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Why we are turning down $54,000 (or more)

Feb 7, 2013 | Schedulefly Crew
Yesterday I spoke with a company that provides a web-based software designed for independent restaurants. It's not a competitive product to Schedulefly. In fact it could be a complimentary product if we intended to integrate with other products (we don't). Anyway, the company hoped we might consider promoting the product to our customers as part of their "referral program". Each successful referral would result in a $200 payment to us.

Ten years ago when I was a little younger and much less wise, I would have probably jumped at the opportunity. Here's what I probably would have been thinking:

"Hmm...
We have about 2,700 customers...
Perhaps 10% would buy this software....
That's 270 referrals x $200 for a cool $54,000....
And we're growing by over 1,000 new restaurants per year, so we could create a recurring referral revenue stream by promoting it to all new customers and re-promoting it to existing customers from time to time....
Let's do this!!!!"


But here's what I was thinking yesterday:

"Hmm...
We don't want to partner with anybody. I've blogged here and here about this topic before...
We don't ever want to promote another product to our customers because that's just not our style - in fact we don't email our customers about anything...period...
This would be a pandora's box - if we promote one product we'll have countless requests from other people to do the same - how do we get good at picking the right ones to promote and turning down the wrong ones???
No matter how well I might get to know the people at this company to feel good about them and their product, I would never want to put our reputation on the line or risk losing any brand equity we've built with our customers for the sake of making an extra buck on the side by promoting a product I am not intimately involved with...
And, perhaps most importantly, if a customer expresses a need for a certain type of product and we referred one, we'd want it to be because we thought it was the right thing for the customer, not because we wanted to earn money from it - I think getting paid for referrals dilutes the value of those referrals and provides the referrer the wrong incentives" (We used to offer $100 referral fees to our users who referred new customers, and we stopped in large part for this reason - and it hasn't hurt our word-of-mouth referrals one bit)

There are a few other reasons why we wouldn't want to do this, but I think you get the gist of the rationale. So with this in mind, we're happy to pass on the $ and instead simply suggest to customers who tell us they have a pain point that this product seems cool and to check it out. I do think it seems like a useful, innovative solution, and I would guess a good number of restaurants will be using it in a few years. But if that happens it won't be because we served as a formal marketing arm for this company, rather because the need for their solution was significant and they did a great job of making the case to the restaurant segment on their own.

Wil




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