A client asked me this question about referral fees from a new online radio talk show:
I was asked to be a guest speaker on a (new) online radio talk show. In the contract she is asking for 25% of any profits made from the talk. It is to be paid upfront before my information is passed along to the interested person. Is this normal?
Well – I took a quick look at the contract you forwarded — and the contract doesn’t seem well thought out. Also — the fact that this is a “new online radio talk show” – suggests that there isn’t an established or affluent audience already in place. You (and the other speakers) will be essentially promoting the radio talk show for them.
The contract also suggests that “the audience/client” pays her FIRST – to get into contact with you. THEN she forwards 75% of that fee to you. BUT since this is a potential lead and no sales have been conducted – the pricing model is (at best) muddled. And if she doesn’t already have an established or affluent audience, there doesn’t seem to be a good reason or ROI.
It would make better sense if she charged the client a flat fee for connecting the client to you – then forward you 75% of that – as well as the client’s contact information. The 75% fee to you is in reciprocation for your time and talk. Or she could charge you a flat fee for each name/lead –but I don’t like that strategy for you. What would stop her from sending you un-vetted names just to get the flat fee per lead? Without additional data on her past success or her clients past success – this doesn’t seem attractive – as it is currently organized.
If you still want to do business with her:
If you still want to “help her out” – you could offer to do 1 talk show for her at no charge (your regular speaking price is $1500)– just to help her get started.
You can offer to pass this speaking contract along to other coaches for a referral fee of $10 for every speaker that signs up for her show (she pays you for you helping her out). “If no one signs up – she doesn’t have to pay you anything. She would only be paying you from the profits she is making from the other speakers” 🙂 This is the same logic she gave to you regarding her referral fee and marketing services.
KEEP YOUR ROI IN MIND AT ALL TIMES.
When approached to participate in a referral program of this nature – where you are provided stage time in return for % of your sales – make sure you understand and ask the following:
1) What is your current audience size? and income level of the audience? (I want to make sure your audience meets my target market).
2) What is the general sales that your speakers make from being on your program? What is your history of your speakers success? Can you show me the numbers and testimonies of your speakers’ success from participating in this business model? (I want to understand my ROI)
3) Since you seem to be using your “marketing skills, networking abilities, and PR experience to help grow my business” – as a reason for speakers to participate; I need to better understand your success in PR and marketing. How do you actually find the customers? What is the guaranteed minimum audience numbers? What are you actually doing for that rate? and can you guarantee a minimum of affluent audience members for my talk? Can you share your client’s success story and testimonial?
4) If I am expected to market your programs (i.e. passing this along to other speakers) – do I receive a referral percentage for finding customers for you? Or are you expecting the speakers to promote your program for free while you are expecting them to pay a referral % to you?
5) How influential are you across your fan base? How many people can you currently reach; AND do they actually take action when you speak? Having 1000 friends that don’t participate isn’t much of a selling point.
6) Does your audience pay a subscription-based-model for this valuable content? If so – what percentage of the fee does the content providers receive? I normally receive $1500 for a talk. What are your plans for compensating speakers for their time and preparation – as well as their valuable intellectual property?Anyway – as a business coach; I look for the ROI. So – the answers to the above questions will give me enough information to make a good business decision about your program.
The bottom line: There IS A cost for me (and other established and influential speakers) to appear on their program. IF they are a start-up and don’t have the business metrics to show past success, then it is the content and speakers that will be helping them out to building their business. If they are well-established, then it’s going to be these business metrics that will attract influential speakers.
A savvy business owner should not hesitate to ask these important questions.
