Finder’s Fee: An Effective Marketing Tactic

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If you have an opening in your family child care program, offering a finder’s fee is the first thing you should consider offering the parents in your program.

It’s a marketing tactic that has helped many child care providers fill openings in their program.

What’s a finder’s fee?

A finder’s fee is a gift you give to parents in your program who have referred new families to you. Tell your parents, “If you refer a new family to my program and I enroll the family, I will give you a finder’s fee after the new parent has paid me for at least a month of child care.”

The finder’s fee you offer parents in your program can be money, gift cards, free child care or anything else you want. The amount of finder’s fees I’ve seen from talking with child care providers across the country ranges from $25-$50 in most cases, or free care from a day to a week.

If you give out cash or a gift card, you can deduct 100% of the cost as an advertising expense.

This is a no-lose way to promote your program. Unlike paid advertising, you will only pay something after you’ve enrolled a new family and received at least a month’s worth of child care. The parents in your program will be initially spreading good worth of mouth without cost to you. They will also be selective in who they refer to you because they will want the new child to be compatible with their own child.

When I discuss offering a finder’s fee in my workshops, I find that few child care providers are willing to pay more than $50. When you think about how many thousands of dollars a new client is worth to you over the years they remain in your program, I think a finder’s fee as high as several hundred dollars is well worth it!

In fact, during financial hard times a high finder’s fee may encourage current families who may be financially struggling to make more of an effort to give your referrals.

Some child care providers object to offering a finder’s fee because they believe doing so makes them look desperate or lowers the value of their services. Instead, they give parents a thank-you note. I don’t share this view. Other businesses offer deals to customers and few complain.

You could also consider offering a finder’s fee to clients who have left your program, other child care providers, or parents who have contacted you but decided not to enroll their child in your program!

Do you offer a finder’s fee, and if so, what kind of success have you had?

Tom Copeland – tomcopelandblog.com

Image credit: https://www.flickr.com/photos/swafo/

Marketing smallFor more marketing ideas, see my book Family Child Care Marketing Guide.



Categories: Marketing

1 reply

  1. Tom, I offer a finder’s fee to anyone (current clients, previous clients, family, friends, neighbors…) who successfully refer a new family to me. My finder’s fee is whatever the deposit amount is. A new family has to put down a deposit equal to the first week’s fee to hold the spot. I do not wait until the child starts because I want the referring person to get an immediate reward. One current mom earned $410 dollars last year because she referred two new families to me! This aggressive sort of marketing has worked wonders for me! And it isn’t very difficult for me because when I have an opening, I don’t know exactly when I will find a new family. So, I might go several weeks without that income. To add an additional week because I am giving away a referral fee isn’t a big deal. And you are absolutely correct: the “lifetime” value of a new family might be as high as $35,000 easily. Many times, higher. I am basing this on the weekly fee x 52 weeks x the estimated number of years the family is here.

    The mom who earned $410 sent me a family who paid a monthly retainer to hold an infant spot for six months. Then…days before the baby was supposed to start, this new family cancelled the contract. That was very frustrating, but, of course I did not refund any of the money. I had already paid the current mom her referral fee and that was okay. It was okay because she had, in fact, gone out of her way to find me a new family. It was hardly her fault that they cancelled at the last minute.