Percentage for recommendations: share or not share

I first encountered this phenomenon at the beginning of 2015. One of the clients offered to share with me the contact of a potential customer for a percentage of the project. I had long been interested in learning how such transactions take place, and I agreed.

The conditions were very simple, and we agreed on them verbally. I receive a contact from a potential client and offer him my services. If the transaction is successful, he must share a percentage of its value. I also have to share a percentage (I don’t remember exactly how much, but definitely less than twenty) from any work for this client within a year from the date of conclusion of the agreement.

I received contacts, talked with the new customer, sold my services and got to work. Over the course of a year, I completed two projects for him and paid a percentage of them to the person who provided the contact.

The aftertaste was unpleasant. Firstly, I didn’t like the fact that I was paying a percentage of transactions for something as simple as “sharing a contact.” Secondly, I was faced with something that I had not discussed in advance: it would be a percentage of the amount before or after taxes. Thirdly, I paid the interest “in black”; we did not formalize the agreement on paper. And I’m already used to working with clients and contractors officially.

After that incident, I shared the percentage only once. My friend “matched” me with a customer (in fact, he handed me over to a client who was ready for a deal). I did the work and shared part of what I earned with my friend. The difference from the first case was that he didn’t ask me about it. This was just my way of thanking you for the “adjustment.”

There was also the opposite case. I once organized a paid consultation related to working on a startup for one of my clients. On the client’s side, I came to the consultation with two client representatives, and on the consultant’s side, my old friend and his assistant. An acquaintance conducted a paid consultation (unfortunately, the client was dissatisfied with the result), and we ran away. And a few days later he gave me a small sum for organizing this consultation, although I did not ask him for it. It was nice. By the way, it was this gesture that prompted me to share the percentage with the friend I wrote about just above.

There was also a period in my work when several beginning specialists began working under my brand. I didn't officially hire them, and this was my first attempt at trying to do projects with someone else's hands. The conditions were simple: I provide them with orders, help them cope with their work, teach them the intricacies of the profession and pay half of the transaction amounts.

It lasted me exactly a year. During this time, I found three specialists for the team and managed to attract enough orders for all of us. At the same time, I did not stop working with my own clients. We all had good relationships and a good atmosphere. We worked remotely from different regions. But after calculating my expenses for the year, I realized that I was spending more time and effort to get the same amount of money as when I worked alone. I was tired, disappointed and gave up. The team felt this and slowly disbanded itself. And I concluded that working alone is more profitable than working with a team. Most likely, this conclusion was premature.

Now it seems to me that it was worth taking a month off and continuing to work in the same mode with renewed vigor. Then, over time, the amount of resources I need to support employees would decrease so much that it would bring in much more profit than working alone. I came to this understanding after many years, working on my own project and forming a team. This story taught me not to make hasty conclusions in matters that require a lot of time to get the first results.

There were several cases when I took small commissions (up to five percent) for conducting a transaction through my individual entrepreneur, helping friends whose clients were not ready to enter into an agreement with an individual. I didn’t like this experience either, since I had to be formally responsible to strangers for work that I had no control over, and I stopped agreeing to such adventures.

In the end, I settled on this: I try not to take or give interest for recommendations, but I am ready to make exceptions by concluding a formal agreement that will indicate all the necessary conditions: how much, when, %% of the amount before or after taxes, and so on. But even now, when I am writing these lines, this has never happened in my practice.

When recommending clients to friends and colleagues, I noticed that it was unpleasant for me when, after the recommendation, they did not tell me how their communication with potential customers ended. Usually in such cases, I call the customers themselves and ask how everything went, and then I try to recommend such “silent people” less often. And, on the other hand, I am pleased when after some time I receive a first-hand story and gratitude for the “adjustment.” I myself always tell people who recommended me how everything went. This information is important in order to understand whether the need of the person who asked for a recommendation has been fulfilled, or whether it is necessary to continue helping him in his search.

Each personal recommendation is a responsibility for a person. And if you often recommend someone who does their job poorly, or someone who pays poorly for it, you can damage your own reputation. Especially if you take money for it.