Referral cash is income offered in return for your recommendation of a product or service to someone else. Because you earn that money for a referral alone, and no direct work, it is considered passive income (the holy grail in business ownership). For example, if you sell a third-party tool or service to a client, and they pay you to manage that service, that is NOT referral cash. But if you sell a 3rd party service to a client, and every month that 3rd party is doing the work, collecting the money from the client, and paying you a small portion (like a dividend), that is referral cash.
In the past, these arrangements were often extremely discreet—an unofficial "bribe" in which consultants were encouraged to sell specific solutions in order to earn a kickback. Nowadays, referral programs have become far more legitimate, and are considered a standard, expected token of appreciation for a consultant's loyalty and support. You choose the third party tool or service that is the best fit for your client, and you are thanked for bringing in that business. These deals can be an important source of revenue for your business. They also help you build stronger relationships with your vendors, in turn allowing you to deliver a higher level of service to your clients.
Virtua Consulting can help you master every aspect of owning and growing a successful consulting business.
So how do you make this referral cash? There are nuanced differences based on your industry, but here are some ideas to get you started on the road toward, regular passive income:
Start to think about the different ways that you can add a passive income source to your business model. Just keep in mind that the key to long-term business success is providing unique value that meets a demand in the market, so while referral cash is an excellent secondary income source, it should not be your primary source of earnings.
Have questions? Other ideas you want to add? Reach out!