How to Build a Good Referral Partner Program
Setting up a referral partner program can be a valuable way to expand your reach outside 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.
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.
What is a Referral Partnership?
A referral partnership is where a business agrees to promote and refer customers to another in exchange for a certain benefit.
These perks can range from reciprocated referrals to some 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 encouragement, solid value proposition, or reward, your partner doesn’t really have any reason to promote your business to their own customers. (Especially if your business is in a similar industry as theirs!)
What is the Difference Between a Referral Partner and an Affiliate Partner?
There are two types of marketing that can be used to drive organic brand growth; affiliate and referral marketing. Although they might sound the same, there are key differences that exist between the two.
In the case of a referral program, they are typically existing customers who are rewarded each time they can successfully recommend your business to people they have a personal connection with, such as their friends and family encouraging them to use your business.
Referrals are the best option if you want to retain customers as there is a trust factor that exists with the relationship.
With affiliate marketing, the person recommending your business does not have to be an existing customer, as they can be third-party content creators who will share your business with their audience to receive a commission.
Ideally, affiliates should have a strong network of relationships that matches the target market your brand aims to reach.
How to Build Referral Partnerships? 6 Steps for a Successful Referral Partner Program
Much planning goes into designing and implementing any successful partner program, and referral partnerships are no different.
However, the upfront work can be well worth it when the program is implemented and begins growing marketing and sales efforts on its own.
So what are the key factors of a referral partner program?
What does it take to keep your partner interested in the agreement? 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.
Step #1: Find Your Ideal Referral Partners
The most crucial 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.
Once you have identified potential partners with your ideal customers, it’s time to evaluate the partner. Consider the following questions:
- 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 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.
Step #2: Develop a Go-To-Market Strategy for Your Program
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 their customers that they can’t?
Use this opportunity to see how you might be able to cooperate with your partner and consider some selling points for how you can 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.
Step #3: Set the Right Expectations for Referral Partners
Take the time to schedule a few meetings with your potential partners and have a discussion on what can be offered, what can be reciprocated, and create some ground rules.
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.
Step #4: Educate New & Existing Partners
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. Not only does this jeopardize the chances of having repeat purchases, but it could ruin the chances of the partnership becoming successful.
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.
Step #5: Communicate Regularly
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, and it should occur on a regular basis. Therefore, 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.
Step #6: Track the Results of Your Program & Provide Value
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.
Strategies to Get, Build, and Develop Referral Partnerships
Developing a referral program is one of the most cost-efficient methods you can use to meet your sales and marketing objectives.
We have looked at the factors you need to consider when you are building a good referral partner program, but what about developing referral partnerships?
Luckily, we have some strategies to get you started when it comes to getting and building referral partnerships.
Use a Partner Email Template to Get Referral Partners
Reaching out to a potential referral partner can be daunting and time-consuming.
What do you say to them to make the best first impression and increase your chances of them entering into an agreement?
Luckily, you don't have to fret about that as we have the perfect referral partner email template you can use.
Use Partnership Tech
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, according to Hubspot, 90% of partners not using partner technology believe their company should start now.
Using a platform like Kiflo is the most efficient manner to take your program to the next level.
Kiflo is a PRM platform that allows users to manage partners efficiently, track rewards, and establish an easy-to-use onboarding process.
Don't Forget Referral Partner Commission
Referral partners provide great value and provide a host of unique benefits that will go a long way for your brand, therefore, it is essential that they receive a commission or referral fee for the role that they play.
There are multiple options available for referral partner program offers, but ultimately, it will depend on what you deem fit.
For instance, depending on the type of transaction, the costs, which are usually paid in cash, could range from 5% to 25% of the total sale.
In order to determine how effectively the referral program is performing in terms of customer retention, keep an eye on the engagement levels of the referred customers. This will allow you to more easily arrange retention bonuses, as needed.
You will gain so much from starting a referral partner program, and with the resources and guidance offered in this article, you can ensure that you achieve great success.
Make the journey smoother by relying on Kiflo's great partner relationships management software that will make your partnerships easier to navigate!