Skill Level Appropriate for all
- Referring to other consultants or service providers has a lot of benefits. You create value for your clients by sending them to a qualified supplier. You can earn referral fees from the firms you refer work to. You build relationship equity with your other partners and they may refer work back to you. You also build a reputation with your clients as the first person they call when they have a problem. That gives you the first shot at being their solution.
You can have different arrangements for your referral relationships. You can go the full contractual route where you have a legal document that specifies the terms of the relationship. The other end of the spectrum is going with a handshake. I'll look out for you, you look out for me, and we'll send business back and forth. Choose the structure that best suits the type of relationship you're trying to build. Screen your referral partners. It can hurt your reputation to send someone who's bad to one of your clients.
Make your services complementary between your firm and the firm your referring work to. I have a couple of different situations where I'm referring work to other firms. In one situation, we're a provider of training services. The other firm does consulting work. There's not an overlap between our services. I send him clients who need consulting, he sends me clients who need training. We have a relationship with another firm that's a technology firm. We don't do technology.
Anybody who needs technology solutions, I send them to that organization. And when those people need training services, he sends those clients to me. Be careful though, sometimes these relationships work out, and it's awesome. Sometimes the relationships don't. If you find that the relationship is getting too one-sided, in favor of the other party, you can and probably should stop referring work there. Also, protect your asset.
That asset is your client network. Bad partners can poach your clients. Bad partners can create relationship issues for you and your client. Partnership arrangements can be an awesome way to grow your business. Just do so carefully and think about the type of relationship you want with your referral partners.