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Proactive Referral Partners Critical To Generating Demand, Initiating Conversations

Featured Proactive Referral Partners Critical To Generating Demand, Initiating Conversations

Acknowledging that B2B buyers are placing a higher emphasis on comments from colleagues and peers, user reviews and third-party/analyst reports, marketers are taking steps to make sure that these go-to sources are more proactively making recommendations about their products and services.

Rather than wait for a prospect to ask advice about a business issue or recommendation on a product and service, marketers are assembling legions of trusted advisers who can recognize a good prospect when they see one, respond quickly to inquiries and even initiate conversations that could trigger a deal.

“Brands are focused on the 68% of the buyer’s journey when customers are not talking to them because they feel that they are not in the room,” said Jay McBain, Forrester’s Principal Analyst of channel, partnerships and alliances, in a recent video. When brands are not striving to influence buyers as early as possible, “they may lose the deal without even knowing there was a deal.”

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Powerhouse companies such as Salesforce and Microsoft are adopting that mentality, McBain explained in a presentation earlier this summer. The same day Salesforce announced the shut-down of its resale programs, it reported that it needed to add 250,000 new non-transactional partners to double the size of the company over the next four years. Of the 7,500 partners that Microsoft recruits each month, 80% are non-transacting entities, including referrers.

“Partner referral programs can be used in any industry and offer a way to motivate and reward partners for identifying and registering new leads,” said Kathy Contreras, Senior Research Director of Channel Management Strategies at Forrester. Commenting in the State of Business Partner Referral Programs, an annual report by Impartner, a PRM software, Contreras said, “This type of partnership provides the opportunity to align with organizations that have strong relationships with a supplier’s target buyers, but are not interested in or qualified to resell the supplier’s offerings.”

Planning For Referral Revenue

Partner companies — such as MSPs, systems integrators, VARS, resellers and ISVs — are clearly embracing referral-marketing as an important revenue stream. Of the partner respondents to a survey by The 2112 Group, a business strategy and research firm, 73% said they are actively incorporating referrals as a part of their business.

“That's extraordinary to us because the presumption going into this research was that partners treat referrals or the opportunity to make a referral as opportunistic—not something that was systemic,” said Larry Walsh, CEO and Chief Analyst of the 2112 Group. “What we find is that it is not only systemic, but it is incorporated into their business and their profit models.”

The income that partners are generating from referrals “is not an inconsequential volume of revenue that they're banking against. They are actually budgeting against it,” Walsh continued.

In addition to the revenue that referrals can generate, many partners see making recommendations as critical to building lasting relationships with their customers.

“One of the things that we as an industry have done very well is to teach the partners to be more in tune with their customers’ business — what their needs are and what the challenges are,” Walsh said. “We teach them to think about complete systems, not just products.

“What the referral research is showing us is that partners are thinking about satisfying the customer,” he continued. “They don't stop just because they may not have a product or service that meets the customer's needs. They know referrals are a means for satisfying the customer, and in keeping the customers whole.”

Partners also look at referral programs as an opportunity to gain exposure and experience with a vendor, the survey found, as they consider becoming a true engagement partner.

Surprisingly, vendors appear to be less enthusiastic about their reference programs. “The majority of the vendors believe that their referral programs are ineffective,” said Walsh. “And 25% say they are completely ineffective.”

Vendors Are Missing Referral Opportunity

Walsh believes that the aforementioned 25% who say referral programs are ineffective are mistaken. “One of the things we are stating in this report is that vendors need to think of referral programs as a strategic part of their channel programs and they need to structure them with formality in order to maximize the return,” he said. “Part of what we're finding is that the ill perceptions of the value of referral programs to a vendor are based on that informality in that program.”

With more structure and management of their referral programs, “they will get a better return from it,” Walsh added.

One vendor that clearly understands the value of a well-managed referral program is LogMeIn. In a conversation with Channel Marketer Report, Randy Fahrbach, Senior Manager of North America Channel, said referral-generated leads are one of the company’s highest converting leads and tend to represent a higher-than-average deal size.

Without a doubt, Fahrbach and his team bring the level of “structure” to its referral program that Walsh said low-performing initiatives lack. It is easier to onboard a referral partner, Fahrbach said. “A referral partner doesn't need to have as deep a knowledge of a product as a VAR, reseller or an MSP that's going to configure and set it a solution.”

If LogMeIn referral partners aren’t already being proactive in identifying opportunities, the company strives to ensure that more of them know how to “refer on purpose,” said Fahrbach. The goal is to teach them to keep their ears open for an opportunity, “while they go about their day job. We’re focused on teaching them what an opportunity looks and feels like so they can uncover it and then ask the question, ‘Hey, I think this might work for you. Do you mind if I have a LogMeIn expert on this product follow-up with you?’ When they give that buy-in, it really makes it a warm lead, a middle of the funnel lead rather than a top of the funnel lead.”

Promoting Referrals To Direct Sales

Equal rigor is given to make sure the LogMeIn direct sales staff is up to speed on coordinating their activities with referral partners.

“We train our direct sales reps on how to work with partners because it's a different muscle,” Fahrbach said. “Calling the referral partner before contacting the customers is key to discovering insight that can accelerate the deal.”

Critical to the success of strong relationships between direct sales staff and referral partners is a comp neutral program — one that does not “ding a salesperson’s compensation if a referral partner brings a deal to them.”

For partners, it’s equally important they are assured they will be compensated,” Walsh said. “What they want to know is that is there a strong probability that they will receive some type of compensation. That's where informal programs that don't have a high level of process and transparency fall short.

“Oftentimes the referral program is something that is relegated as a part-time job to someone who is already working in the sales or channel organization, or in some cases, in a marketing function,” Walsh continued. “But what we do see with some of the better referral programs is that there is a dedicated management team overseeing the process and is also accountable.”

Referral program technology platforms, according to Walsh, are “clearly part of ensuring that transparency in automating the process in a more formal way.”