Kathryn Delany

Are You Taking Kickbacks?

by Paul Strikwerda in Articles, Career, Freelancing, Money Matters 32 Comments

On August 1, 2007, serial entrepreneur and Boston-based tax accountant Lewis Weinstein quietly launched the beta version of ReferralKey, an on-line referral management system.

Some called it “LinkedIn on steroids.” Others feel it’s just another version of the traditional inbound marketing strategy.

How does it work?

Once you create a ReferralKey online profile showcasing your amazing accomplishments, you can invite others to join your network and start exchanging leads. Does the following viral email look familiar?

Are you taking on new clients?

If you’re taking on new clients, I’d like to include you in my private referral network to send you business leads through Referral Key. Please accept my invitation below. Thanks!

Best,

Person’s Name
Name of Their Company
City, State

It seemed like a good idea at the time, but there was one problem. It didn’t take off. Weinstein told the Boston Globe that professionals using the site felt it just wasn’t helping them generate enough new business. Weinstein: “The common response was, ‘I thought you were gonna send me referrals.”

A wait-and-see approach never works and Weinstein discovered that something essential was missing from his system; something that drives all human behavior: an incentive.

TAKING THE BAIT

You see, the average ReferalKey member wasn’t just going to refer a colleague or a friend on the basis of his or her merits or the existing relationship. Before they were willing to make a recommendation, they needed one question answered:

“What’s in it for me?”

Weinstein’s answer:

Cash, Omaha Steaks, L.L.Bean or Callaway Golf gift cards.

ReferralKey was relaunched in April 2010, based on the following principle:

“Grow your business by offering rewards to other people who send you successful referrals.”

This winning idea turned boring, unresponsive professionals into bounty hunters, ready to stake their claim and claim their steak. I just received an email from a colleague offering me 10% of whatever she will make, if she lands a job based on my referral.

RefferalKey even lets you track referrals to “ensure your relationships are reciprocal.” Yes, my friend, if you rub my back, I’ll rub yours and just so you know, I do keep score!

Do you like it so far? If you’re having any doubts, you’re not alone.

Chris Reimer is Vice President of Social Media at brand developer Falk Harrison. He writes in his blog:

“The first time I got an email with the subject line “Are you taking on new clients?” Holy crap, I was excited! You bet I’m taking clients! (what a hook). Ten seconds later, I felt the shame of spam, deflated, and just a little pissed. After receiving 100 of these emails? No one likes spam.”

Kathryn Delany is a web designer and Search Engine Optimization and Marketing Specialist. She writes:

“I have been sucked into the vortex of the Referral Key saga. I usually am very cautious about these emails. However, the initial invitation came from a long trusted colleague so I signed up. Sadly I followed the instructions on importing my LinkedIn Contacts, little suspecting that this site hijacks the list before you can choose who you would like to invite to your circle. As it ‘imports’ your contacts it automatically sends out the invitation to everyone on it!”

Chris Reimer concludes:

“Stop joining services that blast out marketing messages Uzi-style as ReferralKey.com does. The bad taste you are leaving in people’s mouths is not worth it.”

A MORAL MAZE

Apart from receiving downright annoying emails, I have a more moral objection. There is a good reason why professionals like lawyers, realtors, accountants and therapists have adopted codes of conduct, specifically prohibiting them from taking payment for referrals. It is considered to be unethical.

Look at the definition of bribery:

“An act implying money or gift given that alters the behavior of the recipient”

RefferalKey says it is based on “trusted relationships,” but if you’re meeting a need with greed, what does that really say about your definition of “trust” and “relationship”?

Do you really think you can buy my opinion and influence my behavior by offering me a bounty? Is that how you think I operate? I almost feel insulted!

YOUR TRUE MOTIVES

If I were motivated by money, I probably wouldn’t even be in the voice-over business. Take it from me: You will never do your best work for the love of money. You do your best work when you hold yourself up to standards no one else can or will match. Your best work is always a labor of love and never the result of greed.

Here’s my bottom line: a referral needs to be earned, not bought.

I owe a huge part of my business success to referrals, and I am frequently asked to recommend colleagues. For those recommendations I get paid big time.

Before I tell you what I receive in return, you should know that I take my referrals very seriously. The fact that I will recommended a certain person, reveals as much about me as it does about the person in question.

One can usually judge someone by the company he or she keeps. When you pass the name of a colleague on to someone else, you put your reputation on the line. So, how do you go about it?

When you’re thinking of recommending someone, ask yourself the following question:

How do I know that someone else is good at their work?

Here are your options:

  1. See – I need visual evidence (e.g. I need to watch them do their work)
  2. Hear – I need to hear them (e.g. listen to their demo)
  3. Read – I need to read about them (e.g. a review, a report, a website)
  4. Do – I have to work with them to get a feel for how good they are

In certain circles, the answer to the question “How do I know that someone else is good at their work?” is called a “Convincer Strategy,” and most people come up with more than one answer.

The next question is:

How often does a person have to demonstrate that they’re good at what they do, before I am convinced?

  1. A number of times – e.g. Three or four times
  2. Automatic – I always give someone the benefit of the doubt
  3. Consistent – I’m never really convinced
  4. Period of time – It usually takes e.g. a week, a month… before I can tell if someone’s really good

The last thing you need to be aware of is your frame of reference:

  1. Internal – No matter what anyone says about her, only I can tell whether or not she’s any good
  2. External – A source I trust recommended her, and that’s good enough for me
It’s very common for people to have an internal frame of reference with an external check, or the other way around. If your frame of reference is completely internal, no one will ever be able to convince you of anything. If it’s completely external, your opinion will be totally dependent on what others have to say.

Whether we realize it or not, all of us have different ways of convincing ourselves. If my frame of reference is pretty much internal and a person needs to consistently demonstrate to me that he’s any good by working one-on-one with me, systems like RefferalKey are useless.

It will only work for people with a more external frame of reference who are convinced by reading about someone, and based on that, give the person the benefit of the doubt. How big of a group is that?

QUALITY REFERRALS

Should you decide to give RefferalKey a try, ask yourself how well you know the contacts you’re about to invite and how well they know you. In other words: what is the quality and the depth of the referrals this system generates? Is it worth the risk of pissing people off with automated impersonal email messages?

Referring people can be very rewarding. It’s an essential part of being in business and staying in business, as long as you do it for the right reasons. If you landed a gig as a result of my recommendation, I demand that you pay me back by doing the best job you could possibly do. As one of my teachers used to say:

“If you look good, I look good, so you better make me look good!”

Secondly, don’t send me any money or vouchers for Omaha Steaks. You booked the job because you’re the best and you deserve it. I don’t take any credit (or cash) for that.

Take your 10% and give it to a worthy cause. Pay it forward.

That’s the key to referrals!

Paul Strikwerda ©nethervoice

PS Please refer someone else to this blog by retweeting and “liking” it on Facebook.