Business owners are consumers and they expect quality, service and value just like everyone else. When searching for a service provider, most people value a recommendation from someone they trust.
When someone makes a recommendation, we assume they are making the recommendation in good faith and the service provider is honest, reliable and competent. That is not always the case, however. What if the referral source does not even know the person they are recommending? What if the only reason they are making this recommendation is because they were paid to do it? Would you still trust the recommendation as much?
Radio talk show hosts, TV personalities and even large companies have “recommended service provider” programs. Make no mistake, these are paid endorsements and it is big business. A well-known national celebrity can make in excess of $25 million a year in referral fees.
I interviewed a representative of a large national celebrity referral program about their requirements to be a recommended service provider. While they did have some minimum experience and production requirements, that was the extent of the quality vetting process. When asked if they removed service providers from the program if client feedback is negative, their response was that rarely happens. They prefer to coach and train their service providers rather than remove them from the referral program.
Countless consumers act on these recommendations because they trust the source. The source may imply their recommended service providers are vetted for quality. Rarely do they disclose the service provider may pay thousands of dollars for each closed referral. In virtually every case, they would not recommend that service provider if they were not getting paid to do it.
Some of the service providers who pay for endorsements are good and some are bad. Consumers have a responsibility to vet the people they do business with. Ultimately they are the ones who will be harmed if they hire the wrong person.