At Engage '09, during her speech Marcy Blum took the bull by the horns and said that she is a "reformed commission taker". She said that she does not approve of the practice unless it is plainly available for the client to see. There were a lot of nodding heads in the audience, but one person who argued the other way and said that those who refer business should receive compensation from the vendor receiving the referral. I had to literally sit on my hands not to steal Marcy's thunder.
Commissions, referral fees and hidden markups (where your invoice is marked up by the planner or other vendor on their letterhead) are not in and of themselves evil. They just have no place in today's market. Without efficient access to information (i.e., without the Internet), customers are subject to the power of those who control the information. So if a customer has no good way to find a reputable vendor and no way to discover what people really think about the vendor's work, the only real source of information is from a referral. In this kind of market, a commission or referral fee is far more powerful and valuable to less-established players in the market. However, with the Internet and the amount of information about ANY artist literally available at a potential client's fingertips, the closed system is now blown wide open. Simply, there is virtually no value in a stand-alone referral from a vested source any more – a potential client may take the recommendation but will research the creative business prior to choosing to do business with it.
I abhor the lack of transparency in any business, creative or not. Unless you are willing to pay the commission or referral fee out of your own pocket, your client has the right to know what they are paying for. I might be puritanical about things, but failure to disclose a commission to your client is this close to fraud. It might not be illegal, but it certainly stinks to high heaven.
The biggest point though is not the ethics of the practice, but the impact it WILL have on your business. The goal of your business is to deliver your art at a price point you consider to be fair value. If what you are delivering is at an inflated price because you have to "bury" the commission, do less to be able to afford the commission or because someone else is marking up your invoice, your brand will suffer. Clients know when they don't get what they pay for and they are not shy about saying so to you or everyone on the planet via the Internet. And make no mistake, you are the one who will be singled out. After all, it is your business that delivered an inferior product relative to price not the vendor receiving the commission.
Should you be grateful for a referral? Of course. But show your gratitude by going above and beyond for both your client and the vendor. Overpromise and overdeliver. In the medium and long run, the value generated by your actions will far outweigh any commission you might have to pay.
And to the person at Engage '09 who questioned why a florist shouldn't pay a vendor who sent her many, many referrals a referral fee, I respond with this: why do you think the vendor was referring the florist in the first place? Because she is a GREAT florist and she makes the vendor LOOK GOOD. Your art needs to stand on its own.
{ 23 comments }
AMEN!!! Great advice and I can’t tell you how many planners I have seen that have to explain themselves out of a messy situation to a client. The money is not worth risking & ruining your company’s reputation!
Great post, Sean! There is a lot of controversy with this subject among the Wedding Industry.
In this world, people are tend to expect something back when they do something good (i.e. referrals. And I totally agree with Maria @ {ritzy bee}, it’s not worth your business reputation at all.
Sean, you get a big amen from me on this one…
This is something I’m really passionate about. Outsiders see the wedding industry as a racket anyway, and kickbacks/commissions just reinforce that perception. It’s an unambiguous case of ethics, plain and simple. Kickbacks drive up the cost for consumers, and erase the line between a referral for outstanding work and a referral for payment.
Thanks for posting about this, keep it up!
Having been a wedding vendor for 24 years and now in wedding media. The topic of commissions and kickbacks has always been a discussion point. I agree 100% with you on the transparency issue. An event planner should be referring the best possible vendors. There needs to be a level of trust established by the event planner and having a financial relationship with vendors undermines the integrity of that relationship.
Great post
“And to the person at Engage ’09 who questioned why a florist shouldn’t pay a vendor who sent her many, many referrals a referral fee, I respond with this: why do you think the vendor was referring the florist in the first place? Because she is a GREAT florist and she makes the vendor LOOK GOOD. Your art needs to stand on its own.”
Let the church say “AMEN”!! I agree with you and everyone else who has posted 1000%. My take is this – I charge appropriately for what I do, what I create and what I bring to the table. I don’t need to get a “hand under the table” from anyone else because I sent business their way. I make recommendation based on a core set of principles – so if your name appears on the list or comes out of my mouth, it’s because I know you can do the job. Period.
When will people learn that you simply cannot serve two masters?
Sean,
Let me add my “amen” to the choir!
I have NEVER accepted or paid referral fees in my business, never paid to be in a venue’s wedding book (same thing, different wrapping) and in Las Vegas, LAND of the KICKBACK, it hasn’t been easy.
I’m asked by some businesses that are new to working with me “How do you make money”? I charge my clients a substantial and fair fee for my services and allow them to take advantage of any benefits my valued relationships with wedding professionals might bring (in the way of better discounts, a special upgrade), etc.
When there are times a business has a business model where they prefer to work directly through me, I respect that and accept the discount and pass it directly to the client; full transparency and everyone knows up front that’s how I operate.
IT HAS set me apart from others as a quality planner to do business with and I respected for it by the same quality of professionals that have the same core values I do and who I choose to collaborate with.
I teach “Vendor Relations” for the Wedding Coordination & Design class at TISOH (www.tisoh.com). I have been teaching this mantra to every class. I am printing/emailing this post for this and EVERYONE to see!
Thank you Sean for breaking this down even more for me and everyone else. I am the florist who asked the questions after Marcy’s speech. She was so transparent and clear and I love that about her. I had never been asked for a “kick back” before, until a few months before Engage09. And what a perfect arena to get such a controversial question answered. I appreciate the additional detailed information here in your blog…a powerful tool for me to stand behind. Thank you!
Thank you for this post, there is a lot of this going on in the industry lately. I forward any incentives to the bride. I want to recommend a vendor for their work, not from what I can get out of it.
thanks for putting this out there. i come from the world of politics where everything is disclosed, even just a meeting over coffee, so it always strikes me as odd when commissions or pay to play things aren’t disclosed.
spot on.
Sean – THANK YOU for posting this! Well said, and mandatory reading for everyone in the industry.
Fabulous post! As a planner, I NEVER take a commission- never have. When I refer a client to a vendor, it is because I have a relationship, a trust and a confidence in their product- not because it puts money in my pocket. I don’t endorse anyone I haven’t worked with or have 1st hand knowledge of and I don’t blog about unknown or questionable vendors. My reputation is on the line every time I send a bride somewhere. I don’t take chances with that or with someone’s wedding!
Fantasic post!!
Hello Sean, I have a question. I understand the transparency issue. That is just good business practice. My question is when planners say they have never accepted a commission. How do they make money? My mother owned an interior design firm and she charged an hourly rate plus a commission of 20%. Her clients knew this up front. She worked with vendors to make certain that the (if it was a furniture vendor, say) sofa was the style the client wanted, helped select fabrics, coordinated the sofa production and delivery timing and staged the sofa in the home. That is a lot of work and the more items she coordinated, the more complicated the work became, hence the commission. It make sense to not charge a commission on the overall wedding budget, but if a wedding planner is coordinating the details of all the transportation, hotel accommodations, etc., would you suggest a flat hourly fee, a commission fee or a combination of both? May of today’s clients seem to understand hourly and commission rates for interior designers, why not their wedding planner, too?
Hello Sean, thank you so much. As a florist, I would hate to know that a planner is only referring me because I paid her, not because of the work I do. One of my biggest annoyances in the floral industry is the prevalence of wire services–teleflora, 1800 flowers, FTD, bbrooks, etc. Not only do they charge a referral fee of about 22%, but they also charge a membership fee, and various other “necessary” charges to be in a good position within the group. The end result is a florist trying to not only satisfy, but delight a customer while working with about 60% of the usual revenue. A customer is expecting a $100 flower arrangement, but the florist is only receiving $60. There is much more to be said about this whole topic, but I am wondering what your thoughts are on this.
Wonderful post; thank you!
but I do have a question; you have a link to Bridal Bar on your blog. Don’t vendors pay a membership fee for the privelege of being included?
Suzanne —
I think the Interior Design model can work for planners if it is explained and justified to the client. For Interior Designers, so long as they are passing trade discounts to the client, it is actually fair value for their service.
Kristina —
Not a big fan of wire service models, but does get you business. Would let your clients know that the wire service is taking a fee and ask them if they would like to pay for it separately or have it included in their bill — this way they know that they are getting a $60 arrangement not a $100 one. Don’t know if this is possible given your contract, but sure would be great if you could do it.
Nancy —
Bridal Bar is a pure referral service and the value is that they are matching the right client with the right vendor. Bridal Bar screens its vendors very carefully and has the right to terminate the vendor at any time. The value of the business is a referral. To my knowledge they do not pay any percentage linked to sales (i.e., a commission) nor do they hide that vendors are paying to belong to BB. So to me a completely different animal from commissions and much more akin to paying to advertise with say, The Knot or in a bridal magazine.
Thank you for the reply, Sean! I am so excited for your new business venture! Congratulations!
Excellent post. As wedding planners, we need to keep our brides and grooms’ best interest at heart and that includes watching their dollars.
There are so many things about the creative market that are what I consider “sleazy” such as printers charging a “set up fee”? That is ridiculous – they just know that they’re service, and turn around time aren’t memorable enough to bring a client back a second time, so they take what they can get when they can get it.
Also, it’s not advertised in the price of their services – just thrown in there once the job is nearly finished, if not completely finished.
Hi Nancy,
I actually created The Bridal Bar and we make no secret of the fact that our vendors are part of a pre-paid, highly edited membership. We do not take any mark ups or commissions whatsoever. I firmly believe as Sean does, that you can’t gain the trust of the client when this is on the table. When we recommend a vendor and/or product to our brides we want them to know that it’s because we think it will enhance their event, not because we make a larger dollar return on it. We don’t charge the bride a cent, they know where our revenue comes from, and even if they don’t hire a single vendor of ours, we still assist them as best we can and offer the most service possible. I don’t think you can get more transparent than a free and individual wedding service like that, one who doesn’t take a back end from your event in any way. Even a magazine charges you a few dollars for the right to look at their paid advertisers – not to say this is wrong, but I don’t think magazines or my model can be to blame for commission concerns in this industry.
Sean’s blog is great at creating discussions, he is so brilliant and in tune with our industry, he knows how to bring topics of passion and importance to light. That said, I would trust any link, any post, or any thought process he puts his name on – and none of those are paid…that’s when the value of a recommendation is truly trusted.
Thank you, Sean, for this excellent post on such an important topic. I have been a wedding consultant in southern California for 16 years and have NEVER paid or accepted a vendor referral fee or commission. This is something I have tried to impress upon all the new wedding consultants I’ve mentored over the years.
Thanks Sean — you hit the nail on the head as usual.
I was at Engage!09 and thought the discussion on kickbacks was very interesting. While I’m in the same boat with nearly everyone else and uphold extremely high moral standards for my own company, it did raise a couple eyebrows in the room. I think this is a controversial issue and clearly marks the way our industry is changing for the better.
I’d love to see a post sometime on the fine line between kickbacks and undisclosed markups. We could just call undisclosed markups “retail,” could we not? My business doesn’t operate this way but I know several that do and are very profitable because of it. I think Suzanne brought an interesting point about interior designers which can spur a lot of discussion within the wedding community. It would be nice to make that fuzzy gray line a little clearer!