The Broker Problem: Who Pays the Commission?
Brokers are one of the most important groups that attract customers for you. These people are professional at getting leads and bringing in more customers for business. It is easy for them to do because, attracting customer is their job and they earn revenue through it, but there is an obstacle in collaborating with brokers which is explained through the following example.
Let’s say a guy called David refers his friend John to a person called George. George works in stamp selling business. John will be George’s customer from now on. George gives David 200 dollars as commission in exchange for referring John. So far so good. However, the problem arises when George doesn’t pay commission to David for John’s next purchases for two reasons: Some companies intentionally avoid paying such commission.
Due to the complexities of such process, some other companies are unable to calculate all of the commissions in their referral chains. Let’s say there are tens and hundreds of brokers and each one of them refers one to five customers per day. It will be an extremely complex process to calculate all of these commissions. Therefore, brokers either refuse to refer a customer or make secretive moves in the process of customer referral.
This issue is a huge drawback for the referral system and it makes many brokers not to get into this business. We must be able to devise a smart way so David can keep receiving commission for each purchase that John makes from George.