Partners are the cheapest sales team you'll ever have: recurring referral fee vs one time
Partners are the cheapest sales team you'll ever have, and most founders insult them with a one-time fee.
On our July 3 team call, Charles, Amir and I wrote down the master plan in one line: onboard as many partners as possible. It was flagged as the number one growth hack. We'd just watched a PR strategist send us a deal that we all considered a home run, and the question on the call was simple: are we paying her the 20 percent?
Should a referral fee be recurring or one time? For a services business with retained clients, recurring. A one-time fee pays a partner for the introduction. A recurring fee makes them a partner in the relationship, and that's what gets you the second, third and tenth referral. The percentage can flex. The structure shouldn't.
20 percent of contract value, every billing cycle
An hour after the team call, I was on with that PR partner. I told her straight:
"we pay our partners 20%"
The terms, as we laid them out: 20 percent of contract value, paid every billing cycle, for as long as the client stays. If the client renews, she gets paid again. If the client leaves, she stops.
Here's why that structure matters. A one-time fee makes the partner indifferent to what happens after the intro. A recurring fee makes them care whether the client is happy, whether we deliver, whether the client renews. They check in. They smooth things over. They send the next one because the last one is still paying them.
It also aligns us. If we do bad work and the client leaves, the partner loses too. That's a partner who will tell us when something's off, because they have skin in it.
When 20 percent recurring doesn't work
That same afternoon I got the other side of the argument. A partner who runs a dev shop read a document I'd sent him, which had assumed the same 20 percent recurring commission flowing from his side for referrals we'd send him. He flagged it right away.
His shop had never offered 20 percent recurring. Even 10 percent recurring had only been offered to a few key partners. And his margins swing a lot by project: a custom enterprise build and a quick setup job are completely different businesses. A flat 20 percent forever would eat the profit on some projects entirely.
He was right, and I changed the doc on the call:
"I'll change it to you know 10 to 20 depending on the contract"
The agreed direction was case by case, with 10 percent as a workable floor for most deals.
The lesson: the percentage should follow the margin. A services business with high gross margins and retained clients can afford 20 percent recurring. A project business with thin, variable margins can't. Neither is wrong. Forcing one structure on both is.
Why I still wanted a floor
My ask on that call was not a bigger number. It was a predictable one. We have 20 to 30-plus conversations a day. If I'm going to send a partner referrals at that volume, I need to be able to tell a prospect, and myself, roughly what a referral is worth without calling the partner every time.
A floor does that. "At least 10 percent, more on bigger contracts" is something everyone can calculate in their head. "We'll figure it out deal by deal" sounds flexible, but in practice it means nobody refers anything, because nobody knows what they're getting.
Trust first, contract optional
We didn't require a formal contract with the PR partner. The arrangement was trust-based, and I told her we were open to signing something if she preferred.
That's deliberate. A partnership that starts with a lawyer starts with suspicion. A partnership that starts with a clear rule, paid on time, builds trust every billing cycle. If either side wants paper, sign it. But the paper isn't what makes the partner send the next deal. The payment arriving does.
Give partners a blurb they can forward
The most underrated part of a partner program isn't the commission. It's making the referral easy.
After that call, I owed the PR partner a summary: every guest she'd referred, their status, the partnership terms, and a short blurb she could forward to her own clients. Her referrals come in two forms: clients who might need us, and people who'd be great guests on the show. The framing I gave her for both was simple: he wants to hear your story, and after the podcast there's a business model worth exploring.
Partners are busy. If referring you takes them ten minutes of writing, they won't do it often. If it takes one forward, they will.
The show helps here too. A partner who sends us guests, not only clients, gives every referral a soft landing: the friend gets an episode first and a business conversation only if it fits. And anyone who has sat through a pre-interview and an episode with us knows exactly what we do and how we treat people. They don't need a pitch deck to refer a friend. They need the blurb and the assurance that the friend will be treated the way they were.
How I'd set up a referral program tomorrow
- Default to recurring for retained services: a share of every billing cycle the client stays.
- Set the percentage by your margin, with a clear floor partners can calculate in their heads.
- Expect partners with thin or variable margins to offer less in return, and accept it.
- Start on trust and a written rule. Paper is optional, paying on time isn't.
- Hand every partner a forwardable blurb and a status update on their referrals.
The one-time fee is cheaper on paper. It's more expensive in every other way.
If you send founders our way, or want to, apply to partner with us.
Frequently asked questions
How much commission should I pay a referral partner?
It depends on your margin. For retained services with healthy margins we pay 20 percent of contract value every billing cycle. A partner with thin or variable project margins agreed with us on 10 to 20 percent depending on the contract.
Should referral fees be recurring?
For retained services, yes. A recurring share keeps the partner invested in the client staying happy, which leads to more referrals. A one-time fee pays for the introduction and nothing after it.
Do I need a contract for a referral partner?
Not always. We started on trust with a clear written rule and offered to sign something if the partner preferred. Paying on time is what builds the relationship.