New data: How companies are using referral partner incentives [Infographic]

Partner incentive amount and type always seem to be in question and I can understand why. The partner incentive is the motivator and continual base driver of partner deals. Therefore, the type, amount and structure are very important decisions. In recognition of this, data on referral partner incentives was analyzed to determine the most popular incentive type and amount offered to referral partners to help direct referral partner strategy.

This data was analyzed by a third party and comes from referral partner incentives fulfilled by referral partner programs run on the Amplifinity partner referral program software, reported in The State of Business Partner Referral Programs. Here are the findings.

What type of referral partner incentives are companies providing and why?

There are many different types of referral partner incentives. Referral partner programs run on Amplifinity used three different types. This is how the usage came out:

  • 60% used checks
  • 20% used gift cards
  • 20% used bank transfer

Checks had the highest usage with 60% of programs fulfilling on them. Checks were typically used when a referral partner program had variable reward amounts or offered a percentage of revenue to referral partners.

The 20% that used gift cards typically offered this type of referral partner incentive when they had a “bounty” reward structure.

Bank transfer tied with gift cards at 20%. This type of referral partner incentive was utilized when the partner program was paying out high amount regularly and wanted to group the incentive payments. This is also used when international payment are required in order to handle currency exchange.

What is the average referral partner incentive amount companies offer?

The other aspect of referral partner incentives that is even more deliberated on than referral partner incentive type is amount. Partner marketers and channel program managers need to ensure that the incentive is high enough to provoke action and keep the referral partner program top of mind but low enough so it’s still is less than the average cost per acquisition of marketing leads.

According to the data, the average referral partner incentive amount overall was $182. Here is the incentive amounts breakdown.

  • 14% fulfilled on incentives that were greater than $1,000
  • 76% fulfilled on incentives from $100 – $1,000
  • 10% fulfilled on incentives from $40 – $100

The maximum incentive paid out to a single referral during the course of a year was $8,463. This variance in the amount of referral partner incentives can mostly be due to the structure of the incentive being a percentage of revenue and the different costs of the product or service the partner referred.

Start visualizing how to offer motivating referral partner incentives that entice referral partners:

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8 benchmarks for creating a successful customer referral program [Inforgraphic]

We always hear how customer referral programs have grown in implementation as a result of their undeniable ability to generate quality leads that convert to new customers. But even though referral programs might appear to be wildly successful compared to your different lead generation programs, finding out how it compares to other successful customer referral programs is often more telling. This useful insight helps to understand where extra attention needs to be paid in order to optimize for success.

The eight benchmarks mentioned here comes from the new data report, The State of Business Customer Referral Programs. These benchmarks are a result of millions of customer referrals made in business customer referral programs run on Amplifinity’s referral software.

What is the average activity that can be expected from a customer referral program?

Activity is a very important metric to understand. Customer referral activity is the foundation of a successful referral program. This is what the first benchmark is focused on.

1. During the course of a year, it was discovered that 36% of customer enrolled were actively referring.

This means that 64% were inactive. Why were they inactive? A lot can depend on when a customer was enrolled. If they were enrolled in a previous year, made a referral, but where not successful they are often deterred from referring again.

To overcome this try having sales or customer success reach out and engage inactive advocates to train them on how to refer and the right type of person to refer in order to keep them engaged in the referral program.

How many referrals can a customer be expected to generate?

Once the percentage of active customers is discovered, how are those customer behaving?

2. On average:

  • 61% of customers will make 1 referral
  • 34% of customers will make 2-10 referrals
  • 5% of customers will make 11+ referrals

To try an increase the number of referrals coming from customer advocates, provide a special offer or an increase in reward with each successful referral. Driving multiple referrals from a single advocate becomes even more important when looking at the next benchmark.

3. The data found that on average over a year period a customer produced 0.87 referral leads.

This means that if a customer referral program had 1,000 advocate they would produce 870 referral leads.

However, compare this to customers who previously referred a qualified referral lead.

4. These previously successful customers produced an average of 2.5 referral leads per year.

To drive more referral leads from previously successful customers, identify these customers and have sales reach out to thank them and encourage their productivity.

How many deals are generated from customer referrals?

Now getting to the main event – the conversion rate. The average referral lead to deal conversion rate from customer referral program run on the Amplifinity referral platform was 3x greater than the industry average of 3.64%, according to Salesforce’s Implisit.

5. The average conversion rate of referral leads that turned into customers from all programs was 13%.

While this conversion rate is spectacular, it becomes even more phenomenal when looking at customer referral programs that had sales involved.

6. Customer referral programs that had sales teams play a role in recruiting customers to become advocates as well as regularly asking for referrals had a 30% conversion rate.

This conversion rate has a 17 percentage point increase over the average. To help facilitate this try training sales on when and how to ask for referrals and break standard lead routing rules. This would allow the salesperson who ‘owns’ the customer to have their referral leads routed to them and incentivizes sales to form stronger relationships with customers to increase the quantity and quality of referrals.

How do the quality of referrals compare to the quantity?

So you now know that it is important to drive a higher quantity of referral leads. But the quantity of referral leads needs to be balanced with quality. For instance, a customer advocate could easily refer daily by sending a blast referral out to their social network. And while this could look great if you are just looking at quantity of referrals made, when aligned with the percentage that turned into deals you will be sorely disappointed.

7. In a year, the top 1% of customer advocates by volume of referrals, made 22% of overall referrals which only resulted in 1% of deals.

This falls extremely short of the average conversion of 13%, not to mention the 30% conversion of referrals when sales is involved.

But what about the top 10%?

8. The top 10% of customer advocates by volume of referrals, made 54% of referrals, which only resulted in 6% of deals.

Unfortunately, when an advocate just focuses on the quantity of referrals they often sacrifice quality. General social blast lose the one-to-one connection that make referrals so powerful.

Luckily there is a way to combat this. Try coaching enthusiastic customers on what makes a successful referral. They will appreciate the guidance and the reward that comes from referring more qualified leads.

Start visualizing customers referral results and discover how to manufacture successful referrals:

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