BNI 831: Is it a New Referral?

Summary

BNI & The Power of One: Episode 831 – "Is it a New Referral?"

Release Date: June 30, 2025
Host: Tim Roberts

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Introduction

In Episode 831 of the BNI podcast series titled "BNI & The Power of One," host Tim Roberts delves into a pertinent question submitted by Matt from Australia. The episode focuses on navigating the complexities of referral submissions, especially concerning ongoing client relationships and trail commissions in the mortgage brokerage sector.

Matt’s Inquiry: Understanding Referrals and Trail Commissions

Matt, a mortgage broker based in Australia, is part of an exclusively online BNI chapter. His revenue primarily stems from upfront commissions, supplemented by trail commissions paid monthly by lenders. These trail commissions are a result of Matt maintaining client relationships through services like rate reviews and loan top-ups. Notably, these commissions are handled directly by the lenders and are not billed to clients.

Matt's primary concern revolves around the appropriate handling of referrals in his unique business model. Specifically, he inquires whether he should submit a new referral each month for clients who continue to generate trail commissions or only when significant events, such as refinancing or securing a new home loan, occur.

Tim’s Insight: Clarifying Referral Practices

Tim addresses Matt’s question by emphasizing the importance of understanding what constitutes a "new referral." He underscores that a referral should represent a new potential client rather than an ongoing business relationship. Here are the key points Tim discusses:

• Defining a New Referral: Tim clarifies that only new clients should be submitted as referrals. Ongoing clients, irrespective of trail commissions or repeated business, should not be considered new referrals. As he states, “[...] definitely not on the trail commission. Absolutely not” ([00:39]).

• Avoiding Referral Inflation: Tim warns against the temptation to submit multiple referrals for the same client based on ongoing commissions or future business prospects. He likens this to “padding one stat versus another stat,” highlighting the integrity issues it can cause within referral reporting systems ([04:10]).

• Thank You for Closed Business: Instead of submitting new referrals for ongoing clients, Tim recommends using the "Thank You for Closed Business" metric to acknowledge the continued value and loyalty of existing clients. This approach accurately reflects the sustained relationship without misrepresenting referral metrics ([05:30]).

• Lifetime Value Over Multiple Referrals: Tim advocates for tracking the total lifetime value of a referral rather than counting multiple referrals from the same client over time. He explains, “[...] over the lifetime of working with that client, they did a million dollars with me. That's a million dollar referral” ([06:45]).

• Analogies to Illustrate Points: To further clarify, Tim uses relatable examples, such as a barber-client relationship, where regular services do not equate to new referrals ([03:15]). He also references his experience in the insurance sector to reinforce the concept that additional services to the same client do not merit new referrals ([06:00]).

Tim’s Recommendations for BNI Members

Based on Matt's scenario, Tim provides actionable advice for BNI members facing similar dilemmas:

1. Do Not Submit New Referrals for Ongoing Clients: Reiterate that trail commissions or recurring business do not warrant new referrals. Maintain referrals strictly for genuinely new clients.

2. Consistent Tracking of Closed Business: Utilize the "Thank You for Closed Business" feature to recognize and document ongoing client relationships and their contributions to your business.

3. Focus on Referral Quality Over Quantity: Emphasize the importance of the quality and lifetime value of each referral rather than attempting to increase referral counts through multiple submissions for the same client.

4. Maintain Integrity in Referral Reporting: Uphold honest and accurate reporting practices to ensure the credibility of BNI’s referral system and the trust within the network.

As Tim aptly puts it, “[...] you don’t refer me to this client and they, they used me 10 times. So there’s 10 different referrals gave me. No, it’s you referred me to this client and over the lifetime of working with that client, they did a million dollars with me” ([06:45]).

Conclusion

Tim concludes the episode by reiterating the significance of maintaining ethical referral practices within BNI. He encourages members to focus on building long-term client relationships and accurately reflecting their business interactions within the referral system. Moreover, Tim extends his gratitude to Matt for his insightful question and highlights the global reach of BNI by mentioning the upcoming international conference in Australia.

Notable Quotes

• Tim Roberts on Trail Commissions: “Definitely not on the trail commission. Absolutely not.” ([00:39])

• Tim Roberts on Referral Integrity: “[...] you’re only giving people credit because they want to credit on a Palms report or power of one report... it’s just not accurate.” ([04:10])

• Tim Roberts on Lifetime Value: “You referred me to this client and over the lifetime of working with that client, they did a million dollars with me. That's a million dollar referral.” ([06:45])

• Tim Roberts on Ethical Practices: “I would not want to be padding the referral stats. I would want to know what’s the actual value of that client to me over the lifetime.” ([06:10])

Final Thoughts

Episode 831 serves as a valuable resource for BNI members navigating the nuances of referral submissions, especially in industries where ongoing commissions are prevalent. Tim Roberts provides clear guidelines and emphasizes the importance of maintaining honesty and integrity within the referral process, ultimately fostering a more trustworthy and effective networking environment.

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Thank you for tuning into this episode of BNI & The Power of One. For more insights and to submit your questions, visit bnipower1.com.

Transcript

[Sam]

Sam.

[Tim]

Welcome back to BNI and the Power of One. Back with another episode of your questions and topics and I appreciate everybody who continues to send them in. Today's question comes from Matt out in Australia. It says hi Tim, I'm a mortgage broker in Australia. I'm part of an online only chapter. My revenue comes mostly from upfront commissions and a small trail commission is paid monthly. If clients stay with the lender I introduce them to. Brokers receive this trail commission for the work done to upkeep their loans such as rate reviews and loan top ups. These commissions are paid to me directly by the lender and not charged to the client. I have received internal referrals helping some fellow members with their home loans. I am putting in thank you for closed business for this ongoing trail commission every quarter. But I got asked the question recently if a new referral should be put in every month for ongoing clients due to the trail commission. It would make sense to put in a referral if say two years down the track they refinance or get a new home loan through me again. But I'm not sure about submitting a new referral for a staying as a client. So it's a really good question, very common question. We've addressed it in the past and that this is another good example of thank you Phil Cola's business. For us entering a new referral. I would tell you that you should not put in a new referral in either situation that you put out there. So definitely not on the trail commission. Absolutely not. And I wouldn't if they put in say two years down, they refinanced or got a new home either because they're not a new client. And again, it gets into padding 1 stat versus another stat. You know, when we start putting in referrals each time, those aren't referrals. We're only giving people credit because they want to credit on a Palms report or power of one report or whatever new report B and I is going to be rolling out and it's just not accurate. It's not a new referral. All right, so let's just take them piece by piece. The trailing commission is all part of the original referral. You're getting the trail commission because of the original referral. So it's, it's definitely not a new referral. But the referral that was passed originally is becoming more and more valuable. And so the thank you for closed business that you're entering is perfect. Now whether you do it every month, when you get it, you're doing it once a quarter, you know, whatever you're going to be most consistent with, do that. Another example of this would be, you know, we get a barber in my chapter now that person is going to be the person cutting my hair. I'm a referral the first time I go because I am a new client. I, I am not a referral every two weeks when I get a haircut. But the thank you for closed business goes in because I'm still that person's client. Just like that person who passed through the original referral that's leading to the trail commissions is still just your client. And it's from the original transaction. Now to the second part where it says would I think it would make sense to put a referral if, say, two years down the track, they refinance? I would argue no for the very same reason. They are still your client. You got the original referral that made them a client of yours. Now every time they refinance with you or if they end up buying new house and doing that, they're still your client. You didn't get referred to a new person. Your thank you for closed business for that original referral really goes up. If you're asking me, I'd much rather know, like, okay, for every referral I get from bni, how much value was there to that referral over the lifetime? You know, you don't go, yeah, you referred me to this client and they, they used me 10 times. So there's 10 different referrals gave me. No, it's, you referred me to this client and over the lifetime of working with that client, they did a million dollars with me. That's a million dollar referral. That's the way it should be tracked. A referral is to a new potential client. The only like caveat to that really would be like a builder. For an example, you know, if I built an, if I built a house and then 10 years down the line I build an addition. But even then you could say it's still the original client. I would argue even then it's still the original client. So I, you know, everybody's going to do what they're going to do. There's no way to really police this or track it. So I'm giving you just general my advice on how I would handle it. I would want to know the total value of the original referral. I would not want to be padding the referral stats. I would want to know what's the actual value of that client to me over the lifetime. Of them being a client to me and not just people you definitely don't want to put in. It's not a referral. Every time you get the first case is just there is no gray area that is black, that is not a referral. The trailing commission, no way, no how, not a referral. Don't put it in. There'll be people that will debate the other side on the two year refi or whatever. And so there's a little bit of gray area. My personal opinion on it, I wouldn't even put in a referral then I would, I would keep it as you are my client now and everything we do as a in that client relationship goes down to that original referral of you becoming a client at that time. So that's how I would approach it. Hopefully that's helpful. Again, it's a very common thing that goes across a lot of different industries. You know, when I was a member and I did the insurance side, if you bought life insurance from me and then, you know, a year later you bought some disability insurance, it wasn't a new referral for me, it was this is the client relationship and every transaction we do in that client relationship goes to that original referral. So hopefully that's helpful. It's a great question, Matt. Appreciate it. Appreciate you listening. Literally on the other side of the world, Australia, the home of this year's international conference. So hopefully everybody who's able to attend that has a great time. I'm jealous I will not be there. Beautiful part of the world I do want to see someday, but unfortunately not able to make it happen. But anybody who can, you definitely should. Can be a huge event in a beautiful part of the world and a good time. So, Matt, thank you again as always. Go to bnipower1.com Leave your questions, your topics, leave us a review. Apple podcast, Spotify, Google Podcasts, however you're finding it, I really do appreciate all those. Have a great day.

[Sam]

We rise with the sun Ready for the day with hard work and passion we pave the way Every little task it builds and it grows in this world of business it's the heart that shows dedication Shines in everything we do Together we climb it's me and it's you we all work hard to make our dreams alive with strength of spirit we leave the average behind the power of giving lifts us high and wide that's why we are proud to be a part of BNI. From early mornings to late at night we hustle and we strive Keep our vision bright through every challenge we stand tall and strong together as a family we can't go wrong the bonds we're building they take us far in the game of business we're shining like a star we all work hard to make our dreams come true with strength of spirit we all pull through the power of giving lifts us high and wide that's why we are proud to stand side by side Being as the place where connections thrive Uniting our hopes, keeping dreams alive Together we network, inspire and share with every referral we show that we care we all work hard to make our dreams align with strength of spirit we're truly on the grind the power of giving lifts us high and wide that's why we are proud to stand side by side so here we are lifting each other high with dedication and pride we're ready to fly Together we'll grow through every stormy night in this journey of ours we're shining bright.