Conflicts of Interest - Referrals

When you have an opportunity to refer business, what if you know more than one person who provides that service?  How do you know who you should refer the business to?

Some professional referral groups require members keep referrals in the group.  At TBC, we have never mandated members refer business to other members of the group.  Instead, we share these guidelines to help our members decide who will get their referrals.

At TBC, we vet all of our members, refuse to admit members with a bad reputation and remove members that do not provide exceptional service.  Because of that, we are going to assume members in your group are great at what they do, as we describe options on how to avoid conflicts.  

Just because you are part of a networking group, does not mean you should immediately start referring business to the members.  Wait until you build some trust and loyalty with them, because your reputation is on the line.

At TBC, we vet all of our members, refuse to admit members with a bad reputation and remove members that do not provide exceptional service.  Because of that, we are going to assume members in your group are great at what they do, as we describe options on how to avoid conflicts.  

Even after the Trust and Loyalty is established, sometimes there can be conflicts of interest when making referrals.  Maybe you have a family member, a friend, or a client that is not a member of your group, and they provide the same service as a member of your group.  Maybe you are a member of multiple groups, so there multiple options to refer that business.  How do you handle those situations?

We will look at some general ideas first, and then address specific situations. Remember this fundamental rule.  NEVER refer any business to someone unless you trust them.  This applies to family, friends, clients and members of your referral networks.  

It is a good idea to have more than one person to go to when you have a referral.  Sometimes people are extremely busy, or go on vacation and cannot service your referral.  You need a backup.  In addition, there is nothing wrong with giving the consumer multiple options, and let them decide who they like.  Sometimes the personalities of the parties involved will determine who that business should be referred to.  Maybe one of the services provides happens to have a certain area of expertise that could help you decide who to refer the business to.  There are many factors that can help you determine who should get each referral.

It’s a Family Member: If you are using the service personally, give strong consideration to using your family member.  You have to spend time with them during the holidays and you do not want to upset them.

If it is an outside referral, and the person in your group is a better service provider than the family member, we recommend you refer that business to the group member.  If you send it to your family member and they do not do a great job, it will hurt your reputation, and cause tensions between you and the family member.  If the family member is better than the member of your group, why didn’t you bring your family member into the group when there was an opening?

It’s a Friend:  Very similar situation to the family member.  If you value the relationship, best to keep business and personal relationships separate, unless your friend truly is one of the very best in their industry.  If that is the case, bring them into the group and refer all your business to them.  

It’s a Client: Many people have a desire to refer business to their clients.  It makes sense, because the client is paying you, providing a portion of your income every month.  Most people want to help people who help them.  We recommend supporting your clients IF, and ONLY IF, they are exceptional at what they do.  They have to make you look good.  We have seen several cases where people refer business to their clients, and it came back to haunt them.  IF your client is really good at what they do and you are trying to decide if you should refer the business to your client, or to the member of your group, try this: Get a rough idea of how much value the group as a whole has produced for you in the past 12 month.  Then compare that to the percentage of your income the client provides on an annual basis.  Let’s assume the group provides $30,000 in income, and the client pay you $3,000.  That is a ratio of 10:1.   Consider referring business along those ratios, giving 1 referral to your client for every 10 you send to the group.  

 We hope this gives you some basis to avoid the stress and tension you feel when conflicts of interest arise in your referring relationships.   

 

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