Purveyor asking for a referral fee. Ok, or not OK?

[Harry Nutczak]

This is a continuation thread of the issue I had with a purveyor that got me a little upset. I just wanted to get it off of Marv's Event-planner thread.

I have been buying from this guy for several years through various restaurants. (well over 1-Million dollars spent with this guy)
I told him I plan on using them for 100% of my product for catering jobs.

And I get asked to provide a referral fee for any parties that he sends my way.

I say, "Isn't buying all my product from you for all of my parties enough?"

I think he was way out of line by asking for a palm-greasing. I have brought them into restaurants as purveyors when they had no business relationship with those restaurants until I brought them in. I get into catering now and he wants a referral fee? Did I ever ask them for a kickback? Lord knows i have been accused of it by one employer!

Does he pull this garbage with restaurants? Does he tell the owner, or the chef that he wants his palm greased for recommending customer to them? I don't think so! he would be booted out that door real quick!

And to top it off, I get a call today for a wedding party event for 300, next year in August that got referred from another meat purveyor, and I have only dealt with this other company for personal reasons to get a couple steaks, chops or other stuff for home use. I have not even done commercial business with the one I just got the referral from.

They asked what I was up to this season and I told him, they asked for my phone number and asked if I would take some jobs if anyone is looking for someone to roast a pig for a party, because nobody else does that around here.

Guess what, they are now getting a thank-you gift & a card delivered personally for the referral.
And I think I just changed purveyors for all my meats. I'll throw the other guy a bone once in a while, but that's about it after his comment.
I did not place an order with them today. I wonder if i will be getting a call tomorrow to ask why. I have placed Monday orders with these guys for 5 years, and today is the first time i didn't.
My sales person has been great, it was not the sales person that asked for a finders fee's. I know this will hurt him a little on commission, but I feel that his boss's comment was way out of line.
The boss better be ready to do some serious butt-kissing if he wants me back as a regular customer.

I know a couple people think a purveyor asking referral fee's is ok,
if I have never done a dollars worth of business with this guy I would not be so twisted-up over this. But the amount of (other peoples) money that I have spent with them is more than I will ever earn in my lifetime!


OddThomas had mentioned that he hopes my "Competition does not take him up on the offer".

I have no competition, I am the only company doing this for several hundred miles. We have a total of 2 caterers in this entire 3-county area besides me, and neither one does BBQ.

I hope to have the Half the amount of business that both BBQMAN & Marv. are dealing with weekly. That would be way beyond my set goals for this season. I got a late start, and it took a little coaxing from other's to get me to commit to this business.
I am jumping off a ship that will never sink, and climbing into a leaky rubber raft by doing this and abandoning a great employer.
I am still planning on working for them until i cannot handle both commitments anymore. I committed to a few special summer events with them and those dates are marked on my booking calender already.
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Just remember that the toes you may step on during your climb to the top will also be attached to the a$$es you'll be forced to kiss on your way back down!

[BBQMAN]

OddThomas wrote:

Harry,

I agree most of the responses; I don't see anything wrong with paying a bird dog fee. I certainly don't see why your so upset that he offered to help bring you business and I think maybe you jumped the gun. As far as what you already pay him for your meat, I assume he provides a good service at a fair price and if so, I don't see what one has to do with the other. You may have just lost a good source of business. I hope your competition doesn't take him up on the offer.
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OddThomas actually had some good points there Harry! (We are trying to tell you in a politically correct manner not to step on your own D!ck)

You don't currently have any competition because the area you live in is small, no?

With that being said, in a small town everyone knows everybodies business (from what you have told us in the past about all the goings-on, you do! ). Customer relations are part of this business, and that includes knowing when to bend a little to make ends meet.

This situation can work for you, or certainly work against you whether you currently realize it or not.

If you develop a reputation as a hard nose, people will not want to work with you (competition or not).

I would work out some kind of compromise with the first vendor- sounds like he has been treating you fair for quite some time.

I have no problem giving folks a bird dog fee for refferrals as long as it is reasonable. You yourself just told us that the new guy is already getting a gift and a thank you card! So which is it, you don't like refferral fees, or you do?

Just my two pennies worth!
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BBQMAN
"I Turned A Hobby Into A Business".
Providing "IMHO" Since 2005.

[StarsandStripes]

For what it's worth: Just be sure you can sleep at night.

Congrats on the business. Sounds exciting.

[Harry Nutczak]

Yes there are valid points made by everyone,


The difference between these 2 completely different (And competing)vendors?
I guess it would have to be the standing business relationship that I have had.

The guy that refers me to a large event completely out of the blue, (the client quoted them as saying, "This is the guy you need to call if you want it done right") Is the vendor that i have spent less then $500.00 dollars with over my entire lifetime, I have only purchased their meats for personal use, (both are retail & wholesale operations) have had venison processed into beer-sticks, summer sausage, & Venison-bacon.
And the guy that asked for a referral fee is/was the company with a long standing business relationship, and the good amount of money spent throughout the years.


The first guy, his prices have always been higher than other more well known vendors, but the quality of his beef was at the level that I needed. I actually refused their first order I had ever received from them because of quality problems. and since that time they made sure it was above or beyond what I was expecting, But I paid more for it too. I do not base my business buying decisions on price, quality is always first. Now for home use it is different, price is the first thing. I guess it makes a difference on who's money you are spending.


maybe I am way out of line by being so bent-up over this, But his statement really caught me off-guard. I never expected to hear something like that from that business especially when I stood up for them when other chefs in the area would not use them as a purveyor.

I'll see what happens today, I expect my sales person to make a personal visit today since I did not call in my famous "Monday orders" yesterday. If he realizes I am a little pissed off at his boss when I see him, this could be fixed.
I haven't called or stopped in there since this happened so nothing was said.

Thank you for helping me rationalize this and see the different sides.
_________________
Just remember that the toes you may step on during your climb to the top will also be attached to the a$$es you'll be forced to kiss on your way back down!

[camdentom]

Harry, I admire your ability to listen to good advise from the pros. Lucky you, that you have such an excellent source of information to turn to. I too, have always been a believer in not burning bridges. Decisions made on emotions generally are not the best ones. Chances are, the guys not asking for much. Maybe just some great BBQ leftovers will make him happy. BTW, congrats on the new venture. Very exciteing.

[kickassbbq]

Consider the cost of his referral fee against not getting his referrals at all.
And, if he is in the meat business, there just may be a NEW guy on the block soon, if he thinks he really can drum up business for a caterer.
He can win both ways.
I will pay a reasonable referral fee any time I get the chance to have more business.
Most people are not going to go out of their way to drum up new business for someone on an ongoing basis for free. I would not spend my time doing that for someone.
Be nice to have a Marketing Department for your business!!!!!!!!
In my opinion, it's just good business.
Smoke On!!!!!
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Smoke On!!!!!!
www.kickassbbq.com

[OddThomas]

[kickassbbq]

Harry,
One other thing. The only reason you do not have any competition is maybe nobody wanted to risk the venture UNTIL they see someone else making great money doing what you are doing!!!
If you are out there spreading the word about your good fortune in making money doing the Q thing, someone will see the potential and you WILL have competion in the future.
Has happened to me often with several businesses.
Nothing lasts forever and somone will step in, in good time.
Take care of the business you do have (on both ends) and make being the ONLY guy doing it last as long as you can.
Smoke On!!!!!!
_________________
Smoke On!!!!!!
www.kickassbbq.com

[Harry Nutczak]

I guess I should explain that this guy is not "Actively" finding job's for me.

people call them looking for a pig to roast, and then ask if there is anyone around that does the roasting. they offer their unit which is a propane fired hog-roaster for rent at the tune of $300.00 per day.

All this clown would ever do is give out my number if someone called them and they could not provide their roaster for them to use, and they could not talk this person into renting their roaster.
You can bet your arse they won't pass on any opportunity to rent that POS out, and make $300.00 (Plus Tax, & delivery if needed) for 6-7 hours.

The guy tells me that his roaster can cook a 150 pound pig in 4-5 hours!!
how good ya think that one will taste?? greasy, tough, & Nasty! But hey it hit 170 in the shoulders & hams, so it must be done, right?

So, No they would not be actively "Bird-Dogging" for me. To sell product, they would sell the interested party the pig, rent them their crappy "Propane burning Oven on wheels" and give them verbal directions before even mentioning me.

I have already agreed to a deal over 2 months ago to do 1 roasting job for them, pro bono, scheduled for June 1'st, they have already sold the pig, & rented out the roaster to the client. I will just be tending the roaster.
Then he ask's for a referral fee to give out my number "In case anyone calls and they want something other than a whole pig"
That is not actively soliciting any way you look at it.
With me buying my product from them, I would accept that as enough. if they send a client my way, they make money. if they don't send a client my way and I have a Gig, they make money. Should I have to pay out of both ends to get the jobs that they cannot do? Because if they can rent out that roaster, they will.

it is not a matter of them passing on a chance of their roaster rental and handing the job to me on a silver platter.

I will still be doing business with them for meats and other items, and if I start to get a large amount of good referrals from them, I'll toss them a bone once in a while. he was very clear that cash was wanted, not some good "Q" as a token of appreciation.

So, I will not give them a palm-greasing for every little crappy job that may or may not be tossed my way. If I get a real lucrative deal and it originated from there, then that is a different story, But it will not be cash, it will be written on a business check. or they will get some great "Q" from me.
_________________
Just remember that the toes you may step on during your climb to the top will also be attached to the a$$es you'll be forced to kiss on your way back down!

[allsmokenofire]

I've been in marketing and sales for longer than I care to admit, and referrals and referral fees are just part of the business. While the "principle" of it, and the "method" by which the purveyor asked for it may stick in your craw, it's really just another business expense.

I pay referral fees in my line of work and they are always a percentage and never a flat rate. If your purveyor sends you crappy referrals for little money, they won't get much in return. If they send you large events that you wouldn't have gotten otherwise, you will both profit from them...and that's the outcome that works best for both of you. Since you have little to no competition in your area beating your prices down, you should be able to fold any referrals paid out into the price of the event and recoup your cost.

...but that's just my 2 cents.
_________________
Mike
Team Enoserv