10 Steps for Developing Profitable Referral Partners
A referral program is profitable in any market. That’s because people choose the endorsed word from a trusted source over the product or service seller. After all, businesses always speak highly of their own products and services. In user's eyes, referral programs leave enough room for an objective perspective.
That’s where developing referral partners come into play. Trusted advisors and/or satisfied customers endorsing a product or service provides instant credibility.
But as a small business owner, it's likely that you don't have a string of celebrities waiting to endorse your products or services.
So, what can you do to generate endless endorsements and streams of referrals? In this post, you will learn 10 proactive steps for developing profitable referral partners.
10 Steps for Developing a Referral Partner Program
Step #1: The Target Market
To develop referral partners, you first need a smart referral strategy to help your partners understand the target market. A target market is a group of individuals or businesses to which you want to sell your product or services.
Not all products and services are usable by all consumers; each product and service has different sets of consumers who want to purchase them.
If your target market is an individual consumer (B2C), you can break them into segments such as income, age, demographics, among others. For example, if you offer paid streaming services, your target market may include PC and smartphone users between the ages of 20 and 65.
If your target market is businesses (B2B), you can break them into segments such as the type of business and the number of staff. For example, if you are a cybersecurity and IT consultant, your target market may be businesses with 20 to 100 staff who do not have their own IT department.
Step #2: Develop Your Unique Selling Proposition (USP)
Once your partners are clear on your target market, it is even more helpful to walk them through your USP so they know what makes you stand out. For any business to be at the top of the food chain, there ought to be something unique about them. Know your USP and use that to sell your brand to a referral partner.
When you do not have a USP at all, attracting new customers and quality referral partners is unlikely. After all, no one will want to refer to someone who has placed his or her trust in their opinion to someone with nothing special to offer.
Even if they do refer you, it will be with some disclaimer or reservation, never with an open heart. USPs help you truly speak to your ideal customer; it lets them know that you truly understand them and care about their problems.
Step #3: Identify Referral Partners
First, identify those businesses and partners most likely to refer the right clients and customers to you. Knowing the right partner to work with will be much easier now than your target market and USP. Compatible referral partners can be broken down into different categories based on who they are to your business.
For example, businesses in your supply chain can serve as your referral partner. Businesses that spot the problems you solve can also be a valued asset. Other businesses that share your target market, too, are great to work with especially if they can sell added-value services on top of your products.
Another type of valued referral partners you should seek is satisfied customers. This is because they have experience with your product or service. And surprisingly, your competitors whose niche or USP doesn't meet the needs of the client can refer them to you.
Step #4: Create a Circle of Trust
When picking out the referral partners you want working with you, let trust be one of the criteria you consider. People don't give referrals lightly because their reputation is attached to them. So, you shouldn't expect that other people will refer customers to your brand without earning the right first.
What this means is you ought to put effort into developing referral partners who wish to build a strong relationship with you and your business. Your partners need to be confident that you will be able to deliver high-quality products and services.
After trust is established, they will refer your business with so much assurance and credibility that people will believe them. There are so many ways you can build trust—for instance, making the partner test your product or services, following through on agreements, putting care into partner onboarding, transparency, etc.
Step #5: Nurture Relationships
It goes without saying that a strong relationship is important if you want a profitable referral partner. Nurturing a good relationship with partners starts with good communication. Send them regular emails and surveys to know about their needs and desires. Keep providing your partners with fresh creative content to help make marketing successful.
Building strong relationships with partners will not only make the working together easier, but also put money in the bank. Consider the 80/20 rule —which also applies to the referral programs. This means about 80% of your sales come from 20% of your referral partners.
So, give an extra dose of attention and recognition to those partners. Apart from recognizing their hard work, also keep them happy by giving them advance notice of new promotions. This keeps them informed and offers time to plan and implement their approach.
Step #6: Communicate Regularly with Partners
Although regular communication when developing referral partners sounds like a cliché, it is equally important. Communication isn’t all about talking, but also about being able to dig deep and getting to know their challenges.
When communicating with partners, ask for status reports on ongoing collaborations and projects. When there is constant communication with partners, it reduces the element of surprise.
In the same way you want vendors to alert you during a shortage of resources or obstacles in delivery, you should also make sure your partners know what is happening at your end. Set up an automated system that reminds you to stay in touch with your partners regularly. Social media is a great platform you can leverage to stay connected with your referral partners.
Step #7: Create a Partner Page
Turning your referral program into the most profitable partnership starts by taking it online. When online, it opens your business to more opportunities.
If you don’t already have a website, create one. And on your website, craft a partner page where potential referral partners can get all the information they need about your business and sign up for your program.
The goal of a partner page is to easily connect with new referral partners that have interest in your product or service. This will lead to a larger potential partner network you wouldn’t have access to otherwise.
Step #8: Provide a Partner Portal
What makes a referral partner successful is the marketing tool they use. As such, it is best to offer a variety of marketing tools for the partner to choose to market your brand. For example, links to your landing page can save them with the hassles of creating one, if at all. You can also offer alternative landing pages on your website based on their situation.
Giving referral partners access to your brand's product images, logo, and other graphics aids in promoting your brand. Keep an up-to-date library for your partners. Also, quick loading banners that focus on a single product's features and benefits, including a strong call-to-action (CTA) is an effective tool.
Step #9: Incentivize Partners for All Sale Types
Developing referral partners does not only give you massive reach, but also lowers distribution, marketing, and sales cost. For this reason, it is important to devise incentive plans that encourage partners to sell your product over others.
Please note that your incentives have to be competitive if you want to keep partners encouraged to work with your brand. Also, don't overcomplicate the incentive program for partners. Keep things simple by clearly explaining the goals of your partners and how they can track their progress and gain rewards.
Do not make frequent changes to the terms and conditions of your incentive program. This can confuse your partner and complicate the relationship.
Lastly, ensure you have different types of incentives for partners. An incentive could be cash, a physical gift, a special trip, an invitation to a company event, a personal thank you from your CEO, or a feature in your newsletter.
Step #10: Use a Partner Relationship Management (PRM)
Lastly, look out for the right Partner Relationship Management (PRM) and Customer Relationship Management (CRM) tools that can help you grow your partner program. With a Partner Relationship Management (PRM) tool, you can manage your partners and drive leads to your CRM where the sales team can take over the sales process.
PRM tools help your company manage its interactions and relationships with your prospects and customers.
Kiflo, a PRM solution, helps your company stay connected with your partners, improve profitability, structure your partner program, provide visibility to partners, and streamline processes. With this tool, businesses can guide the process to improve the chance of success.
What Makes a Good Referral Partner?
A referral partner has to exhibit certain qualities to stand as a trustable partner.
First, a good referral partner is someone who puts a premium on referrals and is well-connected. After all, knowing a limited number of people won't expand your connections.
Also, a partner willing to put in the same dedication as you do is integral for a good referral partner.
Third, it’s also important that your referral partner should have a good reputation. As your partner, their actions will reflect on your business and brand.
Lastly, it’s a given that someone with high persuasive power would make one of the best referral partners.