Start with the value of the introduction
A referral can be anything from a name passed along in conversation to a warm introduction to someone who is ready to discuss a specific need. Those actions do not necessarily provide the same value. Before discussing a fee, agree on what the referring partner will do and what the receiving business will handle. For example, a partner might introduce a prospective customer by email, while your team runs the sales conversation, prepares a proposal and delivers the work.
Also discuss which customers are eligible. Will the arrangement cover only new customers, or could it include an existing customer seeking a different service? What if both partners already know the same prospect? A useful rule is to confirm an introduction in writing when it happens, rather than trying to settle competing claims months later. Neither partner should assume that an introduction will become a sale.
Choose a fee that is easy to calculate
Common approaches include a fixed amount for a qualifying sale or a percentage of the revenue received from that sale. A fixed amount can be simple when projects are similar in size. A percentage may fit work with variable prices, but it needs a clear definition of the amount it applies to. For instance, the partners could agree whether the calculation includes optional services, discounts, taxes or pass-through expenses.
Consider the work and uncertainty on both sides. A brief introduction may call for a different arrangement from a partner who spends time assessing fit and helping the customer understand the service. Check that a proposed fee is workable alongside the cost of delivering the project, rather than choosing a number solely because it sounds attractive. If the service is sold through ongoing payments, decide whether the fee applies to the first payment, a defined period or another clearly bounded amount.
Define when a fee is earned and paid
The payment trigger is often more important than the headline rate. Is the fee earned when the prospect books a meeting, signs an agreement or pays an invoice? For many small teams, linking the fee to money actually received is easier to administer than paying on a signed deal that might later change or be cancelled. Whatever trigger you choose, describe it in plain language and use the same definition in your records.
Then agree on the payment process: who sends an invoice, what information it should contain, when the receiving business will confirm the amount and how soon payment is due after the trigger. Think through partial payments, refunds and scope changes before they occur. For example, if a customer pays in installments, the partners might agree to pay the corresponding referral fee in installments too. That is one option, not a default; the important point is that both sides know what to expect.
Put boundaries around the arrangement
A short written record can prevent misunderstandings without making the partnership complicated. Include the eligible services, the definition of a qualifying referral, the fee calculation, the payment trigger and the process for confirming introductions. State whether there is an end date for earning a fee after an introduction, and what happens to already confirmed referrals if the partners stop working together.
Set expectations for how either partner may describe the relationship to customers. An introduction should not imply a promise about price, availability or results that the service provider has not approved. It is also worth discussing whether the relationship or fee should be disclosed to a prospective customer and checking any rules that apply to your industry or location. Where obligations are unclear, seek appropriate professional guidance rather than relying on an informal assumption.
Use a simple review routine
Tracking can be modest: a shared record or agreed email trail may be enough for a small number of introductions. Note the prospect, introduction date, referring partner, status and any fee paid. Limit access to customer information and share only what is needed to manage the arrangement. A regular check-in gives both partners a chance to confirm open referrals before memories fade.
After a few referrals, review whether the terms are practical. Are introductions reaching the right customers? Is the fee calculation clear from an ordinary invoice? Does the payment schedule create avoidable friction? Make changes for future referrals by mutual agreement and record when the new terms begin. The aim is not a perfect formula; it is a process that both partners can follow consistently while protecting the customer relationship.
