Why customer advocacy means the end of reseller partners

Customer advocacy is the practice of leveraging your customers to endorse you and with the right tools it has become a very powerful source of lead generation for businesses. These endorsements can come in many different forms ranging from product reviews on third party sites, to sales references, to referring your product to someone in their network. Sales and marketing have been begging customers for these things for years but they haven’t been able to turn it into a significant lead generation resource.

Now there is software available that allows you to get customers advocating at scale, software for getting content and software that drives referrals and they are working. SiriusDecisions recently highlighted some customer advocacy programs that are impacting revenue in this presentation. It isn’t just influenced revenue. ADP stated that customer advocacy via referrals is their top source of leads that turn into revenue.

But with the onset of customer advocacy adoption and companies realizing the value of it, it’s  highlighting a big problem with reseller partnerships. Specifically, with reseller partnerships you get revenue, but don’t have any relationship with the end users of your product. They aren’t your customers, they are the Customers of your reseller.

These customers may be some of the best and happiest users of your product, but they have no relationship with you so they can’t be leveraged for customer advocacy. If you don’t own the relationship, you can’t control it.

This is one of the reasons why companies are moving away from reseller partners and transitioning toward Referral Partners.

How to leverage referral partnerships with customer advocacy

Referral partnerships benefit both the partner and brand/customer marketer. With referral partnerships you can still leverage the value of your partner network, while keeping the customer relationship direct. The way this works is that your partners act as a trusted adviser to your target buyer. They can recommend your product to them and can get compensated for that recommendation if they end up buying your product. This generates a high quality lead in your sales pipeline that gets sold by your sales team.

And now there is software that can manage the complexity of that relationship from delivering the referral experience and tracking that referral, rewarding and fulfillment process with variations as needed by partner. Relative to resellers, this drives incredible value for Partner Marketers, Sales, your Partners and your Buyers.

Partner marketers can drive incredible value from your partner network while making your brand and customer marketers BFFs. By transitioning to referral partnerships, you are extending their pool of potential advocates that can take actions to make referrals and endorsements. And this of course, drives more revenue.

As customer advocacy becomes a more common and expected part of the lead generation and buying experience, I predict that companies will find it difficult to justify their investment in reseller partnerships.

Justify your investment in customer advocacy by trying out the ROI calculator to discover the ROI you can achieve with a referral program.

CTA_ROI_calculator_v2

The best sales channel you’re probably not using

I’ve been in technology for nearly 30 years and I’ve watched many tech businesses attempt to grow their businesses “through the channel”. This is code for various forms of business partnerships or distribution models that drive incremental revenue.  These partnerships come in many shapes and sizes and include industry designations such as resellers, agents, integrators, etc.

 Back in the day…

Whether the nature of the partnership is “sell with” or “sell through” you usually consider the trade-off between investment in the channel partner, and the potential lift to sales. The investment comes in the form of training, enablement materials, support personnel, commissions etc. and usually mirrors the amount of the sales process you are expecting the partner to carry. The expected payoff is incremental revenue you would not have received through your direct or ecommerce channels.

 Too complicated

Many of these traditional partner efforts fail to live up to expectations. Without early success, execution quickly wanes and eventually the partnership flames out and the investment is written off.  There are a host of reasons why partnerships can be challenging, but one that I often witness is that channels partners can rarely execute the sales process as well as the primary supplier. If they don’t have immediate success, they lose focus and move on to where they can make money faster and easier.

 Watch out for an upset (aka, don’t get Uber-ed!)

In the same way that technology has disrupted markets (think Uber, Lyft, AirBNB), etc.) technology is poised to disrupt the nature of these traditional channel partnership models. And, just like the aforementioned disruptor companies, cloud/SaaS, and mobile technology will provide the crucial linchpin that drives obsolescence of these traditional channel models.

The concept is a simple and elegant, but also powerful and scalable– leverage technology to quickly and inexpensively ramp channel relationships that can drive new customer acquisition and revenue generation. The referral of an opportunity that results in a closed sale becomes the unit of exchange in this new channel ecosystem. It’s pretty much a given that referrals are the highest quality leads with higher close rates than traditional lead methods.

Let’s look at what we really want out of our channel partners and how technology enables could enable a truly disruptive new channel model:

Low friction: Both suppliers and partners want easy and simple. Complex partner models decrease the odds of success.  Today, mobile and social technologies combined with the networked nature of relationships can allow you to make almost anyone a partner that helps you identify and influence qualified buyers.

Speed: The more extended partner network you can build, the better opportunity you have to quickly identify in market buyers and beat your competition to the sale.

Scales easily and effectively: SaaS software can provide a platform for a 100% closed loop process that fully automates tracking, attribution, compensation and communications to the parties in real time.

 

Are there leading edge companies doing this already? You bet!

In the B2C world, the aforementioned Uber and Lyft utilize this method to drive a fast, frictionless growth in a way that is authentic to their brands. Immediately after a ride on Lyft, I am prompted to post a tweet to my network embedded with a referral link. I get my reward if they use my referral. A great example of levering customers as a channel.

In B2B, fast growing SaaS players like RingCentral and Citrix GoToMeeting are using referrals as growth channels with both partners and influencers. Citrix’s Senior Manager, Randy Fahrbach recently wrote a piece on Referrals as a Service (RaaS) for his interesting take on this channel trend.

Who are your potential new channel partners? It can be anyone! Open your thinking to any groups, companies, communities or professionals that may have experience with your product or are in a position to influence your buyers. As an example, if you target small businesses, accountants can be very influential in the certain buying decisions that an SMB makes.

What about companies that sell an adjacent product or service to yours? These companies may be interested in becoming your partner. With little additional work or distraction from their core business, they get to create an additional revenue stream from the relationships they already have today. You can also use the same model for companies that may already be a partner, but you need a lower cost, lower friction way to make the relationship productive and profitable.

Once you are freed from the cost and effort of ramping a traditional partner relationship, you’ll be able to brainstorm many new potential partnership opportunities. Think about your end buyer and what natural partner synergies might exist if you could enable them to refer your product cheaply and easily.  With a simple referral execution, you can engage this channel and make it very easy for them to identify leads and be rewarded for doing so.

 If you go down this new channel partner path, here is what you need to be successful:

  1.      Make it easy for them to partner with you
  2.      Make it easy to refer — direct and indirect
  3.      Clearly delineate rewards with prompt fulfillment
  4.      Provide transparency so the partner is kept up to date on progress
  5.      Reinforce positive behaviors

What is brand advocacy?