October 04, 2021

Reseller vs Referral: How To Choose the Right Partnership

It´s esential to select the right partnership for the growth of your business. Choose the one for you between reseller vs referral partners.

Referral vs Reseller

Partnership strategy is important in any business to help drive revenue growth and new customers. As such, it is important to choose partners wisely. While there are different partnership channels to choose from, our focus today is on reseller vs. referral partners. When choosing between these two, keep in mind that partner onboarding is an ongoing process. 

So, to know what works best for your business, it's important to understand the difference between reseller vs. referral partners. After understanding the difference, you can then discuss the brand's incorporation reseller or referral program with your stakeholders.

But before that, read through this article to get a clearer picture of everything you need to know about reseller vs. referral partnership.

Reseller vs. Referral Partnership 

Though reseller and referral partners differ in terms of what they do and how they work, people still confuse one with the other. 

Do you want to learn more about reseller vs referral partners? Read on as we discuss below how both partnerships work. 

What is a Reseller Partner? 

Reseller partners buy goods and services from a company with the intent to resell as though they were their own. A purchases products in bulk and at a discount. Therefore, they can sell at a higher price to make a profit.

For this reason, the brand's incorporation reseller program can generate revenue quicker because they sell their products and services faster, with innovative strategies and a nothing-to-lose mindset.

For example, let's say you want to begin your own web hosting company. Starting from scratch will cost you more than you can imagine. But you can save costs by signing up for a brand's incorporation reseller program. With the program, you can buy hosts in bulk at a cheaper price and resell as your own with additional services.

What is a reseller partner?
An infographic 2:1 explaining "What is a reseller partner?"

What is a Referral Partner? 

Referral partners refer customers to a business and get paid a percentage commission when they make a purchase. Oftentimes, the commission is a one-time cash commission, recurring commission, gift card, etc. A referral partner will send leads to you and then your sales team needs to close the agreement.

A referral partner can be seen as a business-to-customer (B2C) affiliate program. This is because the key participant in a referral partnership is the customer. 

For instance, you want to be a referral partner for a web hosting company. After registering on the website as a referral partner, you can use a lead form, special referral links or unique code to submit new leads. When a lead is converted to customer, you get rewarded.

What is a referral partner?

Key Difference: Reseller vs. Referral Partner 

Are you still confused? Well, below we elaborate on some of the key differences between marketing through reseller vs. referral partners.

Key Difference #1:  Link to the Business 

While both resellers vs. referral partners are valued by any business, their links to your business differ. A reseller partner is treated as a business owner, while a referral partner can be a business owner or a customer. A reseller needs to have the capital to buy products and services from the business.

But a referral partner doesn't. In addition, a referral partner simply needs to put out the good words to make others buy products and services, whereas a reseller partner needs to employ intense business strategies.

Key Difference #2: Types of Commission

Reseller partners’ commission is based on the discount they get from the products they purchase. Whereas referral partners’ commission is based on the percentage of the purchases the customer they refer make.

Key Difference #3: Contracts

Another way to differentiate between reseller vs referral partners is with the contracts they have with the business. For reseller partners to profit, they have to purchase a minimum set amount of products or services from the business.

However, for referral partners to profit, they have to refer new customers who will make a purchase.

Why Choose Reseller vs Referral Partners

We created a table below summarizing all the important differences between reseller vs. referral partners.

reseller vs referral partners table
Reseller vs referral table comparison

Choosing Referral vs Reseller Partners

As a business owner, would you choose a reseller partnership over a referral partnership or vice versa? While both have their fair share of advantages, you also need to know they have disadvantages as well. Our advice is to choose a partner you feel comfortable with weighing in both the advantages and disadvantages.

For example, reseller partners may generate revenue faster for your business because resellers will sell for you. However, they sell the product as their own with their own added services.

Kiflo Reseller Partner Program
Build up your reseller partner program

Similarly, you know referral partners bring in loyal customers as will send leads to you abd then your sales team needs to close the agreement. However, growth will be dependent on how serious the partner is with referring new customers. So, it's best to always weigh the pros and cons of reseller as well as that of referral partners before choosing one.

Kiflo Referral Partner Program
Scale your referral partner program with kiflo

Select the Right Partnership Program For Your Business in 2021

In conclusion, if you can incorporate both reseller and referral partnership, by all means, go for it. But if you are struggling with managing partnerships (affiliates, referrals, and reseller partners), you can trust Kiflo PRM.

Kiflo PRM is a modern partner platform that can help small-to-medium businesses (SMBs) drive sales and growth with partnerships.

See how Kiflo PRM helps SaaS SMBs to scale, manage and grow partner revenue.

Get a free demo

Frequently Asked Questions (FAQ)

What is the Difference between a Reseller and a Partner?

Resellers purchase products and services from a business and resell them to end-users for a profit. Whereas partners have an alliance with a business where they work together to expand the products and services.

What are Referral Partners?

Referral partners are people who refer new customers to a business and get rewarded when they make purchases. Referral partners are trusted entities, hence they are one of the best ways to get loyal customers.

What is a Resale Partner?

A resale partner is a type of channel partner that acts as an intermediary between customers and your business. As such, they buy products and services from your business and sell them to end-users for a profit.

What Makes a Good Referral Partner?

Communication, by all means, makes a good referral partner. A referral's ability to effectively communicate success stories, values and processes to new customers will determine the conversion rate.

LinkedIn Twitter Facebook

Start Scaling Partner Revenue Today

Get your personalized demo of our all-in-one partnerships platform.