More times than you can count, you have heard us say that selling is a difficult and scary job. That is why so few have what it takes to succeed at a career where you “eat what you kill.” As scary as the job is, most salespeople find prospecting to be the scariest and most difficult part of the difficult and scary job.

Producers come up with countless excuses to not prospect. They’ll “allow” themselves to get pulled into countless activities that have nothing to do with selling, much less prospecting. They rationalize most of these by saying, “The best ROI on my time is to spend it protecting the clients I already have.”

Sure, you must serve existing clients, but there is typically an entire team to help you do that. Besides, servicing existing clients doesn’t take ALL your time.

Stop ignoring the advice

We've written many articles to make the admittedly scary and difficult job of prospecting easier. We've helped reframe the prospecting call so you can see that it isn't an interruption; it's an offer to share valuable ideas and insights. We've written about how to leverage your existing client relationships to fill your pipeline.

For many, the advice and ideas don't matter. They can't shake their fear of doing this part of their job. So, what do they do? They pay someone else to do that part of their job.

I regularly hear from salespeople wanting to know if I can suggest a “good telemarketing service” to help fill their pipelines. My answer is always the same, “No.”

There is probably an exception out there, but I don’t know of any producer or agency who has ever engaged an outside telemarketer and been satisfied with the quantity or quality of opportunities they receive. 

You're paying HOW MUCH in referral fees?! 😳

I also hear regularly from a benefits producer or agency that has entered into a referral agreement with someone. The referral partner is often a property and casualty producer or another center of influence.

On the surface, this is an approach that could make a lot of sense. However, most never properly set up or manage these relationships. This was a big part of our motivation to create our Center of Influence Planning guidebook (contact us, and we'll be happy to share it with you).

Unfortunately, these “partnerships” come down to one thing, paying someone a referral fee. What's wrong with that, you may ask. It isn't the idea of a referral fee that's the problem. The problem is the amount and duration of the fee.

It is not uncommon to hear of referral fee payouts of 30% to 40% or more. Over the life of a client relationship, you may even be able to justify this type of fee IF it were a ONE-TIME payout. But, often, the fee is paid to the referring party year after year after year after . . .

This makes no sense!

First of all, these referral fees are often as much (or more) than is typically paid to an internal producer who would help support the account. Second, the support and resources (think "value-added" services) the client expects will be provided by the party receiving the referral. Third, these referral opportunities are often handed to an internal producer, who is then paid commissions on the remaining fee.

In an industry where many agencies struggle to have a 20% profit margin, how does this make ANY financial sense? That's a rhetorical question. It doesn't. 

I've been tempted to quit my day job and prospect for these overly generous and oh-so-afraid-to-prospect producers and agencies. Think about it, if I were a referral partner, which scenario is more enticing?  

Option One – Prospect for my opportunities, invest in the resources necessary to support the client, and then spend mine and my team’s time servicing those clients. For that, I retain all the revenue from the client.

Option Two – Make a referral to someone else and never do anything else, no financial or time investment to support the account. For that, I get paid 40% forever. This is a no-brainer!

Lucy, you got some ‘splaining to do

When I ask those who have entered these agreements how this makes sense, they have no logical explanation. While I'm not the one who needs to hear the justification, there is an interested party that soon will.

Your client.

MY understanding is that the new compensation disclosure requirement requires reporting these referral fees.

Well, Skippy, I'm curious how you explain this to the client. How will you justify paying someone who does absolutely nothing to help service the client 40% of the commission every year? All because you were afraid to do your prospecting.

Hold on; I'm grabbing some 🍿. This is gonna be good!


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