The new opportunity for marketers this year – referral partners

“Wait, marketing is expected to increase revenue by that much?! And with zero increase in budget?!”

We’re all being challenged to do more with less, but there comes a point where you just can’t optimize existing channels enough to satisfy the growth objectives of executives. My guess is at budget planning time this is the realization that many of you in marketing are facing.

Take solace that you aren’t alone. Of course, many of you will take the “safe” route and try to eke out a few percentage points better results over this year and hope that it is enough to show your worth. Cause let’s face it, that growth objective is downright crazy!

For the rest of you that tie your worth to the growth hack, the hustle and being a demand gen expert – read on.

First, take a deep breath, I’m here with a message of hope.

Partners.

Wait, I’m not talking about signing up more resellers (which takes a year to get them certified and active). No, I’m talking about a different type of partner that is low touch and highly productive at generating leads that convert to purchase.

Referral Partners.

Stay with me, there are companies out there that you already have relationships with that will never be a reseller. If you aren’t leveraging them to drive referrals to your business, you’re missing a golden opportunity.

How golden? A recent benchmark analysis of referral partner programs showed an average conversion of referral lead to purchase of 31%. How does that compare to your inbound lead conversion rate?

How referral partners can fit into your current partner model

Think about all of the different partners and influencers you already have in your go-to-market ecosystem. Chances are you have one or more of the following that could potentially provide referrals to your business:

  • Integrated Software Vendors (ISVs) – Whether integrated or not, there are complementary software solutions where their sales team can identify fit for your product/service within their customer base. They are seen as trusted advisors to recommend you in.
  • Systems Integrators (SIs) – Chances are they are in more companies than those that have your product. They can be a great source to identify companies with a need for what you offer.
  • Consultants – highly influential and have no desire to be a reseller, these companies can be the eyes and ears on the market to identify a need/fit.
  • Services Providers – Just like SIs, these folks are in other companies, you just need to enable them to know what to look for and how to make the connection.
  • Alliance partners – Sometimes key strategic partners are resellers, but many times there is a co-selling/referral arrangement taking place that is simply a “gentleman’s agreement”. When you put formality around it as a program, you can significantly increase the output from this partnership.
  • Resellers – I know, they are keeping their leads for themselves, but don’t rule out talking to your partner marketing team about the reseller program to see if there are ways that referral software can make it better. Many companies use a referral program as a qualification step before becoming a reseller to better ensure an investment that will pay off. It is also used as an exit point for resellers who are no longer effective at the selling part of the gig.

And that’s just looking at the partners you already have relationships with. You can also look at building out referral partners from a strategic to a local/SMB level. Consider all of the individuals that have influence over your target buyer. If you’re selling to small business, how about their bank or their accountant? If you sell into franchises, how about making a deal with the franchisor to recommend your product to all of their establishments?

Once you’ve figured out who can be a referral partner, you can use your marketing savvy to build a referral program that allows referral partners to easily understand your buyer and value prop, make introductions of your target buyer to your business and reap the reward once a referral makes a purchase. And if you need help, here is a great resource with tons of worksheets and steps to help you build a referral partner program.

Marketers, we’ve spent the last 5 years looking to optimize inbound in order to drive growth. Now it’s time to look to partners. You can make that growth objective with referral partners.

Fintech’s Revolution AND Evolution: From competition to collaboration to referral partner programs

Tornadoes, whiteouts, hurricanes… we can usually see signs of their impending arrival, but even so, we are never quite prepared for the effects they bring. One day, we see a well-known and understood landscape, and next, everything has changed and we must learn how to navigate a new territory.

Thus was the fintech revolution.

But while this shift of the financial landscape may have seemed sudden, there were signs. Once the financial meltdown removed the guarantee of banks being a stable financial choice, the idea of alternatives to the traditional banking model suddenly became a viable option. And with the technological boom, digitalization of finance operations was a logical business innovation. Disruptive and transformative, a wave of financial technology (fintech) startups formed from these two coinciding developments.  While new B2B fintech business models targeted several different facets of the financial world, the majority have focused in on payment and lending. These startups brought the finance industry into an age of technological innovation by infusing automation, real-time payments, and better loan offerings through peer-to-peer lending platforms into the financial ecosystem.

From this, the finance world got much more snug. Suddenly, banks’ dominance of financial markets wasn’t a given, and the financial industry was overrun with competition. The status-quo was no more. But the fintech revolution didn’t stop there. This revolution has undergone an evolution. And competition was just the first step in an evolving chain of transformations that allows not only fintechs to benefit, but banks and clientele as well.

Competition: fintech vs. banks

The recent boom in the fintech industry reaches across the globe as people become more comfortable managing their money and business online. These B2B fintech startups are offering tech-enabled payments, currency exchange, crowdfunding, online lending, and wealth management services. These companies are competing and beating out traditional banks and financial services firms. Why?

The digitization of businesses has heightened B2B customers’ expectations of deliverables. Fintechs offer companies agility, speed, transparency, and integrations that banks have only ever offered businesses on a superficial level. According to Business Insider, 82% of customers said that a primary value proposition of these products is that they are easy to use, 81% said faster service, and 80% said good customer experiences.

There is a large frustration with big banks which allows fintech companies to fill the demand. Goldman Sachs estimates that fintech start-ups could steal up to $4.7 trillion in annual banking revenue, and $470 billion in profit, from established financial services companies.

But competition isn’t solely a worry for banks. Other fintechs also face their own competitors. Like any disruptive business innovation, disruption of industry standards only get you so far. Fintech startups are flooding the industry, and because of this banks won’t be the only ones who disappear in the coming years. And while these FinTech startups may have changed the financial structure for good, when the dust settles, and the new landscape is set, the financial world is going to get much more hostile for these pioneers. This is especially true for fintechs that only have a niche offering and lack the long-standing experience and insight many investors are looking for. But don’t get me wrong, the fintech industry is still growing. So what does this mean overall? While the fintech industry has amazing potential to overtake banks, it also has its own challenges from within. With fintech lacking the long-term success and wider offerings needed to dominate the financial market and banks lacking the agility to compete head-to-head against fintechs, the realization has occurred that continued survival does not lie in competition, but rather collaboration.

Collaboration: acceptance and integration of digitalization

As fintechs grew in abundance banks tried to compete, but their established internal structure lacked automation, was restricted by regulations, and couldn’t adopt anything that would come close to the agility of fintechs’ SaaS products. On the other side, fintechs found it extremely difficult to garner industry respect and trust without the historical experience that banks have. In this way, fintechs and banks have become two halves of a whole, and thus came about the inspired idea of collaboration.

So it’s settled, fintechs and banks collaborate to create disruptive new offers. Unfortunately, it isn’t as simple as that. How to go about designing a beneficial partnership requires more thought. This hang-up is felt throughout the industry. In fact, according to Business Insider, 46% of banks plan to collaborate with fintechs, but only 13% believe their core systems can handle the technical demands of partnerships. The financial industry believes partnering with these companies is the best way to stay afloat. This makes sense since banks are set up to maximize security and minimize their costs, not to innovate. Reliance on fintech companies for innovation will be critical. And for fintechs, to gain expertise in regulatory matters and create stronger offerings they need to be able to set up an equal partnership with banks. But in order to do this, it is crucial that fintechs and banks find a way to automate and scale this type collaboration. Thus enters automated referral partner programs.

Referral partner programs: Aligning banks and fintech companies

Fintechs and banks both have different strengths that allow them to accomplish a certain level of success, but they each also have challenges that hold them back from growing further. A partnership removes the need for either to have to overcome these challenges internally. But in order to create long-term sustainable partnerships, banks and fintechs need to be able to automate that relationship. Referral partner programs does this by facilitating a seamless referral partnership that is low friction. Referral partnerships are at the core of many fintechs’ success. OnDeck, Funding Circle, and Lending Club and TSYS are just a few that have developed referral partner programs in order to establish greater trust, provide a wider offering and reach new customers. This is because referral partner programs can create deep partnerships with banks and fintechs that fill offering gaps to increase the value they can provide customers. Referral partners understand the pains of target customer and can extend the trust they have previously developed to encompass the referred company.

Fintech and banks can go about referral partner programs in three different ways:

1. A company can build a referral partner program for their many different individual partners, small businesses and agencies. These will usually be for unmanaged partners.

2. A company has a major partner entity, for which they create a dedicated referral program. This type of referral partner program would be based off a deeply integrated offering on the technological side and the ideological side. One example of this type of referral partner program is Funding Circle and H&R Block. In this referral partnership, H&R Block made Funding Circle the preferred lender for all their small business customers.

3. A company builds a program for one or many major partner entities and their sales teams. This is a more advanced and requires the ability for partner entities to have the ability to keep track of, manage, and increase their advocate pool while having greater capabilities to incentivize and manage partner activity. OnDeck has found great success at using a more advanced referral partner program to increase customer acquisition.

As the financial landscape changes, think about how you can overcome your internal challenges and generate more high-quality leads, especially from your smaller partner. To discover what kind of benefits a referral partner programs and referral software could provide, download the benchmark study, The State of Business Partner Referral Programs – Annual report, to better understand referral partner activity, behavior, sales involvement, rewards and the relative conversion rates.

 

Originally published on Salesforce