Property Management Referral Program

If you want to expand your property management business this year, you may be thinking about ways to increase referrals from customers and partners. Last month, I helped you assess your company’s readiness for a partner network and gave you ideas about various types of referral partners.

Now it’s time to talk about the “nuts and bolts” of creating a referral partner program for your property management business.  You need to put together a well-defined program that motivates and rewards partners for their referrals.

What is a referral program and how do I create one for my property management business?

Referral programs spell out the expectations, processes, and benefits of referring business to you. It also creates an organized system for managing referral relationships, just like the ones you’ve already established for your property management business, personnel, vendors, and existing clientele.

Each referral program should be well thought out and documented. Documentation prevents misunderstandings and can be used to reinforce future decisions and actions. Create a referral program policy and procedures guide that spells out partner qualifications, outlines marketing/promotion expectations,  and explains compensation / payout processes (e.g. minimum payouts and payout schedule).

When partnering with other businesses, it is wise to create a formal partner agreement. This agreement defines the legal relationship between the two businesses. It may include clauses that specify the length of the agreement, ensure confidentiality, define exclusivity, clarify the relationship and obligations, and limit your liability.

[iconbox icon=”emblem-important.png”]Please consult with your legal counsel to go over partner program specifics and discuss any related legal considerations for your property management business. [/iconbox]

How do I motivate my property mangement business partners & reward them for their referrals?

Owner / Tenant Referrals
You can set up a non-cash reward program for your existing clientele and promote it to them through an email newsletter or other regular communication channel. For instance, you might reward owners with a fee discount or give them an additional service at no charge. You might reward tenants with a gift card to a local establishment or movie theater.

Business Referrals

  • Reciprocal Referrals – Some businesses may be satisfied with a reciprocal referral relationship, like exchanging website links, cross-promoting (through an email newsletter or blog), or becoming a preferred agent or vendor. This type of relationship requires fewer resources since there is no need to track referral commissions, generate payouts, or report to the IRS.
  • Commissioned Referrals – Influential businesses that can send you a significant number of highly qualified leads may prefer a commission for their referrals.  A commissioned referral program can be an excellent pay for performance growth strategy.

It is easier to manage a standardized commission program that pays the same referral commission to all of your partners. However, once you identify the partners who send you a steady stream of highly qualified leads that quickly convert to clients, it may be worth adding a second program that pays a higher commission rate (as long as performance remains steady).

[iconbox icon=”emblem-important.png”]Before you put together incentives and financial rewards for your referral progams, make sure you check with your state licensing board to ensure your program complies with state regulations and restrictions. [/iconbox]

The  Federal Trade Commission (FTC) does regulate partner (affiliate)  marketing and endorsements.  Here are a few articles you should read:

  1. FTC Approves Affiliate Marketing Rule Regarding Use of Consumer Information
  2. FTC Affiliate Marketing Rule
  3. Guidelines Regarding the Use of Testimonials and Endorsements in Advertising
  4. FTC Publishes Final Guides Governing Endorsements, Testimonials

As you can see, there are many things to consider before you dive head first into a referral partner program.  Make sure you don’t jump in too quickly. A poorly defined program may cost you time and resources instead of helping you accomplish your growth goals.

When you launch your partner program, you’ll need a very systematic, accurate way of managing partners. You will need to track referrals, calculate commission, and issue payment.  You’ll also want to communicate with them regularly. Next month, I’ll share some insight about managing referral partners.

  • Have any of you created a referral partner program for your property management business?
  • What legal considerations did you encounter?
  • What has been your biggest challenge?

Dee Allomong - Director of Marketing for LandlordSourceDee Allomong has over 10 years of experience in Internet technology and strategic marketing. You can reach her at

Disclaimer: LandlordSource does not represent the article content in this website as legal advice. It is shared information only and up to the reader to use this information responsibly, seeking legal advice as necessary to their business.