How to Set Up an Agency Referral Program That Keeps Working

I can't tell you how many times somebody has asked me if I know a guy who prints T-shirts. I did once, but I don't know if he still does it.

If he had a monthly newsletter I was subscribed to, or we were connected on LinkedIn and every so often I saw him showing off a new T-shirt design, I would have referred him in two seconds.

People do want to help, and people do love to give referrals. But they don't have an elephant's memory, so you've got to help them with it.

That's also why a lot of agency referral programs stall. People sign the partner agreement and assume the contract is going to do the work for them.

Key Takeaways

• Past clients and the firms that serve the same buyers you do are the people most likely to refer you.
• Describe your agency to referrers by the specific engagements and outcomes you deliver.
• The referral fee in my agreements is 10 percent of the first year's billings with the referred client.
• A referral program keeps working when you check in with every partner on a regular schedule.

Who should be in an agency referral program?

People who have hired you before are more likely than anybody else in your network to refer you. In SparkToro and Paddy Moogan's 2024 survey of 612 agency owners and consultants, 66 percent said their top source of referrals was existing and past clients. Partner companies came second at nearly 13 percent.

Then add the firms next to yours. I get most of my best referrals through people who are already working with a potential client in some capacity, when that client needs something different from what they offer.

You've got to have people who know what you do and understand your space, so they know when to refer you. Bob down at the pub might like you a lot, but he doesn't know what you do. He wouldn't know what to listen for. The firms next to yours know exactly what to listen for.

Some of the firms next to yours will look like competitors. I get lots of referrals from firms like that. If you went to their websites, you'd think we compete. As long as you don't come across as a jerk, they'll be happy to refer you.

I also get a lot of referrals from software companies that sell to agencies. For your agency, that means the software companies that sell to your buyers.

To find more, think about where your referrals have come from. What types of places sent them? Start looking for more of those folks.

How do you make your agency easy to refer?

Make it obvious what you're good at. Hinge Research Institute and XPX, an advisor network, asked 262 business advisors (consultants, attorneys, accountants and others) what most stops them from referring a firm. They picked "absence of visible expertise" far more than anything else, at 45.5 percent of their picks. "Not asking for referrals" got 1.1 percent.

Early on at the agency I ran before starting Schmidt Consulting Group, I'd meet people and tell them we did custom software development and UX and UI design. They'd say "cool," and I'd never get a referral. Then I switched to talking about specific engagements and outcomes. All of a sudden I was getting referrals all over the place.

When people ask around for help, they describe a problem, like "we've got this portal that just doesn't work on mobile very well."

Setting up packages helps with referrals too. When your services come as named packages, other people at your client's company can see what you offer, and it's easy for them to forward you on.

It also helps to give your partners the words. A busy partner is going to read one paragraph and no more. The paragraph I give my partners names two situations that mean it's time to call me, one line on who's a good fit, and one line on what happens after the introduction. My two situations are a client who says they need more of the right clients, and a client who says referrals slowed down this year. Then I close with "After you introduce us, I get on a call with them that week and tell you how it went."

How do you ask for referrals?

My mom taught me that you get 100 percent of what you don't ask for. If you're not getting referrals, one of the reasons is that you're not asking for them. Another is that you're not specific enough about who you want to meet.

People asking around for business help get more specific than they would for a plumber: does anybody know somebody who has helped people hire a new development team?

With partner firms, I offer to refer them first. Here's roughly what I say: "I do consulting with agencies, and I see that you do fractional CFO work for agencies. I'd love to meet with you and hear more about your services, so I can let my clients know if I ever hear they're a good fit for what you're doing." Then I get on the call, and they tell me about someone they should introduce me to.

An agency can say the same thing in its own terms: "We run into clients that need paid media, and I'd love to consider you as a referral source. Would you like to jump on a call so I can learn more about your business?"

What should an agency pay for a referral?

My referral fee is 10 percent of the first year's billings with the client. If I send you a client, you sign an agreement that says for the first year I get 10 percent of your billings with them, and you copy me on all the invoices.

Whoever made the introduction built that relationship and should be paid for it. When an agency refers a client to a partner, I tell them to ask for the same thing: 10 percent of the first year's billings with that client, and call it a day.

My referral agreements cover four terms.

If you bill that client $120,000 in the first year, the referral fee is $12,000.

I haven't found a published survey of what agencies pay for referrals. For the rest of the agreement, like which introductions earn a fee and when the fee gets paid, see Partnership Marketing for Agencies.

Past clients are different from partners. They refer you because it makes them look good, especially the more senior ones. Ask yourself what you could create that makes them look good.

What keeps a referral program working?

After you sign the agreement, you've got to be active. You should be connected to your partners on LinkedIn and sending them your newsletter, and when your new website goes up, everybody should get on your list.

You also need a system that keeps reaching out. I build a list of potential partners and use a LinkedIn automation tool to reach out to them. I send 20 messages a week with my Calendly link in them. When we meet, I log it, and they go into a partner list in my CRM. I add them to new and upcoming things and keep in touch.

For the people I feel I can get good referrals from, I visit their LinkedIn profile once a month or so, just so they get a reminder that I'm still alive. Leaving a comment on what they're doing, even a like, helps.

Follow up on every referral like any other lead. A referral is raw material, and it goes bad if you leave it on the counter. An intro gets made, everyone assumes someone else will follow up, and the lead goes cold. Give each one a fixed follow-up schedule and a clear moment where it either moves forward or gets a decent burial.

One study put a figure on what a referred customer is worth. Schmitt, Skiera and Van den Bulte tracked about 10,000 customers of a German bank for almost three years and published the results in the Journal of Marketing in 2011. Customers who came in through a referral were worth at least 16 percent more to the bank.

If your referrals have already slowed down, start with what to do first when agency referrals dry up.

How does Schmidt Consulting Group help an agency build its referral program?

Schmidt Consulting Group works with founder-led agencies on positioning, pricing and new business.

Mentorship is twice-monthly counsel for agency founders on pricing, hiring, clients and direction. You set the agenda, and your team does the work.

Advisory is a weekly operating rhythm for growth: a written plan, one priority at a time, and a review of results every week.

A two-founder production studio worked with us twice a month. In those sessions they built a list of companies, and it got them a meeting with Google.

You'll hear the fee on our first call.