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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How to realign your partner model and SaaS company with referral partners

Partner and agent models are extremely profitable. Partner types like resellers and referral partners help companies get greater sales coverage in a less expensive and more efficient way than a direct sales model. But for SaaS companies it can be more complicated. Among the disruptive ripples that SaaS made was the scrambling of traditional partner models. This is a result of many reseller partners not being able to handle the more supportive and relationship-based customer model required by SaaS products, technical road blocks, and the constant product updates that a more agile subscription service has. So with all of this change you may be asking . . .  What does the partner model look like for SaaS moving forward?

The following are 4 changes that will impact the SaaS partner go-to-market strategy.

1. The position of ensuring customer success moves from the channel partner to the company

With the on-premise model partners took care of the technical implementation of a product but it was then up to the customers to facilitate their own success beyond that. With SaaS removing those technical barriers and instituting reoccurring revenue model, the emphasis is now on the continued building of a relationship and success of the end-customers. SaaS applications have allowed companies to become extremely agile which doesn’t align as well with the rigid reseller model. These partners aren’t necessarily focused on customers after the original sales and many are having trouble conforming to the new SaaS delivery model. These changes make it harder than ever to be successful as a reseller and for SaaS companies to grow revenue from the partner channel.

Based on these challenges, more SaaS companies are moving customer success in-house.

Suggestion: Although current resellers and distributors may not be as effective as they once were, they are still in a position to increase your revenue generation and provide coverage. Try enabling them to submit targeted leads that are picked up by your sales team. They can then assist in the sales process and still be rewarded for their efforts. This is the referral partner model which allows you to maintain and increase sales coverage while delivering the customer support of a direct sales model.

2. SaaS companies will have a dedicated team to meet customers rising expectation

Another large factor for customer success moving in-house is the rising customer expectation that they expect their contact to fulfill. Resellers are becoming less dedicated and more polyamorous than ever before. They often don’t have the time or resources to provide that type of support that SaaS end-users need.

That means when something goes wonky as it always does in one instance or another a customer will require a quick to instant response time. Depending on the type of product and its role in a business it could impact a company’s success or stall its ability to move forward. This means that the fix needs to be applied as quickly as possible.

Suggestion: When a customer comes from a partner referral as opposed to being sold by a reseller it ensures a quicker response time since they don’t have to wait for the reseller to have enough time to contact the company, understand the solution & institute a fix. Try assigning a dedicated customer success rep to an account to ensure the providing of proper communication and information in a timely manner to help control the situation and fix the issue.

3. Agile product updates require continual training

One of the beauties and challenges for a SaaS company or product is that they can easily institute product updates quickly and seamlessly. This allows companies to provide more customized products and services while continually improving it. However, this also requires the continual training of resellers on the in-depth technology requirements, benefits, drawbacks, how to use it and how it can apply to different customer types.

This means that resellers need to be able to set time aside to continue to understand product updates at an expert level. This is the only way they can try to provide the consultative services that customers expect goes along with SaaS products and services. Unfortunately many reseller don’t have the time to keep training or provide the consultative services that enable customers to benefit the most from using the product or service.

Suggestion: Instead of providing continual in-depth training as you would with the reseller model, the referral partner model allows you to update partners on new benefits, its capabilities, restrictions and uses in a succinct, high level format. Try assigning a sales or success rep to update referral partners regularly so they can correctly relay the benefits to qualified leads but don’t have to have a deeper understanding to sell the product or ensure the success of product updates.

4. More referral partners and less partner monogamy

While we have already said referral partners are an alternative route (and smoother route) for SaaS companies than other traditional partner models, we must take into account that partner monogamy is no longer reliable. As a channel account manager at a large company releasing their own SaaS product said in a confidential interview, “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.” Expanding on this he explains that, “One day they might work on a deal with you and the next they will have moved onto a deal with someone else.”

Suggestion: A referral partner program can help manage and scale partner referrals while allowing SaaS companies to continue to expand coverage areas and generate revenue from the channel. Try implementing one to draw sustainable revenue growth from your partner ecosystem while removing the challenges that SaaS products and services create within the channel.

To understand referral partner program performance benchmarks from companies like yourself, download The State of Business Partner Referral Programs.

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The changing partner channel . . . and what you can do about it

The partner channel is changing. And while there is a lot of buzz around the how and why, there isn’t much content on what to do about it.  First, let me break down what is happening . . .

  • The buyer is now a buying unitSiriusDecisions recently revamped its marketing pipeline to be account-based instead of lead-based. Fundamentally, more purchases are happening with cross-departmental buying units versus an IT buyer (who traditional resellers have relationships with).
  • Vendors are embracing subscription models The subscription economy removes the effectiveness of resellers. The direct relationship between the customer and the SaaS provider is extremely important for delivering success services and simply easier contractually on the customer than going through a reseller.
  • The VAR system is broken – Possibly my favorite article of the bunch, due to the fabulously sarcastic (yet painfully true) flow chart of how the reseller deal process works (or better yet doesn’t work) was written by Andrew Plato called Goodbye Yellow Brick VAR.
  • Competitors are taking business away from resellers – Due to many of the above factors, Forrester analyst Jay McBain, refers to The Rise of Shadow Channels which are much better suited to drive business than traditional resellers.

So what can you do about the changing partner channel?

If you are a Channel Chief facing decreasing revenue from your network of resellers, you are likely having trouble sleeping and perhaps are suffering mild panic attacks as you contemplate how to stop your reseller Titanic from sinking. Take a deep breath and let’s consider some life raft tactics that can turn your partner channel program around.

Step 1: Evaluate your partners

Determine which partners can make the transition to the subscription economy and the disparate buying unit. The “younger” resellers may be more able and willing to transition. Once you’ve identified those with potential, meet with them and discuss a program and incentive model that will meet their needs so there is a win-win. Larry Walsh of 2112 Group advises vendors to take an Outside-in approach to channel programs – basically, design programs for what your partners need, not what you as the vendor need.

Step 2: Don’t fire the rest of your partners

Instead of firing the rest of your partners, consider whether or not your remaining resellers have access to target buying personas in your target accounts. If so, it may make sense to transition these resellers into referral partners. They can continue to make money, but not have to deal with the complexity of the sale. Plus, your direct sales team will love these warm introductions to fill up their pipeline.

Step 3: Onboard potential resellers differently

Assuming some resellers can transition to be successful in this new model, you will likely see a different breed of resellers emerge. But instead of trying to push them into your traditional certification program, first start out light. Onboard them as referral partners to start (like TBI is doing) – this proves they have access to your target buyers and influence to see a deal close. Once they have a feel for how easy you are to work with and have proven productivity, then you can spend the time to upgrade them to a reseller. Note, some may never graduate, but will stay happily productive as referral partners.

Step 4: Start getting revenue from non-reseller partners

That’s right, technology partners, integration partners, services providers, ISVs, system integrators, etc. could all be providing you leads. Enroll them as referral partners and you can make up for lost reseller revenue by sourcing business from your existing ecosystem.

Step 5: Expand your partner ecosystem

Most Channel Chiefs are familiar in the realm of managed partnerships, but much less aware of the potential of individual unmanaged partners. Consider all of the individuals that have influence over your target buyers or have intelligence as to when a buyer is in-market for your product or service. Here’s a few to ignite your thinking: lawyers, real estate agents, accountants, association members, lenders, agencies, consultants, even your own customers. You can use a referral program to leverage all of these individual referral sources at scale to drive high quality leads to your direct sales team.

Are referral partners replacing resellers?

I’m sure you’ve recognized a theme here of referral partners. Truly this development is a response to how the partner channel is changing. Vendors want the direct relationship with customers. They want to do the selling, but who would say no to hand delivered high quality leads? Some businesses are seeing so much success with referral partners that it has overtaken traditional marketing as the #1 source of customer acquisition. If this is completely new to you, there is a great Referral Guidebook that has 20 interactive worksheets to walk you through determining who would make a great referral partner, how to design a referral program (including incentives calculations) and through to sales enablement and metrics.

Yes, the reseller boat is sinking, but there is still phenomenal opportunity for the channel to be a big revenue generator for your company. It just requires some different thinking about who a partner is and how they work with you. It’s time to take action – go find a life boat before it’s too late!

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Referral strategy: The 7 factors of a profitable referral incentive strategy

Upon identifying your referral sources, developing a recruitment strategy, creating a sales enablement plan and developing a plan to enable referral sources, it’s time to build a referral strategy around your incentives to drive more high-quality referrals.

This portion of your referral strategy is very important. Adding an incentive to your referral strategy isn’t just a box to check before moving onto the next step. There are a variety of different mechanisms that are involved in creating a referral incentive. Different referral sources might require different amounts and structures, and have different motivations. Here’s how to determine the right referral incentive strategy for your referral program.

4 factors that determine your referral incentive structure

In order to drive repeat referrals, you need to set up a referral incentive structure that is motivating to each specific group of referral sources. There are four considerations that go into this part of your referral strategy.

1. The calculation – To create an incentive amount that is both motivating to referral sources and provides the best ROI, ask yourself this question: Do you want to reward at purchase or at an earlier stage?

If the answer is at purchase, determine the best way to calculate the reward for your program. If you need help with that, look back at the second blog in the series to see how to calculate incentives based on your current CPA.

However, if you would want to have your incentive fulfilled at an earlier stage, try rewarding on a flat bounty. To do this, determine the amount and stage to be triggered.

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2. Timing and multi-stage – To make sure your referral structure keeps referral sources engaged and motivated, and ensure that the referrals they provided are quality, ask yourself this question: Do you want to add a retention period before paying the incentive in full?

If the answer is yes, consider splitting the incentive into multiple stages such as at purchase and after a retention period to keep engagement high.

If the answer is no, take a look at your sales cycle. If it is a long sales cycle, consider rewarding at multiple stages to keep engagement up. However, if your sales cycle is short you can just have your incentive be fulfilled at a single stage.

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3. Multi-level – To decide how to structure your incentives to motivate repeat referrals and create higher-performing referral sources, ask yourself this question: Do you want to create multiple reward levels?

If the answer is yes, you then have to decide if you want to base the reward on the number of successful referral or on the number of rewards (only used if using multi-stage rewards).

However, if the answer is no you can simply keep a non-variable reward.referral incentive, referral strategy, partner reward, referral partner, referral partner reward, incentive calculation

4. Accrual – To understand how to handle accrual based incentives, ask yourself this question: Do you have transaction fees for EFT and/or expect a high frequency of successful referrals from your sources?

If the answer is yes, determine the frequency of the incentive payouts.

If the answer is no, payout the reward at the time the referral becomes successful.

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Answering these questions can help you create a more targeted and effective referral strategy for your incentives. But once these decisions are made you still aren’t done. Now it’s time to think about incentivizing the other people involved in the referral process and the inclusion of added incentives.

3 times you should include extra incentives in your referral strategy

While having a regular referral strategy in place for your incentives is necessary, going the extra mile can help keep you top of mind for referral sources. For instance, during a slow time of the year, referral sources can be prompted with a special bonus. And you can’t forget about the other people involved in making a referral successful. To drive added referral activity there are people outside your referral sources that can be incentivized. Here‘s how to determine if you should include any of these three extra incentives in your referral strategy.

1. Prospect reward – Also known as double-sided rewards, these rewards can reduce some of the perceived risk referral sources have when making a referral. This is because it allows a referral source to offer the referral a great deal. To determine if this is right for you, ask yourself this question: Do you have the ability to offer referrals a discounted price?

If the answer is yes, determine the appropriate discount.

If the answer is no, see if there is anything else you can offer for a certain action a referral takes, like a gift card for taking a meeting with sales. If that still isn’t possible just stick with your single-sided reward.

2. Campaign bonus – When trying to drive point-in-time activity, an extra incentive such as a raffle prize or an increase in the incentive can help to re-engage referral sources and facilitate greater activity. To determine if this is right for you, ask yourself this question: Is there times during the year you’d like to stimulate an increase in referral leads?

If the answer is yes, figure out whether you want to incentivize referral lead collection or successful referrals.

If it is referral leads you will need to look to see if you have the budget to reward on each lead. However, if you don’t you can implement a raffle instead.

Even if you don’t have a specific time period in which you want more referrals, consider picking two months during the year to run a promotion.

3. Sales incentive – It has been shown that sales involvement in a referral program increases the conversion rate from referral lead to purchase by 10 percentage points for partner referrals and 17 percentage points for customer referrals. To drive consistent activity from sales or other employees, an incentive can be created to motivate them. To determine if or what type of sales incentive is right for you, ask yourself this question: Are you incentivizing a direct or channel sales team?

If you’re incentivizing your channel sales team, consider if they should be incentivized to recruit referral partners and collect referrals as part of their commission. If that is something you want, try organically incentivizing with leaderboard transparency. On the other hand, if you don’t want that, look into creating monthly goals with prizes to the top individual achievers and top sales team.

If you plan on incentivizing your direct sales team, consider if you want to incentivize recruitment or referral collection. If recruitment is where it is at for you, try quarterly goals and prizes or a swag bonus for each new recruit. However, if you are going to incentivize based on referral collection, figure out monthly goals with prizes for the highest performing salespeople.

To get more targeted with your referral strategy for your incentives, download and fill out these interactive worksheets. Or, download all of, The Referral Guidebook, to build a revenue-generating referral channel specific to your business.

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What types of partner referrals are driving new deals? [Infographic]

Companies who have implemented referral partner software to automate partner referrals and incentives are using it to help meet growth objectives by leveraging smaller partners, qualifying potential resellers and continue to get revenue from resellers who can’t transform to a SaaS delivery model. And as more companies start to diversify partner relationships and automate this process it is interesting to investigate not only how partners are using referral programs but the success partners are having with different types of referrals.

The data used here comes from the new benchmarks report, The State of Business Partner Referral Programs. These benchmarks are a result of partner referrals made in business partner referral programs run on the Amplifinity platform.

What type of referral methods are companies providing referral partners?

Out of the six referral methods, the inclusion of these methods are the following:

  • 100% include lead form
  • 50% include email
  • 50% include verbal referral
  • 50% include shareable URL
  • 30% include social media
  • 10% include print cards

It is no surprise that every program included lead forms since this is a common method of lead submission for any type of partner program. But while this insight is a great way to understand how companies are enabling partner referrals, a better indicators of effectiveness of partner referral methods are the actual use of these methods by partners and the relative conversion rates.

What referral methods are referral partners using the most?

It is clear that the inclusion of a referral method in partner referral programs are directly related to use by referral partners. However, looking at how partner referrals are most likely to happen is a data point that gives a great deal of insight into partner preferences and what type of methods should be included in a partner referral program. The following show what referral methods were most used by referral partners:

  • 81% use lead form
  • 13% use social media
  • 3% use verbal
  • 2% use shareable URL
  • 1% use email
  • <1% use print cards

Logically, lead forms are most used as they are included in 100% of partner referral programs. But what becomes interesting is the second most used referral method. Social media comes in second for use even though it was only included in 30% of programs. Verbal, shareable URL and email fall closely together in use but fall far below the use of social media even though they are all offered 20% more than social media. You could say social media is so popular because it is an easy way to directly refer. But if that was the case than shareable URL usage should be higher than social media since it is just as easy to directly refer someone and included in more programs. The difference is that social media can be a general blast out to all contacts without having a specific person in mind. This makes it easier and allows referral partners to continue to refer especially if a partner doesn’t have a specific referral with a need for the company’s product or service. But easy isn’t always better, especially for partner referral programs. When it comes down to it, it is all about the conversions.

Which partner referrals are converting to deal?

Moving from highest use to highest converting, you may notice that two methods are missing from the list – email and social media. These have no conversions. With social media having the second highest usage but no conversions, it proves that general blast don’t work in driving deals from referral partners. This is because when a referral doesn’t include a one-to-one relationship it loses its influential power. To try and correct this, train referral partners on the right way to make referrals and how to make one-to-one referrals through social media.

The following is the rate at which the rest of the partner referral methods converted:

  • Print cards – 67%
  • Lead form – 37%
  • Shareable URL – 21%
  • Verbal – 21%

While print cards have an amazing conversion rate this must be taken relative to use and inclusion. If you remember, print cards were only included in 10% of programs and have less than 1% of use.

Lead forms have a solid and reasonable conversion rate that goes along with the rest of the data. While verbal referrals still have a very good conversion rate it was only used 3% of the time. With verbal referrals now being automated and trackable, I predict that the use will increase in the coming years and therefore the relative conversion rate.

Start visualizing partners’ referral process and discover how to grow partner referral conversions:

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