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 2 – How to engage and recruit partners

Once you’ve identified potential referral partners, it’s time to get their attention and convince them of the value of becoming a referral partner for your business. So why should they partner with you, anyway?

Here are some value props to consider:

  • Does recommending your product/service put the partner in a good light with their customers or network?
  • Does it help them to be perceived as a trusted advisor?
  • Does your product/service add complementary value to their offering?
  • Does your product/service make their offering more sticky by increasing usage or value?

If you answered yes to any of these, you’ve got a great case on how their participation in your referral partner program will be a win-win. Add a fair incentive model with a bounty, or better yet, revenue sharing and you’ve got a solid value prop that will get the attention of potential partners.

If you answered no to all of those questions, you can still find willing referral partners if the ask is easy for them, meaning they are connected to the right people and your referral system is easy to use. But in these cases the value is 100% focused on the incentive, so you’ll need to make sure there is enough upside for them to make the effort. (And yes, I will cover incentives later in this series).

So you’ve got your value prop, now who is going to deliver it to recruit referral partner?

Partner marketing can email and advertise, but the single most effective way to recruit  partners for referrals is to have your sales team do it. Direct sales has an organic incentive to recruit  partners for referrals because they reap the benefit of the resulting leads. If they are organized by territory, they also typically have connections to local associations, influential small businesses and salespeople from companies with symbiotic offerings. Arm your direct sales team with the value prop and a simple registration process. Additionally, get sales leadership the metrics needed to drive their teams toward a partner recruitment objective.

If you are lucky enough to have a partner sales team, partner recruitment is even easier as this team is already incentivized to drive recruitment. Just make sure they understand your ideal partner profile and work closely to evaluate how the partners they recruited are performing.

In either scenario, it never hurts to do some internal promotion like this one.referral partner program, partner referrals, recruit partners

You can also put marketing to task on an internal campaign to drive recruitment in a short window (a month or quarter). Make it a competition across individual reps or regional sales teams with great prizes and watch the partners enroll!

Once you recruit partners for referrals, you’ll need to have the key capabilities to enable referral partners. Keep a look out for the next article in the series that covers how to enable referral partner.

In the meantime, see how automating referral partner management can increase your ROI with the ROI Calculator!

Previous articles in this series: Step 1 – How to identify potential partners 

 

Referral Strategy: Create an onboarding process for your referral sources

After identifying your referral sourcesdeveloping a recruitment strategycreating a sales enablement plandeveloping a plan to enable referral sources, and constructing a referral incentive strategy, you can start to fashion a referral strategy that enables you to create an effective onboarding process for your referral sources.

To build an onboarding plan, you need to first determine what information should be collected at registration for different referral source and the training they need to succeed.

5 ways to determine your referral strategy for your registration process

Throughout the life of your referral program, you will need to collect different information from referral sources at different times. To figure out what information you need to collect at registration based on your referral program structure, answer these five questions.

  1. Are you using the referral program as your partner database?

If yes: Collect all required fields at registration, like email, address, and phone number.

If no: Connect your registration and program to your CRM/PRM with SSO and prefill this information.

  1. Are you paying your referral sources via electronic funds transfer?

If yes: Collect the appropriate bank information.

If no: Validate the address or email is correct for a check or electronic gift card.

  1. Do you want to approve referral sources before they join the program?

If yes: Collect the key information you are judging their approval on. This could be a check on access to your target buyer, a sample of existing clients, or the ability to commit to an SLA.

If no: No additional information is needed.

  1. Is a salesperson (direct or channel) involved in the relationship with the referral source?

If yes: Provide a way to select their salesperson during registration so that performance can be tracked and reported by salesperson.

If no: No additional information is needed.

  1. Do you expect that the majority of referral sources will earn the taxable limit of $600 during the calendar year?

If yes: Collect the tax information at registration. If the referral source is inside the U.S. this would be through a W-9. If the referral source is outside the U.S. this would be through a W-8.

If no: Establish a process where if they reach the taxable limit, the appropriate tax information is triggered for collection before further payments are made.

Once these decisions are made you can construct your registration form to collect this information.

To help guide you, download this worksheet, along with the five questions worksheet.

How to build a training plan for your referral program

Another important part of onboarding referral sources is training them. Depending on what type of referral source you’re enabling, this training may be as easy as providing content on your target buyer or as in-depth as laying out the different value propositions each type of buyer will respond to and how to identify them. Depending on your referral source’s knowledge of your business, you may want to just put the information in your referral program portal so they can access it whenever they might need a refresher.

When considering the different training you should provide, think about it in relation to who the trainer will be or if it would be self-taught, the delivery mechanism for the training, if there is a specific date(s) it should occur or if it is ongoing, and if the training is a requirement or optional.

Here are a few types of training you can consider offering:

  • Target buyer and buying personas
  • Referable product(s) and value props
  • How to make a 1-to-1 referral ask
  • What happens after you submit a referral – process and communication
  • How to earn incentives – criteria and payment

To help construct your training process, download the exercise or download the entirety of, The Referral Guidebook, to create an all-inclusive referral strategy.

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How to improve reseller productivity with a referral program

Reseller and agent programs are undergoing heavy scrutiny from CEOs. Searching for revenue growth, CEOs want to know if the channel can provide it, yet they are also noticing that traditionally strong resellers are struggling. This means Channel Chiefs are looking for ways to prove the value of this important channel to market.

The answer is to layer on a referral program.

There are some big advantages to running reseller and referral programs in tandem that lead to a more productive channel and corresponding revenue growth. Here’s my list of the top 5 benefits of running a referral program alongside a reseller model.

Top 5 use cases and benefits of running reseller & referral programs together

  1. Make the referral program a qualifying step for resellers – This allows you to validate that a potential reseller actually has access to your target buyers and influence on their purchasing decisions. Once a referral partner meets your requirement for successful referrals, you can then go through the certification process knowing it won’t be a waste. Additionally, by participating in the referral program, the partner has already gotten basic training on your target buyer and value proposition.

Key Benefits:

  • Saves time/resources in certifying only productive resellers.
  • Saves time/resources in training resellers on the target buyer and value propositions.
  1. Use the referral program to attract potential resellersReferral programs are an easy way to begin to form a relationship with potential resellers that is less risky for both sides. The partner can quickly find out how easy it is for them to work with you and find in-market buyers without spending their time on certification that might not pan out.

Key Benefits:

  • Recruit more partners (and potential resellers).
  • Provide partners a great impression of how easy it is to work with you.
  1. Use the referral program to identify potential resellers – Many referral partners start as programs for individuals to sign up for. This is particularly true if you have a territory model for your direct sales team and they are recruiting influencers in their territory to become referral partners. Understanding the referral performance of these partners can lead to identifying potential companies to form managed relationships with – either as a referral or resale partner. This saves time and money in going after the right partners since they have a proven fit for your business model.

Key Benefits:

  • Provides data to demonstrate which companies would be profitable resellers.
  • Saves time and money searching for new resellers.
  1. A referral program makes it easy for resellers to refer – There will always be times when a reseller identifies a potential buyer but isn’t in a position to make the sale due to conflict of interest or lack of the right skill set or solution. Having a solid referral program that is easy for resellers to use allows them to clearly make a referral and get rewarded for it instead of fumbling with deal registration exceptions.

Key Benefits:

  • Reduces exception handling for tracking non-resell contributions.
  • Gives resellers confidence they will be fairly rewarded for non-resell activity.
  1. Transition underperforming resellers to referral partners – Products and buyers change and sometimes resellers can’t make the transition. Running a referral program alongside reseller provides an outlet to move underperforming resellers to referral partners. This allows you to still get great leads from them, but save money on recertification that doesn’t produce closed deals.

Key Benefits:

  • Provides a low-cost way to still get revenue from struggling resellers.
  • Saves time and money to recertify underperforming resellers.

If you are running a reseller program without a referral program, you’re missing out on significant revenue and time savings for your team. Beyond the value of your reseller model, referral programs can also be a way for you to get revenue from non-resell partners in your ecosystem. Technology partners, integration partners, services providers, consultants, implementation partners, etc. all interact with your target buyers and could all be making referrals to your offering if enabled to do so. There are so many benefits to adding a referral partner program to your channel – make it a priority this year.

And to see how referral partner programs are driving revenue for companies, download the benchmark report, The State of Business Partner Referral Programs.

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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.