Recently, the amazing celebrity designer/planner, Preston Bailey, blogged about something that is definitely a problem in the wedding industry. You can see what he had to say about referral compensation in the link at the bottom of the page but here's my take on the subject:
Commonly called kickbacks, it's basically the "I'll scratch your back if you scratch mine," way of doing business. It's unfortunate, and frankly, unethical, if planners refer brides to other vendors if they're only doing so because they'll get something out of it in return or they're fulfilling a personal obligation.
My standard practice is to look at my clients' needs based on their budget, personality, and sense of style. I don't work with the same vendors time after time because:
1) It's exciting to work with a variety of different talented vendors, and
2) the same vendor is rarely the right fit for all of my clients
However, I love to work with people who share my passions and work ethic but the other factors must be present also before they'll get my referral.
When a bride receives a referral from me they can trust that I have only their best interests at heart. Also, I have the personal satisfaction of knowing that when a bride is referred to me by another vendor it's because they know I'm the best planner for that particular job. So, in my opinion, referrals given and received should be done with the highest standards of honesty and integrity based on each individual client's needs, first and foremost. I think Preston would agree. I hope you do, too.
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