Business agreements with other IT companies can be an excellent way to secure high quality referrals. When you are dealing within a B2B context, the referrals you get from non competing IT businesses tend to be ones that will turn into long term service contracts. This is exactly the kind of business you want.



The question becomes though, "What kind of fee should I give to the person I have such a business agreement with?"

There is no quick answer as the referral fee depends on a number of factors. Here are a few guidelines to use to structure your referral business agreements:

Figure out what your average client relationship is worth to you over a year. If the business agreement you have set up is providing you leads that typically turn into sweet spot service contracts, then a $500.00 referral fee is not unreasonable.

If the business agreement is passing on leads that are more one-time service call events (someone got their AOL disk stuck and you have to go over on a Saturday afternoon to fish it out and they balk at paying a $100 fee), then you really can't afford to pay any kind of referral fee.

If you go through the trouble of setting up a business agreement, make sure you will be getting high quality referrals. I recommend you keep these business agreements real simple.

For fixed fee business agreements call it a finders fee and use a range of $250 to $500 per referral. You may go up to $1000, but that should only be after you have established a set of referral criteria that would trigger this large of a fee. You may also want to consider a business agreement where you pay a percentage of revenue.

Bottom Line on Business Agreements

Ultimately, you have to do what you're comfortable with. Business agreements are an excellent referral source but you don't want to lock yourself into paying high fees for referrals that aren't part of your sweet spot. Be smart about it, establish a good relationship with the company you are entering into a business agreement with, and adjust your fee system as you get more comfortable with the process.

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