How Referral Partner Programs Outperform Resellers

Turn the promise of partnerships into reality.

The success of partner programs in B2B companies is highly variable. Many companies try various approaches, but what starts as a promising opportunity, often ends in unmet expectations from both companies in the partnership.

After all, the idea of extending lead generation reach and sales coverage without adding headcount is appealing. And although partnering is a great model in concept, the execution is very difficult. The reality is that you are constantly trying to train and on board Partners in order to make sure that they understand the differentiated messaging and sales techniques necessary to effectively sell your product. In addition, servicing the relationship post-sale introduces an entirely different set of challenges such as how to nurture customer relationships to deliver a continued revenue stream.

Putting it all together is an extremely big task and one that takes a significant amount of resources to achieve success. But thanks to new referral marketing technology entering the market, we are starting to see a shift in partner strategy. Specifically, partnerships based on referrals are starting to show incredible success and are challenging the traditional mindset of resale oriented partnering.

Resale = high investment with uncertain return

With reseller partnerships, you are faced with the development of detailed contracts that cover all aspects of a complex relationship. But, that’s just the beginning. Once the partnership execution begins, you’re faced with the task of onboarding and training the Partner’s marketing and sales teams and the difficult task of maintaining mindshare as other priorities of the Partner inevitably surface.

Success requires the same time and budget as direct selling efforts, but often with worse results. Why? Because Reseller Partners don’t see your product as the primary way to achieve quota. They aren’t looking for opportunities for your product. Instead, your product is simply an afterthought until an obvious need is exposed by their Customer.

Also, consider the end Customer‘s perspective. Do they have to go through the Partner as a middleman to get support? Are they getting the same care and nurturing as your direct-sale Customers? When the time comes, will they be an Advocate for your business and provide the word-of-mouth recommendations that are so vital to the success of your business? The answer is probably not.

Referral partner programs have challenges too

Referral partnerships have existed for centuries. With this model, instead of a full reseller arrangement, you use Partners primarily as a way to extend lead generation. As Partners come across situations where a need for your product is identified, they refer the lead to you. Your team then engages in the relationship, takes the driver seat in the sales process and ultimately, makes the sale. This fixes a few key issues with the reseller model. You now have a much simpler contract (if any) and you don’t need to deeply train the Partner on how to sell your product or service

However, a few problems remain with referral partner programs and a few new ones arise as a result.

First, you still need to have a way to stay top of mind with your Partners. You also need to make sure you have a simple way to track, incentivize and manage this relationship. For example, how does the Partner stay informed of the status of the referral so they can help the opportunity progress?

And, relative to incentives, will you pay the Partner per lead or when a sale closes? If it is only when a sale closes, how do you trigger the event so that you can fulfill the reward and ensure the partner gets compensated quickly and correctly?

The reality is that much of this is done manually and that limits the output of a Referral Partner. While Referral Partners can produce great in-market leads they are difficult to scale.

Because both models have strengths and weaknesses, I see companies trying to a bit of everything, with limited success.

The rise of referral partner programs managed at scale

The advent of software to manage referrals has tipped the scale strongly in favor of referral partnerships. With the ever increasing pressure to generate ROI from your partnership efforts, my advice is to get there and get there fast.

Here is my take on how automated referral partner programs can benefit all parties involved while being a consistent generator of high-quality leads.

Benefits of automated referral partner programs to your company

1. Quality leads: This one is pretty obvious. You already know that referrals from Partners are great leads, but with referral marketing software you get a consistent flow at a larger scale than ever before.
   
2. Shorter sales cycles: It’s a proven fact, referral deals move faster through the pipeline. It isn’t just that they are higher quality. Your sales team also has access to the Partner who made the referral so they can prequalify the opportunity and enlist their help in making the sale.
   
3. Improved customer experience: From first contact with your product through the entire customer journey, you are now in the driver’s seat to achieve customer success. This makes for a great customer experience, but it also means that your customers can be leveraged later to give you positive mentions in social media and refer your product to their peers. And that means more high-quality leads.
   
4. Cost savings: With automation comes significant cost savings. In this model, you can scale the number of Referral Partners without adding headcount because everything from operational management, to nurturing communications, through to reward fulfillment is automated. Additionally, you no longer have the resource-intensive training nor the co-marketing costs from the Reseller Partner model.
   
5. Better data: With all of your referral partner programs activity managed with referral marketing software and integration into your sales CRM (e.g Salesforce), it is easy to see direct ROI from Referral Partners and prove the incredible value of the channel.

Benefits of automated referral partner programs to your Partners

1. Added revenue/income: Depending upon whether you structure your program to reward the partner entity, the Partner Advocates (typically Sales Reps) or both, the outcome is the same. Your referral program provides an easy way to get rewarded for relationships they already have.
   
2. No hassle: With nurture emails and a personal web page, Partners can see their referral activity and reward status. The result is that the Partners feels informed and views the relationship with your company as low friction. And when Partners have confidence in your system, they’ll refer more.
   
3. Happy customers: Partners are able to easily extend their offering to your product or service to provide solutions that meet the Customer’s needs. And referral leads are the highest quality, so Partners know they will receive the proper attention and care during the buying process.

Benefits of automated referral partner programs to your sales team

1. Fast leads: No one is more appreciative than Sales of referral leads. They can skip the emailing and calling to try to get a prospect. The Partner has all the information needed to get the opportunity generated and can even help Sales drive it through the pipe.
   
2. No new systems: With all of the referral data in the sales CRM, Sales doesn’t have to learn a new system. With fast access to referral lead and Partner Advocate information in the system they use every day, they are more productive.
   
3. Easy Partner management: What Sales doesn’t want is to have to track which Partner referred whom and fight for them to get paid. With all of this done for them, they can focus on what you want them to – selling!

Benefits of automated referral partner programs to your Customers

1. Need resolved quickly: When a need is identified by the Partner, it can be resolved quickly with your product or solution without the Customer having to go through the hassle of blindly scouring the internet for the right product to buy. This saves them time and hassle.
   
2. Work with a trusted advisor: Another reason referral leads move quickly through the pipeline is that the interest started with a recommendation from a trusted source (the Partner). Customers who get a recommendation from a trusted source are much more likely to buy.
   
3. Great support: Since the entire customer relationship is managed by you, referred Customers get the same great support that you provide all of your Customers.

Turn your partner relationships into revenue

Because of the benefits to all parties, savvy Channel Managers are making a transition away from Resellers to referral partner programs managed with software specifically made to handle these kinds of relationships. With a low-cost automated system, you can maintain or reduce the cost of your channel team while simultaneously growing the direct revenue coming from the channel.

Discover how powerful referral marketing software could be for you with the ROI calculator (Warning: May cause your referral partner program to drive revenue at an extreme speed).

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