Are they commissions or kickbacks?
Every so often I see someone posting on Facebook, complaining about another vendor asking for a commission when they refer business. It’s always such a controversial subject and one that I’ve been addressing for years. As a matter of fact, I did two webinars on this, one with just venues and caterers and one with all suppliers. The links are below.
Listen to this new, 10-minute episode for some perspective on this from someone who’s seen this from many different perspectives.
Here’s the link to the webinar with only venues and caterers:
When Your Venue Refers A Vendor, What’s In It For You?
Here’s the link to the webinar with all suppliers:
Creating Win-Win Venue-Vendor Partnerships – Referral Fees/Commissions?
Listen to this and all episodes on Apple Podcast, YouTube or your favorite app/site:
- Apple Podcast:
- YouTube: www.WeddingBusinessSolutionsPodcast.tv
- Spotify: https://spoti.fi/3sGsuB8
- Stitcher:
- Google Podcast:
- iHeart Radio: https://ihr.fm/31C9Mic
- Pandora:
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– Commissions or kickbacks. Ooh, here’s a controversial subject. Hi, it’s Alan Berg. Welcome to another episode of the Wedding Business Solutions podcast. I saw yet another post on Facebook talking about commissions, when someone refers business to you. I know this is a controversial topic. I actually did two webinars on this during the COVID lockdowns. I’ll put the links to those in the show notes here. So if you want to see them. One was with venues and caterers and then the other one was with all different suppliers. And the one that I had with venues and caterers I had a panel of people that did things all different ways. Somewhere, it was normal to expect a commission. Somewhere they don’t do it at all and then everything in between. But let me talk about this subject here. I realize that people look at this way, way differently in different parts of the country, because in some parts of the country, like where I am in New Jersey or in New York, it’s a normal course of business. It’s very common for people.
If you work at a particular venue, if you are not the venue itself. And if it’s a venue that doesn’t have catering, it could be the caterer that’s coming in, it could be the photographer, the planner or whoever, that you would pay a commission or referral fee or whatever to that venue. Now, I know that people do this differently. Some people do this regardless of whether they referred the business to you, you have to pay just for coming into their house. And some people do it. If they refer the business to you and then they might require that you have to use their preferred list, because they do it. But let’s talk about this whole concept here. When you get a sale, what did you do to get that sale? Now, if you were referred by a previous customer, what you did was great work with that previous customer. But if you were referred by an advertising, right?
So, if you did some advertising, you paid for that advertising. You paid for that marketing. You paid for that networking because you’re going out and spending your time and effort, networking with people, and you should be providing value to other people if you want them to refer you. Now, everybody on both of those webinars that I did agreed that you should only refer people who do a great job. I mean, that’s given. You should never refer someone because they’re paying you. You should refer someone because they do a great job. But is that enough, right? People have agents, people have managers, people pay for advertising. They pay for marketing. And there’s a cost. Richie, my podcast producer, so I’m sure is listening to this, because he has to listen to every episode here, Richie, when I mentioned this to him in Utah where he is, he said, “We don’t do that here.” But yet he gets a lot of his business from one particular venue and he gives them a price that’s less than his full price. I said, well, it’s the same thing. The only difference is they’re writing you would check for a number that’s less than your full price instead of you writing them a check because they referred business. You collected the money from the customer and then you paid them. If it walks like a duck and quacks like a duck, it’s a duck. It’s the same thing.
Now I know people say no, but these are kickbacks. Well, what is a kickback? Now I get it that if someone is requiring you to pay them whether they referred you the business or not, that to me gets into a gray area. But if a wedding planner refers business to a band, a DJ, a photographer, or a venue or whoever and says, listen, I’m referring this business to you. I want X. That’s how they make their money. They are your agent at that point. They are your advertising and your marketing. They’re giving the endorsement to that person. Now wedding planners get paid different ways. Some who do a flat fee, don’t do commissions. Some do a smaller fee and do commissions. Some might even do no fee and only do a percentage of whatever you spend on the wedding. And the question is, does that come from the vendor? Does it come from the couple, right? But think about this. If someone, I’ll just use myself as an example, as a speaker. If someone refers business to me and I’ve had this happen.
So, listen, I have a client who needs you to come for sales training. And you know, I want X if they book you. I’m fine with that because they’re bringing me to that customer. They’re the one doing the work. I didn’t know those people existed, until they brought them to me. So I have no problem with that. There’s something called speakers bureaus, which I don’t tend to work with them because our industry doesn’t tend to use them. But it’s vere, very common thing where a speaker bureau will say, I’ll get a client who says I’m having a conference and I need a speaker for the conference. The speakers bureau has people on their rosters says, okay here are some good matches. They make the connection. And if the person, the conference ends up booking that speaker, the speakers bureau gets a percentage. And I got to tell you, it’s way more than 10%, which is kind of the common referral fee in our industry. It’s way more than 10%.
So, what have they done that’s different than a venue who says, hey I have this couple and you’re a good photographer or you’re a good planner or you’re a good whatever and I’m going to refer them to you. And if you book them, I want to get a referral fee. I want to get a commission. I don’t think it’s a kickback. I really don’t. I don’t think it’s a kickback. Kickback, the connotation of a kickback is that there’s something nefarious happening. There’s something illegal happening. It’s not nefarious or illegal for someone to refer business and say, I want a commission for that. I want to fee for that. I want to finder’s fee for that. Finder’s fees happen in all kinds of industries. Are they kickbacks? No, they’re a finder’s fee. You found a buyer, the buyer bought, you want to get that, right?
How is that different than a real estate agent, right? Who finds a buyer for the seller? The real estate agent gets a commission. It’s not that much different, right? So I always see that it’s very controversial. It’s controversial because of the way that you look at it. If you’re expecting that people are going to refer you and not want anything back. Okay, fine. But if somebody says, hey, I have a customer and they’re going to pay you and I want X, right? You get to decide. Yeah, I want that customer or I don’t. I don’t think it’s wrong. I don’t think think it’s illegal. I think it’s your choice of how to do that or not. But to call it a kickback, I think is wrong because kickback again, implies something’s happening under the table. Kickbacks are typically where someone is skirting the system to bring somebody into that. So there might be a bidding process. And then somebody gets chosen because they paid somebody under the table, right? That’s illegal and it’s wrong, okay?
That’s not what’s happening. If you get referred by a wedding planner or if you get referred by a caterer or a venue or who refers business to you and if you are the caterer, the venue or the planner, and you’re referring business to other people, it’s up to you to decide, do I want to get a referral fee? That person is making money because I brought my customer to you. And yes, I think you do a good job. I wouldn’t refer you, but that’s how I make my money, right? That’s how I earned my living. Part of it is by making these connections because we are as strong as our network, right? We used to call it the Rolodex back when there was a physical Rolodex. But that is a very valuable asset. The people that you know, that can help other people. And if you want to get something for that, I don’t think it’s wrong. I don’t think it’s illegal. And I’m not a lawyer. So in your jurisdiction, if that is illegal, right?
Again, I think a commission. I don’t know that a commission will be illegal anywhere. A referral fee is a commission. But again, if you have any question about it, certainly contact a lawyer, because I am not a lawyer, but again, the whole concept of a referral fee, a commission, again, is it a kickback? No, it’s a kickback if something nefarious is happening, illegal is happening, right? You can call it that, but that doesn’t make it that. What it is is a referral fee or a commission. And if that’s not the way they do business in your market, that’s fine. But if like Richie who says, I don’t, we don’t do that in our market, yet they do. They just call it something else, right? I think you have to look at that as well and say, well, is that wrong? No, no. Richie’s very happy to get that much business from that one venue and happy that he’s getting that money without having to advertise, do any marketing, do any networking. He’s networking with that venue and they’re referring him.
So, I know this is a controversial topic. I will put the links to the webinars in the show notes. So please look at the show notes, whether you’re on YouTube here or whether you’re listening on one of the audio platforms and have a link to those webinars. So you can listen to them. It was very interesting conversation because people do it differently. Some people don’t ask for money, but do ask for services in kind. So one caterer up in Maine, he keeps track of the business. He refers to other vendors. And then if he’s having a party and he wants to have a DJ or flowers or anything like that, those people are doing it for him at no charge, because he knows how much business he gave to them. Is it payment? Yes. Is it in cash? No. Does it make any difference? No, not really. It’s still a payment. It’s just not done as a here’s a check for this or here’s cash for this, right? It’s still giving back something, right? There’s still, I gave you, you’re going to give to me, right? So now a lot of you would do that. No problem. But you have a problem writing a check. So again, I think you have to take a step back sometimes and say, if it walks like a duck and quacks like a duck, it’s a duck. I hope this gave you something to think about, thanks.
I’m Alan Berg. Thanks for listening. If you have any questions about this or if you’d like to suggest other topics for “The Wedding Business Solutions Podcast” please let me know. My email is [email protected]. Look forward to seeing you on the next episode. Thanks.
Listen to this and all episodes on Apple Podcast, YouTube or your favorite app/site:
- Apple Podcast:
- YouTube: www.WeddingBusinessSolutionsPodcast.tv
- Spotify: https://spoti.fi/3sGsuB8
- Stitcher:
- Google Podcast:
- iHeart Radio: https://ihr.fm/31C9Mic
- Pandora:
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