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.


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.

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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