Tag Archives: referrals

The Truth About Referrals

How can third party referrals that advertise as free afford those TV commercials?  Good question.

The truth is that those referral  companies charge the vendor!  That means that the plumber, carpenter or handyman that you hired from a referral company paid for your referral and will charge you more to cover his costs.

“I got several referrals at the same time and only chose one,” you say.  Well the dirty little secret is that the referral company charged each of those vendors,  whether they were chosen or not.  That means that the vendor you chose not only had to increase his rates for your referral but also for each referral he wasn’t chosen for.

Why would you want a nationally advertised company to refer a tradesman  that will need to be local to provide you service and reasonable rates?   It is just a numbers game to them.  They have no more interest in your needs than the man in the moon.  The tradesmen they refer to you will only be the ones who agreed to pay for your referral.

So now you have several  names.  Each of whom has paid for your number.  Each of whom could be reached just as easily on the internet without the middle man referral company.  Other than generate income for the referral company, what have you accomplished?  You still have to choose.

You say the referral company has ‘vetted’ each of these companies.   Isn’t that what you’re supposed to do?  The truth is there is no incentive to the referral company to limit vendor participation by excluding anyone, regardless of their performance or reputation.  The more vendors that pay them the more they profit.

Several of these referral companies are engaged in class action suits with either vendors or consumers for fairly obvious performance and ethics violations.

I was taught there are no free lunches.  All costs will trickle down to the consumer.