme which isn't free - you do a discount usually for the friend and also for the referee. With the sort of treatments you do, a lot of people will ask someone they trust for referral and guidance and to be able to bung that person something is business!

Vic x