The partner channel has played a critical role in the software industry, but with the adoption of a SaaS-based business model, a referral partner program has become even more important. Take into consideration the importance of recurring revenue in a business model that requires less upfront cost to the customer relative to the one-time charge, on premise model. It makes reducing churn vital to the survival of SaaS companies. This is especially true when considering the need to generate ‘replacement’ revenue for lost customers. In addition, the immediate impact of a lost customer including the loss of upsell, cross sell, and reference opportunities only deepen the proverbial wound.
So how can channel partners help? Well, one of the most effective ways to reduce churn is to attract the right customers. Partners have the ear of potential customers and a deep understanding of the buyers’ need for your solution. Bringing this type of context to the deal improves the quality of the connection between your customer and your product. By increasing partner referrals, SaaS companies reduce the need to take on customers who aren’t a great fit for their product, decreasing the risk of customer churn.
This is reflected when comparing how referred customer stack up to non-referred customers. According to the Harvard Business Review, referred customers have an 18% decrease in churn and 16% increase in LTV compared to non-referred customers. But how are companies supposed to take advantage of this? Both referral partner program software and deal registration software have been used to facilitate referral partner deals. The question is, how do you choose between deal registration software and referral partner program software? Let’s look at the facts.
A referral partner program vs. a deal registration program
A referral partner program is a specialized and streamlined form of deal registration. Within deal registration software, deal registration functionality works by allowing a partner to refer or register a prospect they know is in the market for your product. That referral is then pushed to your company’s sales team to take action. For most partner programs, deal registration functionality is buried in larger partner management software. The added engagement capabilities of these platforms can introduce a high level of complexity to both the deal registration workflow and program management. Furthermore, other deal registration solutions often lack the functionality needed to properly manage these valuable leads.
CompTia’s Third Annual State Of The Channel Study: Channel Conflict And Deal Registration Trends, document the challenges of traditional deal registration software, including:
- 61% of channel partner respondents citing deal registration programs have inadequate communication such as lack of reporting on deal success, status of the deal payout, and overall incentive information.
- 49% of responding channel partners had technical issues with deal registration software that made the tool difficult to use.
These challenges partners face with traditional deal registration software leads to poor partner experience and disengagement with a company. And because the SaaS industry has a low barrier of entry, no individual product or company can truly dominates the market, which mean partners have a choice in who they partner with. This creates an even greater need for SaaS companies to keep partners engaged.
For many traditional partner programs, referrals are a viable alternative to streamline the deal registration workflow for partners. Since referral partner program software takes a focused approach, its functionality supports continued partner engagement and partner interaction with the referral deal to speed up the sales pipeline. This includes:
- Partners facilitating an introduction between the referral and business.
- A personal partner homepage to keep track of the deal’s progress to sale and how close the partner is to receiving their payout.
- The ability for partners to invite new advocates to the program and keep track of their activity.
- Automatic email updates to partners on their referred deal status.
Along with better engagement, make it easy for partners to refer or register a deal. After all, time is money, and if the software to refer a deal is hindering the process you’re trying to enable, your partners won’t refer. Basically, you’ll be shooting yourself in the foot.
Try creating a simple and easy interface for partners to refer, manage, and gain insight into their referral deal all in one place. This way you offer better usability and partner experience to increasing the number of referrals.
But these claims aren’t mere postulation. A leading SaaS company has had amazing result with their referral partner program. In the first 3 years of the program:
- 8,966 partners have enrolled in the program
- Partners made 5,208 each year
- 39% of referred leads end up becoming customers
With partner engagement being such a large revenue generator, you need software to enable their referrals. And while companies looking to influence partner behavior say they need deal registration software, 70% of their deals still go unregistered with that software, (Third Annual State Of The Channel Study: Channel Conflict And Deal Registration Trends). Don’t let your company’s growth reflect that. Use this free ROI calculator to see what your referral partner program ROI could be.Business & Finance Articles on Business 2 Community