When it comes to business growth, a referral partner program can be a complete game changer. We all know, referred customers have higher conversion rates and are more likely to become long-term customers. But referral partners take this concept to a new level. In this guide, we will teach you everything you need to develop referral partners and have leads start pouring in. Let's get started!
What Is a Referral Partner?
A referral partner is an individual or a business who recommends your brand, products, or services to their customers in exchange for a benefit. The benefit, sometimes called referral fees, range from reciprocated referrals to a percentage of the sales revenue.
Referral partnerships can be a valuable way to expand your reach beyond your typical peer to peer customer referral program. Let's take a look:
Referral partnerships have a few distinct qualities:
- Hold current relationships with the people they plan to refer
- Ability to send many referrals to your business
- Direct relationship with you and your brand. They may personally know you, love your product or service, and are natural ambassadors.
5 Benefits of a Referral Partner Program
Establishing one or more referral partnerships can be a complete game changer for your business. Here's why:
1. Lower customer acquisition costs: compensation for referral partners is usually only made when a deal is successfully closed. This translates to lower overall customer acquisition costs compared to other types of customer acquisition channels.
2. Shorter sales cycle: your referral partners will take care of searching for and prospecting leads for you. By the time the referrals are introduced to you, they will be familiar with your business, and you can then focus your efforts on closing the sale. This also makes it easier to close bigger accounts, as trust has already been built.
3. Access to new customers: referral partnerships open doors to new customers that might be out of reach otherwise. Referral partners already have an established community and have gained the trust of these people. As their business grows you’ll get access to those potential customers as well.
4. Exponential reach and visibility: referral partners have the ability to create a lot of conversations and leads. This can especially work well if referral partners are motivated, financially or otherwise!
5. Improved customer retention: referral partnerships promote a sense of belonging. Referred customers are more likely to conduct repeat business and have a higher lifetime value.
How to Get Referral Partners?
You will find that when you build up your network by learning what your contacts do, getting to know people, and cross-referring your contacts, you will naturally build up an informal referral partnership network.
However, a purpose-built referral partnership that expands outside your existing network can be a game-changer for your business.
1. Identify Good Referral Partners
A useful rule of thumb for successful referral partnerships is that real partnerships go in both directions, not just one. Your referral partners should consist of professionals and businesses that belong to your industry but do not compete with your business. For example,
- Marketing agencies may partner with software companies or video production crews or they use often
- Online marketplaces may partner with apps that compliment or integrate with their system
- Realtors may partner with mortgage brokers, packers and movers, or home stagers to refer each other
- Event organizers may recommend chefs, security personnel, or florists to their clients
The idea here is simple: my ideal customer is your ideal customer. You don’t need to worry about your referral partners stealing your business and vice versa.
2. Recruit Referral Partners
Approaching potential referral partners requires you to develop a plan. Recruiting a partner could take many weeks or months to reach a substantial conversation. Start by investigating the business, their marketing activities, and the owners/founders. You want to learn as much as you can and start to develop how a partnership could work. If the owners write blogs or are active on social media, start to engage with their posts.
3. Pitch Referral Partners
If you have done your research correctly and you are genuine with your approach, this should be the easy step. DM, email, or call your potential referral partner and pitch them your proposal. Explain who you are, how you have been engaging with them for awhile, and how you think a partnership would be mutually beneficial. If possible, talk with the partner over a video call or host casual lunch meeting to introduce yourself.
TIP: To convince the potential partner that the partnership will be mutually beneficial provide them with real referrals before expecting them to reciprocate.
How to Develop Referral Partners?
Now that you have referral partners, let's talk about how to develop them and maximize their results!
1. Build a System
Formalizing a referral partner system provides professionalism and transparency. An automated referral program software such as ReferralHero is ideal for tracking and managing referral partners, their referrals, and rewards. While you can build a manual system, automated referral software streamlines all the tasks associated with your program saving you time and money.
A good referral partner system should:
- Let your referral partners easily refer your business with appropriate tracking
- Make it easy for referrals to become a lead
- Allow you and referrers to track the progress of the referral’s status in real-time, e.g. whether they have made a required purchase or completed an account upgrade
- Automate communication with the referral partners and referrals
- Automate the reward distribution
- Track and measure the success of each partnership with advanced analytics
2. Create An Onboarding Experience
A smooth and informative onboarding process helps ensure that your referral partners will be set up for success.
- Educate your referral partners on your target customer profile. They need to know what type of buyer personas are a fit for your product or service. Provide training on all of the details of the target customer profile and make sure you also include in great detail the challenges and needs of each persona and how your product or service can help solve their problem.
- Train your referral partners on how to introduce your product or service. This includes your brand message, value propositions, product information, and selling points. This information should be well-documented so that your referral partners can access it anytime they need it.
- Explain your process and how you will be communicating with their referrals so they can rest assured that their referrals will be well taken care of. After all their reputation is also on the line.
- Communicate the success criteria with your referral partners. They should be well-educated on the factors that are used to determine a successful referral and compensation.
- Set up coaching programs to help improve the performance of any struggling referral partners. Analyze their performance on a regular basis, find out what their issue is, reach out and have a coaching session with them.
3. Formalize a Partnership Agreement
Formalize the referral partnership with an agreement in writing as that ensures that both parties understand their own responsibilities. Some of the ground rules could be:
- Scope of the relationship. That is to submit leads of potential new customers for the purpose of referring new business.
- Deal registration. The referral qualification process that will be used to evaluate and dispose of leads brought by the referral partners.
- Referral fees and payment upon successful referrals.
4. Commit to Being Referable
It takes time to build up trust in the eyes of your referral partners. Besides, constantly improving your product and delivering value to your customers, there are many small steps you can take to make yourself referable, such as keeping your word, showing up on time, offering before being asked, etc. The more your referral partners get to know you and your business, the more confidence they will gain, thereby making them feel more comfortable sending connections your way.
5. Communicate Regularly
Successful referral partners are aligned and engage in ongoing communication. Reach out and engage on social media with your referral partners to keep yourself at the forefront of their minds. You don’t want to contact your referral partners only when you need something from them. Pass along an article about a recent industry change, send over a digital birthday card on their big day, congratulate them on certain achievements, etc.
6. Make Referring Easy
If you decide to use a referral partner portal such as ReferralHero, enable as many share options as possible. This will make it easy for your referral partners to naturally share with connections on a platform they use, e.g email, Twitter, LinkedIn, etc.
Sharing is made easier nowadays, thanks to the popular use of digital referral links and referral program software such as ReferralHero. Referral links, which contain a unique referral code, give insights into the performance and help companies track the success of their referral partners. The referral links should point to a lead form where the referrals can enter into your sales funnel.
There are many ways you can structure your rewards. They can be monetary or product credits, a percentage of the sales revenue or a fixed amount, or tiered rewards based on the number of referrals. Make sure they are attractive to your referral partners, yet sustainable for your business.
Building connections and lasting referral partnerships are a two-way street. Showing gratitude publicly goes a long way to keep top partners feeling appreciated for their hard work and encourage their continued referrals. Besides the referral fees, spotlighting them on social media or mentioning them in a monthly newsletter are additional non-monetary ways you can recognize them for their efforts.
All said and done, when it comes to referral partners, the most important thing is to focus on developing relationships built on trust. Landing just one or two referral partners could be a complete game changer for your business. Leverage the power of word-of-mouth and use the same referral program platform used to scale 1000s of businesses.