Expert: Walter L. Gibson - 3/8/2009

Question
Hello,

Your response would be greatly appreciated.  Regarding referral bonuses for our cosmetics business, people want to refer clients to us.  These clients are typically beauty schools.  How much each will purchase will have a wide range.  How much referral bonus should we give to the person who referred us to the school?  Is it typical practice to keep giving a commission to the person for every order the school makes.  This means we have to give him a bonus for the 2nd order, 3rd order, 4th order, etc.  What suggestions do you recommend?

Thank you in advance for your assistance.

Answer
I would send a monthly or quarterly bonus check for a certain percentage of total orders.  We have run a cleaning business for 20 years and pay commissions on sales of cleaning jobs.  Our commission structure is 3% for sales up to $199 and 5% for sales over $200, and bonuses are paid monthly.

Hope this helps!

Gwen
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