Setting up a referral partner program can be a valuable way to expand your reach outside of your typical business networks, but what makes for a good referral program?
Don’t get this confused with your typical customer referrals. A good partnership program focuses on developing solid relationships with other businesses which then go on to refer you to their networks on a one-to-one basis.
This can be a much more powerful tool since businesses already have an established audience and continuous marketing efforts in place.
Also, they will have already gained the trust of the audience.
But why would another business want to promote and refer its customers to you?
This is one of the challenges you will face when building your referral partner program, so we've got you covered with 6 key steps to secure effective referral partners.
We also discuss the major highlights of partnerships in 2022 and what you can expect to see in 2023.
- 1. What is a Referral Partnership?
- 2. 6 Steps for a Successful Referral Partner Program
- 2.1. Step #1: Find Your Ideal Referral Partners
- 2.2. Step #2: Develop a Go-To-Market Strategy for Your Program
- 2.3. Step #3: Set the Right Expectations for Referral Partners
- 2.4. Step #4: Educate New & Existing Partners
- 2.5. Step #5: Communicate Regularly
- 2.6. Step #6: Track the Results of Your Program & Provide Value
- 3. What 2022 Taught us About Referral Partner Programs
- 4. What to Expect in 2023 for Your Referral Partners
- 5. Using Partnership Tech for Your Referral Partners
Table of contents
A referral partnership is where a business agrees to promote and refer customers to another in exchange for some kind of benefit.
These perks can range from reciprocated referrals to some kind of monetary reward but the idea is that this type of partnership is mutually beneficial.
Making sure the partnership is advantageous to both parties is a key factor in building a successful referral partner program. Without some kind of encouragement or reward, your partner really doesn’t have any reason to promote your business to their own customers. (Especially if your business is in a similar industry as theirs!)
So, what does it take to keep your partner interested in the arrangement? Designing a well-thought-out plan will ensure your partner stays engaged and interested in the program.
A thorough plan will include obvious value for both parties and include a way to track and realize the benefits that it can bring. Here are 6 steps for designing and implementing your referral partner program in a way that resonates with your ideal partner.
A lot of planning goes into designing and implementing any successful partner program, and referral partnerships are no different.
But the upfront work can be well worth it when the program is put into action and begins growing marketing and sales efforts on its own.
So what are the key factors of a referral partner program?
The most important part of any partnership is finding the right person.
Anyone can refer a customer to you, but if that customer isn’t interested or wouldn’t have a use for your product, then it’s a waste of resources.
That’s why it’s important to base your partnerships on the prospective customers your partner will attract.
Think about what those customers are looking for and if they would fall into your ideal customer category. Would they be interested in a product or service like yours?
Once you’ve identified potential partners with your ideal customers, it’s time to evaluate the partner. Do they sell similar items or would your product seem out of place?
Are your products of the same standard/quality?
Do they target a similar audience with the potential for conflicts?
Do they share similar values?
Asking yourself these questions will allow you to pick out partners that are an ideal match for your product(s) and business vision. Doing this work upfront will also ensure that you use resources where that will yield results and not be wasted on the wrong types of audiences.
As we all know, finding and recruiting partners for your referral partner program can take some time. Fortunately, you can also automate this process with platforms like LinkedIn and Lemlist to help you with your search.
Plan out how you can integrate with your partner's offerings. If you sell similar products, are there any particular holes that your product or service can fill for their audience?
What kind of benefits can you offer to their customers that they can’t?
Use this opportunity to see how you might be able to cooperate with your partner to offer a complete solution that adds additional value to their products and services.
This is perhaps the best way to work with a referral partner as it integrates your offering directly into the sales process of your partner, making it easier for them to pitch you as a solution.
Take the time to schedule a few meetings with your potential partners and have a discussion on what can be offered and what can be reciprocated.
In some cases, a partnership may just be a simple channel agreement to promote or refer customers to one other.
However, the most successful plans will have unique ways to implement and market each other's services within the offerings themselves as part of the sales process.
In some cases, partners may not want referrals in exchange.
A cash incentive may be enough for some, but you should consider your options prior to launching a "definitive" perks list.
The idea is to be able to scale the program just as you would with your existing sales and marketing process, effectively putting a reinforcing layer on top.
It's important to understand that both the partner and you should get significant value from the partnership for it to be successful. Both sides should always benefit, not just one or the other.
Once your partner is engaged in the partnership, it’s time to bring them up to speed. Since you are asking your partner to refer and essentially sell your services, it’s important that they understand the basics of what you are offering as well as the latest product updates. You can do this by developing a channel enablement strategy.
For companies that have referral partner programs embedded as part of their entire business strategy, it may be worth notifying partners weeks in advance before a new feature is released so they can get prepared once it becomes available for the end users.
You wouldn’t want to send a salesman out "in the wild" without any information on the product or service they have to sell.
Develop material or a quick video course to get them up to speed on the basics of what you offer, and keep them up to date with a partner portal like Kiflo.
Building and maintaining relationships with referral partners involves much more than exchanging business cards. Like all business partnerships, referrals are built on trust.
Referral partners want to know that, if they recommend you to their clients, you will offer just as good or better service. And if your partner trusts that you can look after their customers, they will keep sending you business.
Communication is key to building trust. Keep yourself top-of-mind with your referral partners. If you haven't spoken in a while, reach out. However, avoid sending a standard email. Also, try to add value.
Send your referral partner's company a news article that highlights market changes or other relevant developments. When your referral partner reaches a milestone, congratulate them.
When setting up your referral partner program, remember to set tangible marketing and sales goals and do so in a way that makes sense for your partner.
If a partner can "see" the benefits of your program, it essentially sells itself.
Focus on rewards and benefits that can be tracked and measured. Whether this is a referral counter, clickthrough tracking, or a commission tracker, displaying this type of information can provide partners with the motivation they need to stay engaged.
Fortunately, PRM solutions have analytics features that allow you to track your metrics with ease.
2022 saw partnerships reach new levels. As the year draws to a close, it's only fitting to reflect so we can focus on making the next even better.
HubSpot recently published their State of Partner Ops and Programs report detailing the impact of partner ecosystems on businesses. According to the report:
Roughly 50% of companies report that 26% of their revenue comes from partners
65% of companies see partnerships as crucial for their future growth
93% of enterprise organizations have a partner program
65.2% of companies use at least one partner technology system. A PRM is used by 36.7% of companies, making it the most popular technology.
In 2023, we will continue to see a boom in referral partnerships. This expansion will provide an enhanced experience for customers and open up new opportunities and levels of engagement for partners.
As it stands, referral partners are the second most common at 72.4%. That’s because referral partnerships provide benefits to the business such as lead generation, customer retention, and brand recognition.
Based on the information shared in this report, to keep your partners happy, there are a few things that partners will expect in 2023, such as:
Referral partners will likely be looking for incentives other than money.
They are going to expect technology on your side that allows them to track data such as deals closed.
With so many programs available, in order for your referral partner program to stay competitive, it will need to do three things well: provide a solid solution, give a great experience to shared customers, and increase service revenue.
Your partners will expect you to involve them in your sales process if you want to increase collaboration, develop new business opportunities, and expand your market presence. You must enable both your external and internal teams to do this.
Partners will expect a platform that provides them with metrics so they can determine if they are meeting their individual goals.
Referral partnerships need the coordination and motivation of a large number of internal and external actors to be successful. Among other things, this requires partner technology.
In fact, the report states that 90% of partners not using partner technology believe their company should start now.
Using a platform like Kiflo can really take your program to the next level.
Kiflo is a Partner Relationship Management (PRM) platform that allows users to manage partners efficiently, track rewards, and establish an easy-to-use onboarding process.
Save time and energy with a free demo of Kiflo in the link below.
Frequently Asked Questions (FAQ)
What is a referral partner program?
A referral partner program is a form of partnership in which a company voluntarily recommends your brand to its customers and receives compensation for doing so.
How do I create a partner referral program?
Creating a partner referral program is an intricate process and entails a lot of upfront work. The most important factors are finding good partners, selling them on the benefits you can provide, and ensuring referrals are customers who find value in your products and services.
How do referral partnerships work?
Referral partnerships work by providing a partner some sort of compensation in order to promote and refer your business to their own customers and clients.
Do referral programs apply to customers only?
No, in fact, some of the most successful referral programs are between businesses or organizations. They are a bit more involved but they lead to long-term ROI.
Why do referral programs work?
Referral programs are effective because they are a straightforward and genuine approach to promoting your business. This is based on the trust between you, your partners, and their customers. When your partners trust you, they'll recommend your business to an audience that is likely to be receptive.