A payout for a sales referral … is 10K too much?

I found this email from our ERP software vendor stunning in so many ways:

I want to personally make you aware of a new program we have just launched, geared toward paying you $10,000 – as many times as you’d like!

The ZZZ referral program is simple: refer a colleague, partner or acquaintance (who has not engaged with ZZZ) that selects software from ZZZ, and we’ll pay you 5% of that software sale up to $10,000 per referral. It’s pretty much that easy! You win, and they win through improved business processes and state of the art enterprise software enhancing their organization.

For a recipient who knows someone to refer their company to, the initial reaction to this email must be cha-ching! (And that’s just going to be a couple people, you’ve got to figure.)

To other grown businesspeople (like me), our reaction is different:

  • Wow $10K isn’t incentive, its graft!
  • Do I get the money, or does my company?
  • Hmmm, they must be hurting for business.
  • A 5% cut, that’s more like a commission.
  • Would I do this … is this ethical?
  • This is questionable, and its coming from our vendor … ewww!

Now, as a disclaimer, I don’t sell software, I’m not tasked with lead gen quotas, so maybe I’m just over-reacting. What do you think about this marketing/sales tactic?

  • Bill Sterzenbach

    I’d say it all comes down to their cost to sell. If they pay their salesforce over $10k to identify, qualify, present, etc then it’s a net gain to them to pay you $10k. Selling software is expensive and it’s a product with a good margin. When you add that ERP is a complex sale (or considered purchase, whichever you prefer) then you’re talking big bucks to get to a sale.

    I would agree that the opportunity to give the wrong impression is high with the method they are using. Also, I’d say the bonus would probably have to go to the company if you are a customer of the ERP as this would start to look like an incentive to lock you into their product.