Referral strategy: Ideas to recruit and motivate referral sources

Once you have identified your referral sources, you’ll need to construct a referral strategy for recruiting and motivating your sources. If you have an existing relationship with your referral sources (like customers or existing partners) then sales can help recruit. If there is no relationship with the referral sources, a formal marketing campaign may be in order to attract referral sources to your program.

However, even if you create the most thorough recruitment campaign, it won’t be very successful if it isn’t motivating.

To ensure your program is motivating, start by creating a strong value proposition.

6 questions to create a strong referral program value proposition

Successful referral programs have a win-win for the company and its referral sources. To lock onto the most motivating value proposition, consider these six questions about your referral sources.

  1. Does recommending your product/service put them in a good light?
  2. Does it help to be perceived as a trusted advisor?
  3. Does your product/service add complementary value to their offering?
  4. Does your product/service make their offering stickier by increasing usage or value?
  5. Does a customer having your product/service help them make more money through value-add services or offerings?
  6. Will the referral source be motivated by a financial incentive?

To assist you in turning the answers to these question into a value proposition, download the worksheet. Additionally, take a look at recommendations on Developing a Compelling Channel Partner Business Proposition from SiriusDecisions analyst Stephanie Sissler.

In regards to question six, we know that most (if not all) referral sources expect a financial incentive. We then must ask ourselves – what level of incentive motivates a specific referral source, and will provide a high ROI?

Your strategy for calculating referral incentives

To start calculating a motivating incentive for a referral source, you’ll need to calculate the cost per acquisition (CPA) of your inbound marketing efforts using the following formula.

Take a year of your total marketing spend and add it together with the total cost of marketing resources during that year. Then divide this by the total number of new customers generated by marketing that year. This is your CPA. Use this number as the maximum threshold for your incentive to maintain a high ROI.

In the SiriusDecisions whitepaper, Keys to Engaging Referral Partners, they find that typical referral fees fall between 5% and 25% of first year revenue.

To see what fits your company, take the average first year of revenue from a customer and multiply it by 5%, 10%, 15%, 20% and 25% to see what the incentive amount would be. If any of them are greater than your current CPA you can remove it from the mix. Ideally, the incentive will be significantly lower than your CPA.

The other option is using a flat bounty. Try using the calculated incentive amount from the above equation for direction.

To help guide you, try downloading and filling out this worksheet.

Or fill it out right on this page for your own knowledge.

When you are done calculating your incentive, you can test your program ROI using the free referral ROI calculator.

Lastly, to see how reward structure fits into your overall referral strategy, download The Referral Guidebook to get all 20 exercises to build your referral strategy into a revenue generating channel.


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Referral Strategy: How to keep referral sources engaged

So you’ve identified your referral sourcesdeveloped a recruitment strategycreated a sales enablement plandeveloped a plan to enable referral sourcesconstructed a referral incentive strategy, and decided on your onboarding process, now it’s time to create a referral strategy to keep referral sources engaged after onboarding, and the referrals pouring in.

When trying to ensure that referral production stays high, you need a communication and promotional plan for current referral sources that keep them engaged whether they are in the middle of waiting on a successful referral or haven’t referred lately.

To start, let’s look at the three types of communication you need to establish the events that can trigger these communications.

3 communication types to keep referral sources engaged

There are three different types of communication you should establish with your referral sources:

  1. Automated communication on program status
  2. Nurture communication by program activity
  3. Regular program communications

These each keep referral sources engaged in different ways and their implementation are based on different criteria. By breaking down how each type of communication can be implemented you will be able to decide on what communications you want to send, plan and execute.

1. Automate communication on program status

Once a referral source has made a referral, you don’t want them to become disengaged from the program because of the lack of transparency or have continuous calls coming in to check on the status of a referral.  By setting up automated communication to referral sources, triggered by referral status changes, you can ensure that referral sources stay engaged while waiting for a referral to become successful.

To determine what automated communication you should implement in your program, let’s list out the different referral stages these communications can occur:

  • Referral is accepted – Send an email that confirms the lead was accepted and wasn’t already in the system.
  • Referral is qualified – This email informs the referral source that the referral was qualified or accepted by sales.
  • Referral becomes an opportunity – Send this email to inform the referral source that the referral lead has been converted to an opportunity.
  • Referral proceeds to the next opportunity stage – There is a lot that goes on with the referral during the opportunity stage and there can be many mini stages within it. This email informs of any stage change in the opportunity and any role they should play. For instance, if you would like your referral source to reach out when the proposal is delivered to see if the referral has any questions, you can indicate that in this email correspondence.
  • Referral is closed (lost) – This email is triggered if the opportunity is lost.
  • Referral is closed (won) – Send this to inform the referral source that their referral made a purchase.
  • Referral reward is earned -This informs the referral source on the amount of the reward earned and any information on how it will be paid.

When deciding on what automated communication you want to setup, be sure to think about the triggers that are specific to your business process.

2. Nurture communication by program activity

The success of referral sources can be optimized by creating nurturing programs that help develop them and encourage activity. Here are a few automated nurture tracks you can create based on certain activities or lack of activity:

  • If a referral source has a high number of referrals, but little or no success – Retrain on the target buyer and value proposition to ensure they are referring the right companies/people with the right message. Also, this reinforces the value of a 1-to-1 referral introduction.
  • If a referral source has low referral activity – Reinforce product value prop and target buyer. Remind them where to find referrals and how to ask for them.
  • If a referral source logged in within last X days but didn’t make a referral – Provide information on how to make a referral, what happens to a referral once it’s submitted and reinforce product value prop and target buyer.
  • If a referral source has a high number of successful referrals – Create a kudos campaign to recognize their efforts and encourage them to keep referring.

Once you figure out your different nurture campaigns, determine the frequency of each based off your referral strategy.

3. Regular program communications

Segmented communications target the special needs of those groups, but regular value-added communication will keep referrals top-of-mind for everyone in your program. Use the ideas below to build a newsletter template to send a monthly (or frequency of your choosing) communication. Possible information to include in a regular newsletter (circle content you want to include):

  • Target buyer/persona spotlight with corresponding value prop
  • Leaderboard of top members by referral success
  • Tips on asking for referrals
  • Success story – highlight a story on how someone generated a successful referral
  • Testimonial – quotes on how great the program is and how easy it is to earn rewards
  • Links to get more info
  • How to earn incentives – criteria and payment

To help construct your referral strategy nurture process and take the next step to create a promotional campaign, download the exercise or download the entirety of, The Referral Guidebook, to create an all-inclusive referral strategy.

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Referral strategy: The 7 factors of a profitable referral incentive strategy

Upon identifying your referral sources, developing a recruitment strategy, creating a sales enablement plan and developing a plan to enable referral sources, it’s time to build a referral strategy around your incentives to drive more high-quality referrals.

This portion of your referral strategy is very important. Adding an incentive to your referral strategy isn’t just a box to check before moving onto the next step. There are a variety of different mechanisms that are involved in creating a referral incentive. Different referral sources might require different amounts and structures, and have different motivations. Here’s how to determine the right referral incentive strategy for your referral program.

4 factors that determine your referral incentive structure

In order to drive repeat referrals, you need to set up a referral incentive structure that is motivating to each specific group of referral sources. There are four considerations that go into this part of your referral strategy.

1. The calculation – To create an incentive amount that is both motivating to referral sources and provides the best ROI, ask yourself this question: Do you want to reward at purchase or at an earlier stage?

If the answer is at purchase, determine the best way to calculate the reward for your program. If you need help with that, look back at the second blog in the series to see how to calculate incentives based on your current CPA.

However, if you would want to have your incentive fulfilled at an earlier stage, try rewarding on a flat bounty. To do this, determine the amount and stage to be triggered.

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2. Timing and multi-stage – To make sure your referral structure keeps referral sources engaged and motivated, and ensure that the referrals they provided are quality, ask yourself this question: Do you want to add a retention period before paying the incentive in full?

If the answer is yes, consider splitting the incentive into multiple stages such as at purchase and after a retention period to keep engagement high.

If the answer is no, take a look at your sales cycle. If it is a long sales cycle, consider rewarding at multiple stages to keep engagement up. However, if your sales cycle is short you can just have your incentive be fulfilled at a single stage.

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3. Multi-level – To decide how to structure your incentives to motivate repeat referrals and create higher-performing referral sources, ask yourself this question: Do you want to create multiple reward levels?

If the answer is yes, you then have to decide if you want to base the reward on the number of successful referral or on the number of rewards (only used if using multi-stage rewards).

However, if the answer is no you can simply keep a non-variable reward.referral incentive, referral strategy, partner reward, referral partner, referral partner reward, incentive calculation

4. Accrual – To understand how to handle accrual based incentives, ask yourself this question: Do you have transaction fees for EFT and/or expect a high frequency of successful referrals from your sources?

If the answer is yes, determine the frequency of the incentive payouts.

If the answer is no, payout the reward at the time the referral becomes successful.

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Answering these questions can help you create a more targeted and effective referral strategy for your incentives. But once these decisions are made you still aren’t done. Now it’s time to think about incentivizing the other people involved in the referral process and the inclusion of added incentives.

3 times you should include extra incentives in your referral strategy

While having a regular referral strategy in place for your incentives is necessary, going the extra mile can help keep you top of mind for referral sources. For instance, during a slow time of the year, referral sources can be prompted with a special bonus. And you can’t forget about the other people involved in making a referral successful. To drive added referral activity there are people outside your referral sources that can be incentivized. Here‘s how to determine if you should include any of these three extra incentives in your referral strategy.

1. Prospect reward – Also known as double-sided rewards, these rewards can reduce some of the perceived risk referral sources have when making a referral. This is because it allows a referral source to offer the referral a great deal. To determine if this is right for you, ask yourself this question: Do you have the ability to offer referrals a discounted price?

If the answer is yes, determine the appropriate discount.

If the answer is no, see if there is anything else you can offer for a certain action a referral takes, like a gift card for taking a meeting with sales. If that still isn’t possible just stick with your single-sided reward.

2. Campaign bonus – When trying to drive point-in-time activity, an extra incentive such as a raffle prize or an increase in the incentive can help to re-engage referral sources and facilitate greater activity. To determine if this is right for you, ask yourself this question: Is there times during the year you’d like to stimulate an increase in referral leads?

If the answer is yes, figure out whether you want to incentivize referral lead collection or successful referrals.

If it is referral leads you will need to look to see if you have the budget to reward on each lead. However, if you don’t you can implement a raffle instead.

Even if you don’t have a specific time period in which you want more referrals, consider picking two months during the year to run a promotion.

3. Sales incentive – It has been shown that sales involvement in a referral program increases the conversion rate from referral lead to purchase by 10 percentage points for partner referrals and 17 percentage points for customer referrals. To drive consistent activity from sales or other employees, an incentive can be created to motivate them. To determine if or what type of sales incentive is right for you, ask yourself this question: Are you incentivizing a direct or channel sales team?

If you’re incentivizing your channel sales team, consider if they should be incentivized to recruit referral partners and collect referrals as part of their commission. If that is something you want, try organically incentivizing with leaderboard transparency. On the other hand, if you don’t want that, look into creating monthly goals with prizes to the top individual achievers and top sales team.

If you plan on incentivizing your direct sales team, consider if you want to incentivize recruitment or referral collection. If recruitment is where it is at for you, try quarterly goals and prizes or a swag bonus for each new recruit. However, if you are going to incentivize based on referral collection, figure out monthly goals with prizes for the highest performing salespeople.

To get more targeted with your referral strategy for your incentives, download and fill out these interactive worksheets. Or, download all of, The Referral Guidebook, to build a revenue-generating referral channel specific to your business.

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Referral strategy: Create a plan for enabling your referral sources

Now that you have identified your referral sources, developed your recruitment strategy and created a sales enablement plan, it’s time to create a referral strategy for enabling your referral sources.

Once a referral source has registered, they need to have access to a portal that not only gives them the functionality to refer, but provides them with all the information they need to make an informed referral.

To do this, start by developing your target buyer profile if you haven’t already.

Developing a target buyer profile for your referral strategy

A key component in enabling your referral sources is ensuring they understand your target buyer profile. Creating this kind of content means first breaking down the traits of your target company into straightforward categories. Let’s start with these six steps.

Step-1: Layout how big your target company normally is. This involves listing the typical revenue range of your target company and the number of employees they normally have.

Step-2: List the industries you most commonly target.

Step-3: Name the type of offering your target companies normally have. This could be:

  • Simple products
  • Simple services
  • Complex products
  • Complex services

Step-4: Figure out what your target company’s typical go-to-market model is. For instance:

  • Brick & mortar
  • eCommerce
  • Direct Sales
  • Resellers/distributors

Step-5: Figure out if there are any key technologies a target company uses or offers.

Step-6: Evaluate your different target companies’ presence relative to competitors. Are they small, medium or large? And are the companies you’re targeting experiencing declining, sustaining or growing revenue?

Once these questions are answered, you can move on to breaking down the key traits that define the buying unit or department of your target companies.

For this, focus in on who the buying department is and ask yourself these six questions about that department:

  1. What are their key needs and challenges?
  2. What are their goals?
  3. What situation/behavior is a signal of need/intent to buy your solution?
  4. What alternative solution are they using today?
  5. What is the value your solution offers relative to the status quo?
  6. Who are the key titles involved in the purchase and the role they play?

Answering these question will help to ensure that you are enabling your referral sources with all the information they need. If you need further help, try downloading and filling out the full interactive worksheet to construct your in-depth target buyer profile.

Create training content for your referral sources

Once you have created your target buyer profile for your referral sources, there are still a variety of different enablement resources that you can provide through your referral software portal. This will ensure your referral sources can communicate the right message to a target buyer and make proper use of your referral program. Here are the different types of content you can create:

  • Product description – Write a description of the product or service you want your referral sources to refer.
  • Value proposition – Develop content that will help a referral source communicate the specific value of the product or service that applies to each individual target buyer.
  • Customer-facing product info – Offer content that the referral source can share with target buyers to grow their interest and get them to agree to a meeting.
  • Incentive rules – Create incentive information that informs referral sources on how they can earn incentives and grow their incentive.
  • How to make a one-to-one referral ask – Not all referral sources will know the best ways and time to ask for a referral. If you are including social media in your program, it is especially important to reinforce the ways it can be used to make a one-to-one introduction versus an awareness blast.
  • How to ensure the referral gets entered – To avoid any lost referrals, provide information that reinforces the different ways referrals can be entered into the system and tracked.
  • What happens to a referral lead – Referral sources want visibility into what happens after they make a referral. Provide them with an overview of the process – who the lead gets routed to, how it’s handled, what happens if it is unqualified, the various points at which they will receive updates on the sales process progress and what happens when the referral makes a purchase. This includes how and when they are going to get paid.
  • How a referral source can access their data – Referral sources need transparency into the status of their referrals and rewards earned/paid. Let them know how they can access this information so you don’t get calls wondering what happened to a referral.

To help guide you through this portion of referral source enablement, download the full worksheet or download the all 20 exercises from, The Referral Guidebook, to create a revenue generating referral channel.

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Referral Strategy: Identifying potential referral sources in 2 steps

Referrals have evolved from a simple approach to a strategic channel used by companies to dramatically increase revenue. New data from companies running these types of referral programs show that an average 13% of customer referral leads and 31% of partner referral leads make a purchase. As a result of the increased complexity of referrals and the potential to drive greater revenue from them, many more considerations must be taken into account when designing a referral strategy. As you start to design your referral strategy, before brainstorming any other referral program ideas, consider the referral sources that could be a part of the program.

While you might already have an idea of one referral source who could drive or is currently driving referrals to your company, there may be some that you are missing.

“With 65 percent of b-to-b organizations including indirect channels and partners in their go-to-marketing strategy and an additional percentage looking to the channel for additional revenue growth, the channel is critical to the future success of a growing majority of b-to-b organizations across multiple industries,” said Kathy Contreras, Senior Research Director of Channel Marketing Strategies at SiriusDecisions. “The ability to leverage referral partners for that growth offers a great opportunity, especially as referral programs offer expansion beyond the typically targeted partners; this can offer many organizations a new or expanded route-to-market.”

Along with partner types like strategic partners, ISVs, integrators and many more, partners can be any influencer of your business. These influencer could include agencies and consultants that are able to identify a need for your product or service in others. In order to not miss out on generating revenue from any referral source, gather your sales, marketing and channel teams, and use these two steps to pinpoint who your referral sources are.

Step 1: Referral ideas to identify new referral sources

To identify all of your possible referral sources, get input and referral ideas from the different departments inside your company. Use these nine question to get direction:

1. What companies have a complimentary product that sells into your same target buyers?

  • Referral strategy tip: This could be integration partners or just companies selling into your same group of buyers.

2. Who do your target buyers interact with professionally?

  • Referral strategy tip: If you are selling to SMBs, there are many trusted advisers to consider, such as their accountants and bankers.

3. What associations do your target buyers belong to or trust?

  • Referral strategy tip: Local associations and chamber groups are often a key way that small businesses network.

4. Are there any purchases that typically happen in coordination with yours? If so, what are they?

  • Referral strategy tip: When someone buys marketing automation, they may buy a webinar platform. Or when someone buys VOIP telephony they may buy a video conferencing platform.

5. Are there any consultant groups or agencies that are typically engaged in advising on a purchase decision in your area or a process that is complementary to your offering?

  • Referral strategy tip: From niche consultants to goliaths, there may be players that are influencing your target buyers.

6. Are your target buyers part of a franchise model?

  • Referral strategy tip: If so, the franchisors have direct access and significant influence worth pursuing.

7. Do you have existing resellers that are struggling with performance?

  • Referral strategy tip: These resellers could be transition to referral partners.

8. Do you spend a lot of effort certifying new resellers only to have them underperform?

  • Referral strategy tip: A referral program can be a qualifying step for a reseller. This ensures they produce quality leads before the time is spent to make them a reseller.

9. Do your customers have access to your target buyers in other companies?

  • Referral strategy tip: Customers can be partners too.

To help guide you, try downloading and filling out this worksheet along with the necessary departments.

Or fill it out right on this page for your own knowledge.

Step 2: Group your referral sources into programs

Following the identification of all your potential referral sources you will need to group them into programs. This will be based on whether or not your referral sources are individuals or companies where employees will be the referral source. It is very important to think about the language and incentives that will drive each referral source. If a referral source needs a unique incentive or branding, this might justify creating a separate program for that referral source.

For instance, a customer might be incentivized by a flat bounty such as a gift card while a partner may expect a percentage of revenue paid through electronic transfer. By grouping referral sources by their messaging and incentive, you ensure the creation of a program that will deliver the most ROI.

If you can’t take on more than one program at a time prioritize your programs by:

  • Whether or not you have an existing relationship with the referral source
  • How fast it would be to get the program to market
  • The potential impact on revenue

Download the worksheet to help with this step or download the complete Referral Guidebook with all 20 exercises to help you build a revenue generating referral channel.

The rebirth of the telco partner strategy: A message from a top telecom company

“The future of the telco channel is bright,” said a Channel Account Manager at a large telco company in a confidential interview with Amplifinity CMO, Trisha Winter this year. But while the future is bright, the channel present is still a little murky. The telecom industry is in the process of adapting their partner model to the looming SaaS marketplace. This is resulting in a large amount of companies pivoting their partner strategies to align with the new on-demand and service model and keep the future shinning promisingly.

“We take part in an event called Channel Partners which is a twice a year telecom channel event,” said the Channel Account Manager. “This event grows bigger every year as more companies embrace the channel and indirect model. Our company is actually behind in some ways, not because we are not trying but because it is harder for the big companies to make the drastic pivots that are needed and that smaller companies can easily maneuver.”

But this Channel Account Manager is not the only one seeing their company having difficulty with this transition. There are a lot of on-premise companies that are being forced to do cloud delivery, but they are finding that their existing partners can’t enable it. In response to this the telecom partner models are being reshaped and different types of relationships are being developed between resellers, agent, master agents, VARs, referral agents and a company.

How are you trying to accommodate the changing partner model?

Recently, the company in question came out with their first SaaS product. This change sets the expectation for other telco companies to follow suit.  Consequently, telco companies’ go-to-market model and channel team will need to change to address how their current channel model does or doesn’t fit with this kind of product.

“That is the big challenge for us,” said the Channel Account Manager. “With the old model you go out and sell these very transactional products. Now we are getting into these consultative and as-a-service products. This requires better sellers and more consultative sales techniques. This will then lead to longer sales cycles. Instead of 30 or 90 days it will more likely be 180 or 360 days. And partners are going have to have a better understanding of the products and technology.”

Trisha Winter, CMO of Amplifinity sees these challenges as the catalyst that has caused many Amplifinity clients to turn to referral partners to continue to grow revenue. “There are a lot more consultants and partner types than there ever has been,” says the Channel Account Manager. The trend toward a consultant and service model requires the sales process to be owned by a company’s direct team but still drive revenue from partners. This is the value of referral partners.

Currently, many agents and master agents are required to undergo an in-depth technology certification to become a partner and have a mature understanding of the CRM in order to be able to generate revenue as a partner. But this Channel Account Manager understands that telco companies can no longer let this be a barrier to generating revenue from the channel. “While we want partners to know the technology if a partner has a good lead we don’t want the technology to be a road block. This is when they will bring us in to close the sale.”

What do you suggest for other telco companies trying to transform their partner model?

“Partner ecosystem is becoming more fluid,” the interviewee points out. “You have to have a way to manage a partner that is there for just one deal and no more. Everything you’ve done before is kind of thrown out the window. This is much different than before when these provider would set up brick and mortar companies with 30 sales reps on the phone. Now you might only have a consultant or agent who can specialize in one particular thing. One day they might work on a deal with you and the next they will have moved onto a deal with someone else.”

This change in the way partner interact is reflective of the switch to a cloud-based sales model. The fact is, a good number of agents will have a hard time transitioning to cloud-based products which not only has a different sales model but a different buyer, especially when selling to businesses. Business buyers of telecom services have pivoted from the long standing IT titles to business leaders due to cloud technology making products and service easier to use. This results in many agents finding they no longer have the customer base to consistently reach target buyers. That is in addition to their struggle to support cloud-based technology. But companies have found that these agents are still valuable contributors who can send targeted leads to the vendor when they see a fit so as to continue to generate revenue. However, unlike the past, partner monogamy won’t be the main source of revenue growth.

“There will have to be an overall cultural shift as well as structural,” says the aforementioned Channel Account Manager. “Whether it’s unified communication-as-a-service or software-as-a-service, this type of a model, while much different than the old one, opens up much more possibilities.”

The overall message from this interview, “The channel is really growing like crazy.” But it is up to each telco business to adapt their partner strategy and technology to take advantage of that growth opportunity.

To continue to help educate your changing partner strategy, download the data report, The State of Business Partner Referral Programs, to see performance benchmarks of companies who have automated their partner referrals for sustainable growth.