Is it tacky to ask for referrals?

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Is it tacky to ask for referrals?

Thanks to reader Laurie R. for suggesting a newsletter on the topic of referrals (if you have a topic you’d like me to write about, drop it in the comments!). Laurie wrote to me:

I’ve been listening to quite a few business podcasts lately on the topic of referrals. Some say you should never ask for a referral, but should instead simply offer exceptional service and make sure to touch base with your clients often, so you are always top of mind. Some say you should ask for referrals often and make it a part of your workflow with clients. Some say that offering clients a discount on their next invoice in return for a referral is a great idea and others say it devalues your services. What have you seen work well in the past? To ask or not to ask? Referral discount or no?

This is an interesting topic, and one that I haven’t written about before! There’s no “correct answer” to this issue, but here are my thoughts:

The key: The type of client

In my opinion, the whole referral issue, what’s a good business practice and what’s in poor taste, what devalues your work, depends on the type of client you’re working with. Specifically:

Agencies: unlikely to work

• Agencies: I don’t see referrals being particularly effective with agencies. Honestly, agencies want to keep their favorite freelancers to themselves, because they want you to be available when they need you. If you want to get more work from an agency client, I honestly think that nudging, as annoying as it feels, is probably the best strategy. Here’s everything I’ve ever written about nudging dormant clients. Even if an agency client isn’t dormant and you’re working for them regularly, you should still nudge them: “I have some availability this week,” “Just wondering if the annual report project I worked on last year will be going ahead for this year,” etc. With agencies, it’s not that I think that a referral system would be a bad idea, I just think it’s unlikely to work.

Individuals: go for it!

• Individuals: I do a fair bit of official document translation work for individuals, and I actually think that actively asking for referrals and offering referral discounts could be a good strategy with this client base. Personal document translation is straightforward: it’s the only translation service for which I nearly always charge the same price. And, most expats know other expats: I’ve had official document clients who have referred me to four or more other people from their country. So here, I’d say go for it. I don’t think you have to be too specific, because you don’t want to commit to a certain amount. Just say something like, “Thank you for contacting me for your official document translation; if you have the occasion to refer a friend or colleague to me for this type of service, please ask them to mention your name. I’d be happy to offer them a courtesy discount, and I would also offer you a courtesy discount on any future translations.” I’ve never done this, but I think it’s a good idea.

Direct clients: Frame it as them giving you access to their network

• Direct clients: Here’s where things get tricky, because your contact at a direct client could very well be in a position to refer you to other people. Maybe it’s a large company and they know people who work in other departments. Maybe they have friends who do similar jobs at other companies, like they’re the international communications director, and they know other international communications directors. And yet, Laurie perceptively points out that this approach might devalue your work. Here’s what I’d do:
  • I’d be very hesitant to offer an actual monetary discount to a good direct client. In my freelance business, these clients pay me well, and I don’t want them to think that the rate I charge them is something that I pulled out of the air because I thought they would say yes to it.
  • For example, I’ve had a couple of direct clients ask me to do translations for them as individuals (“My daughter is applying to graduate school in California and needs a few pages translated”). In those cases, and I’m not saying this is the right answer, just that it’s my answer, I chose to do the translation for free as a courtesy gesture to the client, rather than charge less than my regular rate.
  • Pre-COVID, I also used to send my best direct clients a nice gift at the end of the year as a thank-you gesture, but so many of them now work from home that I’ve stopped doing this.
  • Rather than outright ask for a referral, I’d position your client as someone who is in a position to help you (something that they’ll likely be flattered to do) and phrase it differently. Something like: “I’m always looking for more clients to whom my skills might be helpful; are there other people in [that client’s sector or role] who you think I should get to know?” Or, “I’m looking to connect with other people in the luxury travel sector; does anyone spring to mind?” Or, “I’m really glad you were happy with the annual report translation, and I’d be interested in helping more people who need that service. Do you know anyone else who’s trying to get a report translated for this year’s deadline?” The key here is the wording: you’re not pumping your client for work, you’re positioning them as having access to a valuable network.

Adjacent topic: referral fees

Laurie didn’t ask about paying referral fees to colleagues, but let’s talk about that briefly. Here, I mean that when a colleague refers you for a job, should you pay them a percentage of what you earn?

In general, I’m a “what goes around, comes around” kind of person. I typically refer colleagues without expecting anything in return: simply because I like helping clients, and I like helping colleagues. I do keep a list of colleagues who either repeatedly send me referrals, or who refer me for a large-ish project (maybe $1,000 or more), and I send them a gift at the end of the year.

However, in 20+ years of freelancing, I have on a couple of occasions paid a referral fee to a colleague. For the record, the colleagues who referred me didn’t ask for this, and insisted that I didn’t need to pay them. But in all of these cases, the referral was for a project that morphed into something so large (in one case, $30,000 of work in one year) that I felt like a box of chocolates was an insufficient way to thank them, so I insisted on paying them a monetary referral fee. It’s worth noting that if you live in the U.S., you should ask your accountant whether referral fees might be tax-deductible. My accountant felt that they were, and told me to keep documentation of them for my taxes.

Great question from Laurie, and I hope these tips are helpful! Don’t forget to sign up for March Marketing Madness!

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