So you are convinced of the value of referrals and you’re ready to take the first steps towards building a referral channel, but where do you start? In eight simple steps, you can build out and scale a referral channel for your enterprise company. And with the help of software like Amplifinity, you can bring referrals into your sales workflow to increase both partner activity and revenue.
Step 1: Identify Potential Partners
To start building your channel, you need to figure out your referral target market. To do this, you need to have your marketing and sales teams answer these questions:
- What companies sell complimentary products to your same targets? These companies can include integration partners or companies selling into the same buying group. You can also identify the typical technology stacks and services that are used by your target buying group.
- Who has influence over your target buyers? If you are selling to small or mid-sized businesses, there’s a lot of providers you can consider including people like their accountants and bankers.
- What associations do your target buyers join or follow? Whether they are chambers or local business association, these types of groups are a great way to break into the small business network.
- Are there purchases that typically happen in coordination with yours? For example, when someone buys marketing automation they might also purchase a content platform.
- Are there consultant groups or agencies that advise on purchase decisions in your industry that are complementary to your product? From niche consultants to product sites, there are likely a number of different consultants and review sites that are influencing your target buyers.
- Are your target buyers part of a franchise model? If the answer to this one is yes, it’s good to note that the franchisers have direct access and influence you can tap into.
- Are there under-performing re-sellers in an existing partner channel? If you have an existing partner network made up of re-sellers, you can consider transitioning your under-performing re-sellers into referral partners.
Step 2: Engage and Recruit Partners
Now that you’ve identified your potential referral partners, you need to get their attention and explain to them the value of becoming a referral partner with your business. To do this you can consider the following value props:
- Does recommending your product or service put the partner in a positive light with their customers and network?
- Does it help them become a trusted advisor?
- Does your product or service add value to their other offerings?
- Does it make their current offering more sticky for potential customers by increasing usage or value?
If you answered yes to any of the above questions, you now know how to sell participation in your program as a win-win. Just add to that an equitable incentive model with a commission or some other form of revenue sharing. The key is to drive partner action by outlining the benefits of your referral program on their business.
Next, you need to get your sales team on-board to send your value prop, and to recruit referral partners. Direct sales has an organic incentive to recruit partners for referrals because they reap the benefit of the resulting leads. So, arm your sales team with the right materials and a simple registration process. You can even get your marketing team involved in delivering recruitment campaigns.
Step 3: Enable Referral Partners
The next step in building out your referral channel is enabling your referral partners by giving them everything they need to be successful. The best way to do this is through a personal referral portal. Here are the six things you need in a portal in order to properly engage your referral partners:
- Multiple ways to make referrals
- Product content to educate and share
- Information on the target buyers, including personas
- Clear rules that state how a partner earns incentives
- Transparency into the referral activities and reward statuses
- Training materials about the program and how to make referrals
Once you have all the pieces in place on the portal, you’ll want to make sure you have a motivating incentive structure in place.
Step 4: Incentivize Referral Partners
There are all sorts of ways to incentives referral partners, but how do you know what’s right for your company? When trying to choose the appropriate reward amount, you should consider the following factors:
- Do you want to reward higher amounts/percentage of revenue for highest performing partners?
- Do you want to motivate repeat referrals by having an escalating reward based on the number of successful referrals within a time period?
- Do you want to vary the reward based on deal involvement or lead stage?
The best way to checkpoint your reward amount strategy is to work with marketing to determine their cost per acquisition (CPA) of a customer coming from inbound efforts. Your referral fee should always come in much lower than the marketing CPA.
Next, you want to consider the following when structuring your reward to meet your business needs:
- Calculation – This can be a flat bounty, a bounty by product purchased or percentage of revenue. When discussing the amount, you may want to offer different rates for different partner types or deal involvement.
- Escalation – Setting achievement levels with higher payouts is a great way to incentivize repeat referrals.
- Timing – If you’ve got a subscription product, you may want to consider a retention period before payout to the partner to make sure the new customer is sticky. In these scenarios, you may want to consider rewarding at multiple stages to keep the partner engaged. For instance, 25% of the reward at purchase and 75% after 6 months retention.
- Accrual – For highly productive programs, it may make sense to accrue reward payments to reduce transaction fees and provide higher accumulated payouts.
No matter how you incentivize, it’s important that this is all manageable for you. The more you can automate your referral system, the easier it will be to handle. Partners that are paid quickly tend to be happy and more successful.
Step 5: Onboarding Referral Partners
Now that you have your recruitment, enablement and incentives all figured out, you need to create a smooth onboarding process. Here are the six key things you need to do during the onboarding process for referral partners:
- Collect necessary information – Things like tax form information, banking information (if needed) and basic contact information.
- Educate on the target buyer using personas – Referral partners need to know what types of companies, and titles within those companies, are a fit for your solution.
- Train on how to make a one-to-one referral ask – Have a conversation with your partners about the best times to introduce your product/service to a target buyer, and the best way to introduce your product/service.
- Train on various ways to input referrals into your tracking system – Focus your training on the use case and value for using each referral method, with special attention on how to make one-to-one referrals versus one-to-many referral blasts. Referral types include lead forms, verbal referrals, email, shareable URLs, social media and print cards.
- Discuss what happens to a referral lead once they provide it – Your referral partners need to understand your referral process and how you will be communicating with their prospect.
- Educate on referral success criteria, data access and any service level agreements – There’s a lot to consider when trying to determine success criteria and incentives for your program. It’s important that you have clearly defined key performance indicators (KPIs) by which you measure success, and that you are clear in your communications about those KPIs to your referral partners.
Step 6: Keep Referral Partners Engaged
You’ve done the hard work of setting up your program, and recruiting and on-boarding partners. Now you need to figure out how to keep the referrals flowing in. The key here is to make it easy for partners to make referrals, and to give them full transparency into their progress. Here are 7 things you can do to keep your referral partners engaged:
- Give regular status updates
- Give regular program and success story communications
- Involve your sales team to help drive referral activity
- Have special promotions (internal and external)
- Offer a coaching program to help improve the performance of struggling partners
- Offer escalating incentives to help encourage repeat referrals
- In addition to money, give non-monetary recognition
Step 7: Establish Key Metrics For Your Referral Partner Program
There are 5 key categories you want to measure in order to get the data you need to optimize and grow the output from your referral partners. Those categories are:
- The referral pipeline – For this one, look at the number of partners, the number of referrals, the number of successful referrals and revenue.
- Partner activity – Here, you want to look at the percent of partners that made referrals within a time period, the percent of partners that made multiple referrals within that time period, the percent of partners with successful referrals within that time period, the average number of referrals per partner and the average number of successful referrals per partner.
- Top performers – Look at top partners by number of referrals, top partners by number of successful referrals and top partners by revenue.
- Under-performers – To figure out your under-performers look at your lowest partners by number of referrals, lowest partners by number of successful referrals and lowest partners by revenue.
It’s important to note that you don’t want to take action on the data you collect on a daily basis. Instead, you should check it often and keep an eye out for trends or anything that falls outside of your expectations.
Step 8: Scale Your Referral Partner Program
Now that you know how to measure the success of your program and partners, it’s time to grow! To kick off growing your referral channel, it’s important to consider your goals and identify opportunities. Here are some key areas to think about when driving program growth:
- Do I have great partners, but need more?
- Am I limiting my growth by making my program too complex?
- Am I incentivizing my partners enough to keep them motivated?
- Are my partners becoming disengaged with the program?
If you do find that your partners are becoming disengaged as you try to grow your program, consider automating it (if you haven’t already). Referral program software can remove the operational hassle of tracking, attributing and rewarding referrals. Don’t let this powerful channel go underutilized because you’re still using spreadsheets!
To learn more about building and automating successful referral channels, visit our resource library.