REFERRAL FEES HAVE LONG BEEN AN ACCEPTED PRACTICE IN JUST ABOUT EVERY INDUSTRY.
The large “finder or referral” fees that many structural drying companies are paying to plumbers may be causing an unwanted backlash! (some contractors are paying $500 to $750 (or more) finders fees to plumbers on water damage losses – regardless of the size of the loss). One franchisee is paying 10% of the total invoice to the plumber. Some contractors are even paying a referral fee – just for the referral – even if they don’t make the sale! 3/14/19. I just heard via a Facebook restoration group that one contractor admitted to paying a 20% finders fee to his plumbers! He clearly doesn’t realize the net margin on a P&L is rarely over 20%.
Guess what this has created?
PLUMBERS – many of them who have been struggling to find plumbing work – ARE BUYING EQUIPMENT TO DO THEIR OWN STRUCTURE DRYING – (I personally know several of them) after they get the plumbing call to fix the cause of the water damage — Eliminating the restoration contractor out of the opportunity. (Even one the largest and most recognized plumbing companies has joined the water damage clean-up industry as your competitor!)
WHY????????? Partly because they think that since we can pay huge Finder’s Fees, there MUST be huge money in Structural Drying! LET’S NOT BECOME OUR OWN WORST ENEMIES!
The insurance industry does not like what they believe is a costly practice to the claim payment since it apparently has gotten out of control, SO…. rumor has it that they are preparing to lobby to make the practice illegal! Finders Fees, Referral Fees, and “Bird-dog” Fees have all been common but when they become excessive, it starts to jeopardize the program and elevate the issue to an unwanted microscope! Also, many state legislatures are implementing laws to make this concept illegal.
Author: Dick Wagner, AskDickWagner.com
Nationally recognized restoration marketing coach, speaker, and consultant
