Build it and they will come: Working with Referral Partners & Making Room for $5Mil/month
Last week, Brett reached out to me with a few questions about referral partner fees and growing your business as a broker. This got me thinking about how at times as a broker, it can be really hard to know who to ask for advice, which is why Top Broker was created. We love receiving questions and having the opportunity to speak to you directly about any pits or peaks you’re experiencing in your day-to-day business.
In my first few years as a broker, I was lucky enough to have a few mentors to guide me through. I also did a lot of research about other organisations, to get a clear idea of what was acceptable in regards to fees and expectations. However if you’re just starting out, or have recently made a change to your services on offer, these types of questions can be difficult to find an answer for.
At Top Broker, we see each and every broker as part of a collective community and our aim is to boost each other up. We’re here to work together and build a better finance industry. So today I want to cover referral partners with you, and if you have any questions, as always, please send me an email and we can have a chat, I appreciate hearing from you.
Brett’s Question: Do you offer your potential referral partners a fee?
This is a case-by-case basis and it depends on the referral partner.
With agents, we generally go by – every $100k in lending settled, they get $100 in return for the referral. This is simple and easy to understand and allows me to be completely transparent.
For other professionals like accountants, lawyers, etc. it comes down to the relationship and how you’re solving their problems. The referral fee isn’t the main interest for these professionals; they want to know about the value you’re creating for their clients. Aspects that are of interest to them are how you can help expand their business through reciprocal referrals, introduce them to other businesses that could complement theirs, and so forth.
If, however, a potential referral partner requests a referral payment upfront, as a general rule of thumb, 20% of upfront payment as a referral fee is fairly standard in the industry. This isn’t absolute and can change between states and territories across Australia, so keep that in mind.
Another thing that comes into play is the service you’re offering.
For example, if you’re offering a lending option with a low rate, then your offerings are probably the same as every other broker. In this case, the referral partner will be loyal to the referral fee being paid, so when another broker comes in and offers a higher fee, you’ll be kicked off the team. This is because there’s really no point of difference between you and another broker.
The solution? Create a point of difference.
Figure out the pain points of your referral partners’ business and work on finding a solution to eliminate them. Once you’ve figured out how to solve their pain points, you then move from ‘just another broker’ to a valuable member of their team.
Brett’s Question: My goal for estimated monthly volume is $5Mil. But at what volume level should I bring on an assistant? For example, would it be around $2Mil per month?
Let’s start with the end in mind. A lot of brokers fail to realise that often you’ve got to pay the price up front in order to grow your business.
Ever wondered why you’ve watched brokers who have been in the same position for years, sitting at the same monthly volume year on year, and then on the other end, there are some experiencing what seems like overnight exponential growth?
Well, this is because they’ve set up their business to grow.
If you always do what you always did, you will always get what you always got – Albert Einstein
If you don’t invest in your business and put money into growth, you won’t be able to make more money. So set up the system to cope. Then focus on growth.
Remember, systems then growth.
The most important piece of advice I can give you is, bring on an assistant earlier than you need. This will allow you to set up the systems in an attempt to pre-empt your growth and see profit as the result.
Think of it like this, when a café first opens, they have more staff on hand to be ready for customers flying in and out. They don’t just leave the shop empty and wait for a customer to arrive, then arrange staff after. If they did this, how would they be responsive and able to provide services and offerings as promised to their clients?
Well, the same goes for your business as a broker. If you have no one to assist you, with no structures in place, yet you’re ready for growth, it will be hard to provide great service to your potential clients.
So don’t let your clients walk into an ‘empty café’, be prepared for the 9am morning rush hour by being fully staffed with systems in place.
Start building solid foundations with your referral partners and building trust between you. Put the structures in place and make room for more business, and it will come.