5 referral partner program benchmarks to measure against [Infographic]

As a result of the changes taking place in the partner ecosystem, it has become of paramount importance to analyze how partners and their relative programs are performing in order to meet and adjust to mounting growth objectives. With that in mind the success of a referral partner program was analyzed in order to create benchmarks that can help companies make informed decisions about their partner programs.

The five benchmarks evaluated were analyzed by a third party and comes from partner referrals made on referral partner programs run on the Amplifinity platform, reported in The State of Business Partner Referral Programs.

1. The average activity that can be expected from a referral partner program

Referral partner activity is the foundation of any successful referral partner program. Therefore, it is important to establish a standard to measure against.

According to the data, on average 69% of referral partners are actively making referrals during the course of a year. Of course this does mean that 31% weren’t active but in any partner program there is going to be lulls and churn. The fact that 69% referral partners are continuing to send qualified referrals to a company a very positive activity level compared to other partner programs.

This could be a result of referral partner programs having a lower barrier to entry which makes it easier for partners to participate and submit leads.

2. The average number of referrals a referral partner will make

Based off the average percentage of active referral partners during the course of a year, it’s important to determine how much activity you can expect from these partners.

The data analyzed showed that on average:

  • 45% of referral partners will make 1 referral
  • 47% will make 2-10 referrals
  • 8% will make 11+ referrals

How often referral partners make referrals throughout a year has a large impact on a partner referral program’s success. With almost half the referral partners making multiple referrals during the course of a year, partner referral programs are already in a good place to help meet growth objectives. But to increase this even further, referral partners need to be engaged with and nurtured. Try reaching out on a regular basis to keep the referral partner program top of mind for referral partners.

3. The average number of referral partner leads

The number of leads that are generated per referral partner are directly correlated with the number of referrals made. Therefore, it is reassuring to see that over the course of a year a referral partner can be expected to generate 4.6 leads. This rises to 6.7 if the referral partner has previously had a referral turn into a lead. The increase from previously successful referral partners is a result of the referral partner understanding not only the type of referrals to make but the referral demographic.

To help referral partners who have made referrals but haven’t had any converting to a lead try coaching them on the target buyer and ways to refer. You can also identify the partner who have had success in creating referral leads and reach out to congratulate them and encourage continued productivity.

4. The average partner referral conversion rate from lead to deal

While all the previous data is extremely valuable in order to make sure you are getting optimal engagement from referral partners and that you are getting the highest amount of referrals turning into leads, it all really comes down to if they are turning into deals.

The good news is that the data shows that partner referrals are one of the highest converting sources of leads with a 31% conversion rate from partner referral lead to deal. This outstanding conversion rate can be attributed to the fact that referral programs run on Amplifinity referral software are formal programs that educate partners on the target buyer and automate the process.

This conversion rate increases by 10 percentage points when sales is involved, coming in at a 41% conversion rate. The increase seen here comes from these programs having the ability to manage their sales team to objectives for recruiting partners to the program and collecting referrals from partners.

5. The amount of new customers coming from each partner

When looking at the overall referral partner lead flow on a referral partner program, 863 partners were actively making referrals out of the average number of 1,250 partners enrolled in the program during the course of a year. These 863 partners on average provided 1,231 new customers. This means that on average in a year’s time you can expect every one partner to generate 1.42 new customers.

However, when adding sales into the equation your number of new customers gained per referral partner rises to almost two.

Start visualizing the partner referral flow and discover how to create successful partner referrals:

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Building a Referral Partner Channel: Step 1 – How to identify potential partners

So you’re sold on the value of referral partners, but who do you recruit? You could go after individuals or large entities that are willing to enable their sales teams to pass you referrals. Both are credible approaches, but first you need to determine who has access to your target buyer and target accounts.

Here are the questions for marketing, sales and channels to work together to answer in order to explore possible referral partners:

1. What companies have a complimentary product that sell into your same targets?

  • This could be integration partners or just companies selling into your same buying group. Another approach to answering this question is to identify the typical technology stack and services used in your target buying group. The other technology and service providers are a great place to start.

2. Who has influence over your target buyers?

  • If you are selling to SMB, there are many trusted providers to consider such as their accountants and bankers.

3. Are there any associations that your target buyers are members of or that they follow/trust?

  • 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?

  • For instance, when someone buys marketing automation, they may also buy a webinar platform. Or when looking to purchase VOIP telephony they may also be looking at video conferencing platforms.

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

  • 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?

  • If so, the franchisors have direct access and significant influence worth pursuing.

Certainly, if you have an existing partner network, you may want to consider transitioning poorly performing resellers into referral partners. And to avoid “failed resellers” in the future, you can make participation in the referral program a qualifying step before reseller. This proves out that the potential reseller truly has access to your target buyers before you put in the effort to train them.

To keep optimizing your referral partner channel read, Step 2 – Engage and recruit partners.

In the mean time learn how companies like Citrix are implementing referral partners in the webinar, Why Channels Need to Embrace RaaS.

Data: How companies are driving deals through partner referral programs

The partner landscape has been going through momentous changes due to the onset of the cloud and consequently the change in target buyer. Therefore, it has become a necessity to diversify partner relationships in order to meet growth objectives. One way companies are doing this is by establishing partner referral programs to:

  • Qualify resellers as referral partners to prove productivity and fit
  • Generate leads from ISVs and other individuals who would never be resellers
  • Get value from resellers who can’t transform to SaaS delivery models but can still be leveraged as referral partners
  • Diversify partners and increase revenue generation through referrals


Based off referral partner data from actual companies’ partner referral programs during the course of a year, benchmarks were formed on:

What is the average referral activity a company can expect from partners?

Kathy Contreras, Research Director for Channel Strategies at SiriusDecisions commented, “Partner referral programs can be used in any industry and offer a way to motivate and reward partners for identifying and registering new leads. This type of partnership [referral partners] provides the opportunity to align with organizations that have strong relationships with a supplier’s target buyers, but are not interested in or qualified to resell the supplier’s offerings (e.g. suppliers that provide collaborative solutions, systems integrators, consultants, influencers, etc).”

In the recent study done by Amplifinity based on partner referrals made on the Amplifinity platform during the course of a year, it was determined that on average 69% of referral partners are actively referring throughout the year.  The average program contained 863 partners making referrals out of the average 1,250 enrolled in the partner referral program.

partner referral programs, referral partners, channel partners

The remaining 31% of referral partners enrolled were not actively referring.

How high-quality are the leads that come from referral partners?

Partner referral leads are one of the highest quality partner leads. What makes partner referral leads so high-quality are their one-to-one interactions. But not all partner referral methods necessarily enable that type of interaction. Therefore, it is interesting to compare the most used partner referral methods to their success in driving deals.

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Most Popular Partner Referral Methods

As the chart illustrates, a lead form is by far the most popular way for partners to refer. This is logical since partners have a higher comfort level with lead forms as a result of it being a common business practice for partners. When looking at how lead forms converted for partners it is no surprise that it came in as the second most successful in terms of generating deals with a 37% conversion rate from partner referral lead to deal.

But if lead forms have the second highest conversion rate what is the highest?

Surprisingly, print cards have a conversion rate of partner referral lead to deal of 67%. However, this must be taken with a grain of salt since print cards were used less than 1% of the time by referral partners. This is another method that emphasizes the value of that one-to-one referral from partners.

Social media comes in as a far second in terms of popularity, with the data showing that not one partner referral coming from social media converted to a deal. This brings to the forefront the assertion that it is the one-to-one interaction that makes partner referrals such high-quality referral. While social media referrals can be done one-to-one it is more often used as a general blast.

“The data supports the concept that channel marketers already know – personalization improves conversion,” says Trisha Winter, CMO of Amplifinity. “The same goes for referrals. Social media, which is typically used as a one-to-many referral method was the second most used but had no success. Partner referral programs need to enable one-to-one referrals with methods like print cards, lead forms and verbal; which had high success rates.”

What impacts partner referral programs’ conversion rates?

The average success of deals coming from partner referral on the Amplifinity platform is 31%. On its own this conversion rate is remarkable, but when compared to the overall industry average created by Salesforce’s Implisit of 0.48% it almost becomes unbelievable.

referral partner, partner referral program, channel partners, partner referrals

However, this drastic increase in partner deal conversion didn’t surprise Winter, “It didn’t shock me that the success rate of leads created from partner referrals run on Amplifinity was so much higher than partner lead industry standards. When companies have the ability to enable partners with target buyer information while automating referral tracking, communications and incentive fulfillment it’s easy to see how referral volume and quality would skyrocket.”

Another factor that impacts the conversion rate is the fact that many partners will only bring a referral forward when a prospect has already become interested in the product or service. Attribution can additionally happen at the opportunity stage, which inherently inflates the success rate.

How does enabling sales involvement change the partner referral conversion rate?

While a 31% conversion rate is amazing by any standards, the Amplifinity report showed that enabling sales involvement in the partner referral program drove up the conversion rate even more. On average, a referral program that enabled sales to actively recruit partners to the program, generate referrals from partners, qualify referrals through partners, and receive a facilitated introduction from partners, increased the conversion rate to 41%.

What type of compensation is being offered to referral partners?

Compensation is very important when it comes to any partner program. Within the compensation structure lies the motivation for partners to make referrals. So what type of compensation is used most to motivate partners?

    • 60% of programs offer checks
    • 20% of partner referral programs offer gift cards
    • 20% of programs offer bank transfer

The most common compensation amount paid out to referral partners was between $101 – $1,000 with 76% of partner referral programs paying between those amounts. This large variance can be due to the percentage of revenue a partner referral program pays out and the cost of the product or service the partner is referring.

Download the full report to see more data on business partner referral programs including:

        • Most offered referral methods
        • Most successful referral methods
        • How the top 1% and top 10% of referral partners perform
        • Average referral pipeline
        • And much more

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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.

Quick Tip: How to better qualify resellers

If you have a reseller program, you know how much work it takes to get resellers qualified, trained and enabled. It’s worth it if they add to your revenue stream. But what happens when they don’t? They promised you that they had access to your target buyers and that their team was on board. Unfortunately, there isn’t much you can do beyond call it a sunk cost and move on to the next potential reseller. If this is a far too frequent scenario for you, it may make sense to consider a new approach to qualifying potential resellers – a referral program.

Ryan Morris, principal consultant at Morris Management Partners found in his research that “Everybody is churning, and yet [resellers] tend to churn and ramp and onboard very slowly, because there’s a lot of false starting.” 

By establishing  referral partner programs, you can both enable lower tier partners to be productive for you while also using it as a proving ground for potential resellers. Before you spend the time training and certifying, make sure they actually have connections with and influence over your target buyers by having them supply your sales team (or another reseller) with leads. Track these leads to a purchase and compensate these referral partners with a bounty or a percentage of revenue of the deal. Once the potential reseller reaches a threshold of successful referrals within a set time period, they will earn their right to become a trusted reseller.

With this extra step in the process, you’ve trained the reseller through the referral program on who your target buyer is and through reporting back to the reseller, they can see exactly which referrals lead to a purchase. Around 45% of channel companies pointed to their top pain point being the difficulty of doing business with vendors, (Channel Insider). But by qualifying resellers with a referral partner program they’ve got a head start going into training. Additionally, your team is more motivated to get them up and running quickly, because you know with certainty that they will be productive.

So what about the partners that never qualify with enough productivity? Well, they can still be a lower tier referral partner who occasionally brings in referral leads. This still adds to your revenue stream and compensates the partner for bringing forward that relationship. The more “failed” resellers that you have, the stronger the pipeline of your direct sales team. This makes sales happy and makes the channel team happy that they didn’t waste their time on training these partners to become resellers.

Citrix GoToMeeting referral partner program

Why referral partners will overtake resellers

There are lot of opportunities in the partner realm. With resellers and referral partners (agents) opening up new channels to reach target industries, companies are able to expand their selling power. But not every partner channel is an easy approach to take.  There are many factors that play a role in a business wanting to become a reseller or a referral partner and the company/vendor benefit that will result from this relationship.

Consider that each vendor has to factor in the costs of building a reseller channel. There is a high cost associated with training, certification and just to get the attention of the reseller and their sales team. In regards to training, sales and the rest of the team need to understand how to operate the product, the terminology needed to sell it and receive the in-depth knowledge to understand how to provide support and service. With all the training that has to happen there is inevitably a long period of time where nothing is being sold. And then, when an update occurs or new features are added, another round of training must occur. And once a reseller is fully trained, they likely have multiple products in their sales bag, so then it transitions to a struggle to get focus on selling the vendor’s product.

So what does this mean for the vendors? The amount of onboarding effort necessary for both vendors and reseller partners often jeopardizes the partnerships and the success of partner programs. According to the Ryan Morris, principal consultant at Morris Management Partners, prolonged onboarding cycles, program false starts, and ultimately a high rate of partner churn are often a consequence of the necessary burden involved in preparing reseller partners to bring your product to market.

An alternative approach to resellers is to establish a channel of referral partners. As opposed to resellers, training referral partners is a breath of fresh air. While they need to understand the value proposition, ideal user, and features to know if their referral is a fit, they don’t need much more. They aren’t trying to sell the product directly, just make a trusted and highly valued introduction to a company that offers their peer or customer greater value. This way the brand messaging, selling, and post customer engagement is owned by the brand which allows the company to give customers an authentic experience. In addition, partners can get a commission without any of the headache (or financial ache).

Here are some tips and tricks to enable referral partners and make them (and you) successful.

5 ways to enable successful channel partner referrals

1. Make sure your program supports the specific type of referral partners

One big part of referral partner success is how you go about enabling that partnership. The major determination for this is the kind of partners you are enabling with a referral program. For instance:

  • Do you have a bunch of small partners or bronze level partners (individual partners, agents or small business) that have access to your target buyers in their constituency and can influence them? This only requires an automated referral program that can easily scale the referral partner channel and is available for those partners to register, refer, track their progress, and get rewarded.

 

  • Do you have managed partners or silver level partners that need to enable their sales team to refer customers they interact with and that match your target customer? These require more complex referral partner programs as they need to have two tiers of management (company manages the partner and partner manages individual sales advocates and their activities) in order to provide unique rewarding and reporting by partner.

 

  • Do you have a high performing large partner or gold level partner program? This is usually a single large partner. This partner’s productivity is so high, a dedicated, co-branded referral partner program is created for them that is highly efficient at generating leads.

Ensure that your referral partner programs aligns with the type of partnership you want to create. The different features in these types of programs can enable substantial growth of referral partners and success of their referrals.

2. Training is a powerful tool

As demonstrated above, training is still an important part of the referral partnership. Since the partner doesn’t need to demo the product or sell it directly, they don’t need to go through the highly intensive training and onboarding typically reserved for resellers which tends to slow down the training process and increase expenditures.

To train partners, think about what knowledge they will need in order to communicate the value proposition of your product succinctly. To help facilitate this, offer resources like:

  • Monthly email updates on product innovation or service improvements
  • Video or documents that gives partners a talk track on how to present the product
  • Details on what makes a lead qualified
  • Introduction and walk through on the referral partner software
  • The types of pains the product solves for

Of course, for a tiered referral program, either the company or the partner will also have to take this training and communicate it to their sales team. The partner may add on certain materials to present their sales team which could include specific incentive levels that align with the unique values of each successful referrals.

And in regards to a dedicated partner, they will most likely have themselves aligned with your value proposition, but providing the generalized information above could always help.

3. Make referring easy and trackable by partners

The complicated onboarding that is associated with the reseller model is part of what makes reseller churn an issue. Learning your lesson from that, make partner referrals as easy as possible.

Try giving partners a variety of trackable referral methods which will allow them to adapt their referral method to the type of interactions they are having. This includes:

  • Suggest a lead form
  • A way to collect verbal referrals
  • Email sharing
  • Social media sharing
  • Shareable urls
  • Printed cards

While suggesting a lead will most likely be the most popular since it doesn’t require the referral to do any work, it is always a good idea to provide options. For instance, if a partners contact is more comfortable with another form of referral they can have the option of using it.

Another important aspect of referral partner engagement is allowing referral partners to check the status of their referrals and know how they are progressing. You don’t want partners calling you up all the time to try and figure out if their referral became a customer.

Make sure your referral partners can easily access information about their referrals in the program. Try automating notifications when a referral status changes to alert the partner if there referral is moving forward or successful or was unsuccessful.

4. Offer incentives that partners find valuable

Determining the incentive that your partners are most motivated by can be difficult. You have to take into account the effort they put in and how deep the relationship is with a certain partner. If you have multiple managed partners, the reward should be able to be automated and managed per partner so partners that are considered more valuable contributors can be treated as such.

When Citrix was deciding on how to incentivize managed partners, they did a number of studies on what competitors in their space where doing and that is how they landed on offering 20% of the annual value of the deal. However, Citrix uses an escalating reward structure as partners mature in order to reward low performers, mid-performers, and high performers in a way that will motivate higher numbers of referrals from a single partner. Automating an escalating reward structure for partners is a good way to incentives and scale a referral partner program.

5. Keep it top of mind

Promotions aren’t only for customer. You always want to make sure that your referral partner program is kept at the forefront of partners minds. For a dedicated referral partner this could be easy. But it is still good to reach out every quarter or so and offer helpful tips or remind partners of the chance to escalate their incentive with more referrals.

For individual partners, you might want to reach out by email or by phone more often in order to keep engagement up. These partners most likely have other companies they are working with and further nurturing is required to keep them sending leads.

Do you want to learn more about how to optimize referral partner engagement? Listen to what Randy Fahrbach, Senior Manager of GoTo Channel Development at Citrix/GoToMeeting suggests as he walks through his experience of automating his managed partners with a referral program.

Referral partner program ideas from Citrix. Headshots of Randy Fahrback and Larry Angeli.