Should You Charge Vendors for Client Referrals?

by Early To Rise (05/1/2007)

Issue #2030

  • WEALTHY: What to do if you missed a chance to see your business revenues explode (Charlie Byrne)
  • HEALTHY: The FDA declares war (Jon Herring)
  • WISE: Chad Cockburn on bribery

ALSO IN THIS ISSUE:

  • Would a $50 lobster affect your judgment? (Bob Bly).
  • The best way to get a leg up in today’s competitive economy (Michael Masterson)
  • It’s Fun to Know… about goose bumps
  • Add "eviscerate" to your vocabulary

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ETR Insider Report: Shock and Awe in Palm Beach

By Charlie Byrne

"I discovered a powerful secret that’s been inside of me all along."

"I could have left after the first day and still gotten an unbelievable value."

"I’ve spent probably $100,000 on mentoring over the past several years and this exceeded it all by far."

Flattered and humbled.

All of us at Early to Rise were flattered by the praise we heard from all 28 attendees as Michael Masterson’s 4-day Business-Building Retreat wrapped up Saturday afternoon. And we were equally humbled by sitting amidst such an elite group of high-achieving entrepreneurs for the better part of a week.

When Michael started designing the Retreat nearly five months ago, he insisted that it wasn’t going to be "me lecturing them." He wanted a true roundtable with ideas flying around the room from all directions… a collective energy and synergy that would make the sum far greater than the parts. And, brother, did it work!

Make no mistake about it, Michael was the leader, the motivator, and the chief "idea generator." But as the Retreat progressed, the group transformed itself from 28 individuals into a dynamic team of top-gun business-building experts.

I’m physically back at the ETR office today, but my head is still spinning from all the ideas that came out of the Retreat. I expect that Michael will be writing about some of them in upcoming issues of ETR. But this was a private, high-level, elite event - and many of the specific, confidential discussions are destined to stay that way forever.

If you weren’t at the Retreat, the bad news is you missed out on a rare and extremely valuable chance for this personal consultation with Michael.

Will he do it again? I really don’t know. Michael devoted a tremendous amount of time and effort to this event. Several attendees told us that if he does reprise this effort, he could charge 50 percent more and speak 50 percent less… and they’d still come in a heartbeat. Only time will tell what Michael decides to do.

The good news is that you can see him speak to hundreds of Early to Risers at this year’s October ETR Bootcamp. You’ll get Michael’s unique, counter-intuitive advice for dramatically powering up your marketing… growing your business to tens of millions and beyond… and breaking into one of the most profitable industries around.  

[Ed. Note: Our fall Bootcamp is your next chance to benefit from Michael's extraordinary experience in creating highly profitable businesses. Sign up for Bootcamp TODAY (last year we completely sold out) and get $200 off.]

"Never underestimate the effectiveness of a straight cash bribe."

Claud Cockburn

Should You Charge Vendors for Client Referrals?

By Bob Bly

For decades, I have made it a practice to refer my clients to vendors who can provide services those clients need… and that I don’t or can’t offer myself. I have also made it a policy never to accept a referral fee from any vendor. Many offer it, and some even argue with me when I turn it down.

I do not accept referral fees for this reason: My primary mission is to give my clients the best recommendations and advice I can - and that means I have to be totally objective. Even when what’s best for the client isn’t profitable for me.

For instance, many people call me, eager to pay me thousands of dollars to write a promotion for them. But if I don’t think their idea will work or their product will fly, I turn them down, explaining why I won’t do the job. By doing this, I am saving them from financial disaster… but I am also talking myself out of a nice, fat copywriting fee.

When I tell someone not to proceed with a promotion, my recommendation is based on my nearly three decades of marketing experience. Therefore, the advice is valuable to them. But since they didn’t engage me on a consulting basis, I don’t get paid a dime for it.

I want my clients to know that the advice I give them is always in their best interest… and if I took referral fees from vendors, it would create a potential conflict.

I sincerely believe I would always recommend the best vendor for the job - not the vendor who paid me the highest commission. But could I… or my client… be 100 percent certain I was always motivated by their interest and not a juicy referral fee?

Now, while I am against taking referral fees, I do make it a practice to send a small thank-you gift to people who refer business to me. So if it’s okay for me to send a small gift to a referral source, it seems like it should be okay for vendors to send small gifts to me when I am their referral source.

I don’t want them to do it. And I openly discourage it. But if a nice little gift arrives in the mail, I usually don’t send it back. I keep it and thank the vendor.

The reason I bring this up is that PF, a copywriter, recently contacted me asking for referrals. But unlike the many other copywriters who want referrals from me, PF was offering me something in return for each new client I referred to her - a free lobster. Or, rather, a $50 gift certificate to a website selling Maine lobsters.

Actually, I don’t eat lobster, which I know is unusual. Any food that comes in its own armor is not for me… and, truthfully, I don’t even like the texture or taste. But my oldest son Alex loves lobster… and a $50 lobster would put a smile on his face.

So, did I take PF up on her offer?

Frankly, yes. I referred a few potential clients to her. But I tend to do that for new freelancers anyway.

Did the lobster bribe influence me unduly?

I like to think not. But I am human, and we all like to get what Michael Masterson calls "glicken" - a little something extra.

Should you take referral fees from - or give referral fees to - other vendors?

That’s up to you.

But here’s my position on this issue: Make sure your recommendations are "pure," unbiased, and objective - and make sure your clients know it. That way, you get something far more valuable than the referral commission the vendor wants to pay you. You get your client’s trust - and a reputation in your industry as someone who is honest and trustworthy.

That’s something - unlike a lobster - that money can’t buy.

[Ed. Note: Bob Bly is a popular Early to Rise columnist, self-made multi-millionaire, and the author of more than 70 books. He is also the editor of  ETR's Direct Marketing Masters Edition.- a program to help you start your own successful direct-mail business.]

== Highly Recommended ==

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With an intelligent ETF trading strategy, you can profit from virtually any sector of the market as these sectors rise and fall. Now, let me show you how to leverage those small moves into double, and sometimes, triple digit profits.

Notes From Michael Masterson’s Blog: The Value of Higher Education

It’s more important than ever to have a college education. But the best thing is to have a graduate degree. Here’s why…

According to a Harvard University study, employers are paying college graduates 75 percent more than high school grads. Twenty-five years ago, they were paying only 40 percent more.

That’s good news for anyone who has finished college. Bad news for anyone who hasn’t. People with graduate school degrees have done even better.

That doesn’t surprise me. Education is pretty bad in America. It was much better 100 years ago. Today, a high-school degree doesn’t even guarantee that you are literate. And you can get a bachelor’s degree with huge gaps in what you know - without having read Shakespeare or mastered algebra or learned to speak a foreign language, for instance.

Getting a college degree today is like getting a high-school degree in 1890. Getting a master’s degree today is like getting a bachelor’s degree in 1950.

At the turn of the 20th century, the average American had only eight years of formal schooling. By 1930, this figure was up to about 11 years and today it is 14 years (a high-school diploma plus two years of college).

Although the general trend is up, "the quality and quantity of educated workers isn’t growing nearly as fast as it did in the past nor as fast as it needs to if the fruits of today’s prosperity are to be widely shared." So says David Wessel, writing for The Wall Street Journal. The U.S. ranks well, but not at the top of the list of countries that have seen an increase in higher education. A study by the Organization for Economic Cooperation and Development says that six countries have equaled us and six have surpassed us.

Income is up for college grads, but only on a relative basis. If you take inflation into account, the increase in income that college graduates have enjoyed in recent years has not quite kept up with inflation. This is not true for people with graduate degrees.

That’s one of the reasons why, when I’m asked, I recommend that young people stay in school or go back to school at night till they have a master’s degree. Neither of my two older sons has done that yet. I hope they do.

My third son is thinking of attending the University of Denver, which has an interesting five-year degree that I like: four years of liberal arts education and then a master’s degree in business. That’s a combination I’d recommend to anyone who wants to be optimally competitive in today’s economy. Get your bachelor’s degree in liberal arts, because that is the best way to achieve the basic skills: reading well, writing well, speaking well, and thinking well. And then get a master’s degree in business so you don’t have to play catch-up, like I did, when you get serious about a career.

[Ed. Note: To read more of Michael's unedited, uncensored (and sometimes unexpected) ruminations, check out his blog here.]

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Since When Is a Rock a Medical Device?

By Jon Herring 

In ETR #1996, I wrote a health brief titled "Since When Is a Cherry a Drug?". It was about the FDA’s insane, overarching plan to regulate foods as drugs. Well, they haven’t stopped there.

A new FDA document reveals a plan to reclassify virtually all vitamins, supplements, herbs, and even vegetable juices as drugs. It also calls for items like Pilates machines, massage rocks, and acupuncture needles to be classified as "medical devices," requiring FDA approval and regulation.

If this draconian proposal succeeds, vitamin shop owners could be jailed for "practicing medicine." Running an unlicensed juice retreat would make you a criminal. Supplements and functional foods would all be stripped of their function claims. And growing and selling garden herbs would classify you as a drug dealer.

In an article on this subject, Mike Adams of NewsTarget.com reminds us that the FDA is the same agency that: 

  • Reapproved the drug Vioxx, even after it killed over 50,000 Americans
  • Carried out gunpoint raids on vitamin shops and natural health clinics as direct intimidation against those who practice natural medicine
  • Wants to label irradiated foods as "pasteurized"
  • Openly allows corrupt experts to vote on new drug approvals, even when those experts are taking money from the same companies impacted by their votes
  • Refuses to legalize the use of stevia as a sweetener, even though it is used for this purpose virtually everywhere else in the world.
  • Ordered the destruction of recipe books that mentioned stevia (as part of a campaign to keep the public ignorant of the herb and to protect the profits of aspartame and other chemical sweeteners)

This proposal by the FDA is a desperate attempt to save the failing industry of conventional medicine. It is meant to ensure the monopoly profits of the drug companies and expand the influence of the FDA, all at the expense of your God-given rights and freedoms.

If you would like to lodge a complaint with the FDA, you can do so here: http://tinyurl.com/35ftp7. Reference docket number 2006D-0480 in your complaint.

It’s Fun to Know: About Goose Bumps

The fancy term for goose bumps is arrectores pilorum, the very small hair erector muscles that raise hair follicles above the skin when they are stimulated by cold, fear, etc. When the body’s flight-or-fight response (which is controlled by the nervous system) is activated, these muscles jump into action.

((Source: Why Do Men Have Nipples? by Mark Leyner)

== Highly Recommended ==

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Word to the Wise: Eviscerate

To "eviscerate" (ih-VIS-uh-rate) - from the Latin for "internal organs" - is to disembowel.

Example (as used by Jennifer Senior in a New York Times review of The Lady Upstairs, a biography of Katherine Graham): "Because she wrote a Pulitzer-winning memoir and presided over The Washington Post’s evisceration of Richard Nixon, Katherine Graham is probably the best-known woman to have published an American newspaper."

[Ed. Note: Become a more persuasive writer and speaker ... build your self-confidence and intellect ... increase your attractiveness to others ... just by spending 10 VERY enjoyable minutes a day with ETR's new Words to the Wise CD Library.]

Michael Masterson
Copyright ETR, LLC, 2007

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