Is it problematic to accept cash from a company in exchange for encouraging someone to do business with said company?

(Outside of transparent affiliate relationships.)

Last week, we hotly debated this in Stealth Mastermind, so I opted to roll out a poll on LinkedIn:

While the results lean toward kickbacks being an accepted “tit-for-tat” part of business — we’re far from a consensus here.

Especially given how dramatically binary this question is.

So where do I stand on this?

👉 Kickbacks. Kill. Trust.

This is a hill I will proudly die on.

Turning down thousands

Leading Stealth Mastermind f*cking rocks. 

My days are filled with interesting conversations with some of the smartest people I’ve ever known.

And our group is about as far from the scammy transactional networking groups as you can get (cough-BNI-cough).

So while a lot of members do end up doing business together, or referring customers to each other, that stuff is like a “happy accident”.

It occurs as a result of solid relationships, not transactional intentions. 🤝 

But when one member, (let’s call him Bob), learned that I had recommended one of my clients to another member, (let’s call him Stanley), for creative services…

…and the resulting deal earned Stanley ~$250k in revenue…. 

He couldn’t stop thinking about it. 👇

Bob is someone who I trust, admire, and consider a great friend. He’s not scammy, scummy, or scuzzy in any way. 

And his point here is valid—

I brought Stanley $250k+ in business, shouldn’t he thank me by offering me a cut?

That’s $250k in revenue that he didn’t have to:

👉 Pay out sales commissions on.

👉 Or allocate marketing dollars to. 

What Bob didn’t know is that Stanley actually offered me a 10% referral deal years ago — long before this client came into our lives.

And I turned it down.

Perspective is everything

There was one consistent theme throughout all the conversations we had last week on this topic:

👉 Those who were defending referral kickbacks were doing so from the point of view of the company receiving the referral, and giving the cash.

Here were some of the points made (direct quotes):

—

—

I hear ya, friends. ♥️

All of that logically makes sense from your point of view as the business owner. 

In fact, it also sounds pretty damn ethical. “Sharing your wealth” with folks who helped you earn it is a genuinely nice thing to do.

But defending this idea from the point of view of the person making the referral, and receiving the cash, flips this argument on its head.

Greasy and callused palms

I used to work in the construction industry.

My consulting practice served some of the biggest real estate developers in the world, and a variety of vendors were climbing over each other to get a piece of the projects I was working on.

My clients were the developers, and they trusted my guidance. I knew which vendors were best suited for which projects, and I helped them navigate those decisions with clarity and confidence.

The vendors knew this.

And they all wanted to “partner” with me. They offered me kickbacks that could equate to tens, if not hundreds of thousands of dollars. 🤑

All I had to do was recommend them — which, if they were the right vendor for the project, I was already doing.

In their minds, they were being “nice guys”, offering to give me a cut of the money that I was helping them earn.

Greasing palms is a time-honored tradition in the construction industry — so they were always shocked when I declined their generous offers.

But here’s the thing—

No matter how you shake it, the minute you accept cash for a referral, your advice is forever tainted — even if it’s a referral you were already going to make.

And I was not going to let that happen to me.

It all sucks

Let’s go back to the ~$250k deal I brought to Stanley.

A CEO who I was ghostwriting for had a complicated project that required an agency with a diverse creative skillset.

They asked if I knew of any creative agencies that could be trusted with such a project.

My mind immediately went to Stanley. 

His company ticked all the boxes, and since he was a personal friend, I was confident that he would go above-and-beyond for this client.

• I recommended him without hesitation.

• About a month later, he was hired.

• And, as expected, he did a killer job on the project.

Now… let’s say that I had agreed to that 10% referral deal with Stanley.

I would have had two options when my client asked me for my advice:

1. Tell them that I have the perfect agency to suit their needs, but disclose that if they hire them, I’m getting 10% of the revenue.
   
   OR
   

2. Tell them that I have the perfect agency to suit their needs, and NOT disclose that I’m getting a kickback.

🤦 Both of these situations suck.

👉 The first situation sucks because it makes my client wonder if I’m actually giving good advice, or just pushing them to hire someone who’s going to compensate me.

👉 The second one sucks because not disclosing that my recommendation is tied to a financial incentive is shady as f*ck.

Let’s think about the damn client for a minute

Put yourself in the client’s shoes.

Imagine going to someone you trust for advice on a big decision, and following their advice, only to later learn that they got paid to lead you in that direction.

How would you feel?

Regardless of whether or not the advice worked out— 

I’d personally feel played.

My trust in both parties would diminish, and there’d be a strong chance I’d distance myself from them all together.

I certainly wouldn’t recommend them to others.

But of course, that’s just me. 🤷

The caveat

Transparent referral and affiliate programs can be a fantastic marketing tool, and I’m all for ‘em if they work for your business.

They can offer undeniable social proof, and incentivise your colleagues and customers to be loud and proud about why they love you.

Hell, I have a referral program set up for this newsletter!

But that’s not what we’re talking about here.

We’re talking about how tempting it can be to accept personal cash kickbacks in exchange for making recommendations to people who trust and value your expertise.

When you do this, you’ll earn short-term gains that compromise the integrity of your advice and trustworthiness.

But some friends (who I dearly love) adamantly disagree — and think I’m leaving a shit-ton of money on the table.

No matter where you stand on this issue, I encourage you to put yourself in the client’s position before you give –or accept– a cash kickback.

If you can honestly say that, as the client, this transaction wouldn’t give you the icks — then have at it.

Cheers! 🍻

-Kristin :-)

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