Your Agency Referral Program Questions Answered

You’ve asked, and this week I’m here to answer some common questions about agency referral programs.

First, let’s make sure we’re all on the same page: An agency referral program is a formalized agreement designed to encourage the sharing of new business opportunities among colleagues. As you know, referrals from trusted sources can significantly enhance your perceived authority in the market. These programs typically operate on a reciprocal basis, offering incentives for both receiving and giving referrals. While incentives can vary, cash compensation is often the most straightforward approach.

Now, let’s get to some of your questions about agency referrals:

What are the typical percentages for referral fees in our industry?

I generally see referral fee percentages in the 5–15% range of revenue. Some folks will want to base the referral incentive on profit margin, but I’d caution against this. It often requires disclosing sensitive financial information about your projects. That’s information you want to keep close to the vest. If you opt for a percentage-based fee, base it on revenue and consider limiting it to the first year’s earnings to maintain long-term profitability.