How to build a partner referral program
You’re a marketer determined to cut through the noise, deliver your message, and have it land. But when you’re jockeying for position among an average of 4,000 to 10,000 ads that researchers estimate bombard us daily, how can you possibly compete?
Add the typical sales cycle of 6-12 months to close a deal, plus 60 calls sales reps average each day, and you can see the challenge of generating and converting leads into sales. One strategy that addresses these challenges? Referral partnerships.
Referral programs vs. referral partnerships
Referral programs (sometimes called referral partners) are individuals or businesses actively promoting your brand to their network. Unlike traditional referral programs incentivizing existing customers, referral partners often receive financial compensation for successful referrals.
These partnerships can include businesses in complementary industries or satisfied customers happy to advocate for your products or services. The partnerships often include a formal agreement outlining the relationship’s terms, like commission structures.
Why invest in a referral partnership? Because your referral partner:
Should generate higher ROI because sales often have higher dollar value (though the initial lead may require more nurturing and time upfront)
Should attract higher-quality leads (even though the quantity may be less) that also lower financial risk because of their quality
Should offer greater accessibility for startups and small businesses
What is an example of a referral partner?
Referral partnerships are particularly effective for companies targeting highly specialized niches. The partners’ deep knowledge and connections within their respective fields can significantly enhance lead generation and conversion rates.
For example, a digital marketing agency could partner with an e-commerce platform to refer clients seeking online store development plus enhanced marketing services. Or a fitness studio might partner with a nutritionist to refer clients interested in more comprehensive health and wellness programs.
How to find a referral partner
IOne place to start looking for a referral partner is LinkedIn. You can source new partners like other agencies, fractional CMOs, and other professionals within your industry. If these potential partners are local, meet them in person, treating them to lunch or coffee.
Another option? Attend trade shows or events, or ask for an introduction through a mutual acquaintance. Try participating in webinars, supporting their content, and offering to collaborate on events. Offer to guest-post where you can help with backlinks.
Trust is essential, and building relationships is key to cultivating that trust. While it takes time, these relationships can become a powerful source of business.
What does a referral program do?
The best thing about partner referral programs is that they offer strategic advantages for businesses seeking growth and more effective customer acquisition. Businesses benefit by leveraging the power of word-of-mouth marketing and trusted relationships, as do their partners.
Increased visibility
Referral partners become brand ambassadors, promoting your business to their networks. This organic marketing approach is often more impactful than traditional marketing because it originates from trusted sources.
Targeted lead generation
Referral partners introduce pre-qualified leads who are more likely to convert—a targeted approach saving time and resources otherwise spent on prospecting and qualifying leads. Referrals often come with a built-in level of trust, increasing their receptiveness to a company’s offerings.
Shorter sales cycles
Leads introduced by a trusted referral partner tend to be more familiar with your brand. This familiarity can shorten the sales cycle, especially if potential customers already have a positive perception and general knowledge about your offerings, which may help encourage them to convert more quickly.
Enhanced customer loyalty
Referred customers often have stronger loyalty and higher lifetime value—16% higher than non-referred customers. They’re also 37% more likely to become repeat customers and brand advocates and make larger purchases.
Lower customer acquisition costs
The typical partner referral program contract includes compensation (referral fees) payable upon a successful referral—a much more cost-effective acquisition channel than traditional advertising and other marketing efforts.
Access to new markets
Referral partners can introduce your business to new customer segments or markets you may have previously struggled to reach through traditional channels. Expanded access can help you grow your customer base and diversify revenue streams.
Enhanced reputation
The “trust factor” and brand reputation are a big deal. Positive referrals enhance your business’s credibility and reputation. When potential customers hear positive feedback from trusted sources, they’re more likely to perceive your business favorably.
Stronger partnerships
Referral partners often introduce leads with pre-existing relationships, establishing a foundation of trust. By providing an exceptional customer experience, you can nurture these relationships, foster loyalty, and potentially turn these customers into new advocates. These partnerships can also create stronger industry connections, leading to collaborations, knowledge sharing, and other mutually beneficial opportunities.
How do you build a partner referral program?
When your customers already evangelize your product or service, giving it rave reviews and recommending others try it, it’s time to start a partner referral program.
1.Seek potential partners
Focus on businesses with whom you share a target audience—but who operate in a non-competitive sector. Consider companies whose customers would benefit from your offerings or whose products complement yours. Evaluate your existing customers who’ve expressed enthusiasm for your brand and have a solid professional network.
Public promotion may attract potential partners, too, but prioritize vetting candidates. Create a targeted email list and engage with prospects as you would with sales leads, and then:
- Introduce your referral program
- Provide relevant information
- Address their questions
2. Make the connection
After you create your list of potential partners, meet with them to discuss program details and demonstrate your products or services. While you expect value from a relationship, so will they—so think about how they will benefit. What else will they receive besides a commission and perhaps sending referrals to them?
Other incentives might include:
- Recognition programs like acknowledgment at industry events, awards, badges, certifications, or a featured spotlight on your company’s website
- Exclusive perks like VIP early access to a product or promotion—or a ticket to an exclusive event
- Priority access to customer service, support resources, or training programs
3.Write and sign the referral partner agreement
Formalize your relationship with a written agreement—a legal contract establishing the partnership that outlines the terms of the referral relationship, including referral fees and other incentives. While typically used in corporate settings, these agreements can also involve individuals and protect everyone involved.
Key elements of a well-crafted agreement should:
- Clearly define the types of leads your partner will refer
- Establish criteria for evaluating and qualifying leads
- Specify the compensation structure for successful referrals
- Delineate guidelines for maintaining brand integrity
4.Develop a smooth onboarding process
Position your referral partner for success with a well-structured onboarding system. Educate partners about your target customer profile, including their pain points and requirements and how your product or service addresses them.
Clearly communicate your process for handling referrals to show partners how you will care for leads they share. Provide comprehensive training on your brand message and representation, competitive differentiation, ideal client profile (ICP), product or service information, and selling points. Offer an essential onboarding kit that includes:
- Unique tracking links
- Landing pages or referral forms
- Promotional email templates
- Social media graphics and copy
- Other marketing collateral, if relevant
Providing a robust onboarding experience empowers your referral partners to effectively promote your brand and drive successful referrals.
5.Be responsive and communicative
Sometimes—especially in the beginning—your referral partner may need guidance on defining the proper target audiences or timing for sharing a referral. Or perhaps they’d appreciate support communicating your brand’s value proposition, selling points, or how your company’s products stand out from the competition.
Proactive assistance can address challenges before they escalate (and frustrate) and increase the success of referrals. Reach out regularly to your partners to offer a helping hand and maintain open communication. Schedule periodic check-ins via email, Slack, Teams, Google Meet, or Zoom.
At &Marketing we’ve found partner referral networks to be invaluable. Interested in learning more or joining ours? Contact us!
