8 min read
Traditional go-to-market (GTM) strategies for SaaS companies are broken.
Outbound is declining in effectiveness. Ads are getting more expensive and attracting less clients. Cold emails are getting into the spam folder in droves, especially with Google’s 2024 crackdown on cold emails.
While inbound is a more effective choice for growth, it won’t be long until it loses its effectiveness. The market is overloaded with information, and buyers are tuning out of the chatter.
So how can salespeople cut through the noise? A referral partner program might be the answer for your SaaS business.
What is a referral partner program?
A referral partner program is an agreement between a company and an individual or another company that actively recommends your company to their network.
Note that referral partnerships are different from client referral programs. A client referral program leverages existing users to invite their network to try your product, offering one-time rewards like discounts and perks to the referrer and the new client.
Referral partnerships, on the other hand, are more formal. Referral partners are well-versed about and have a deeper relationship with your business, and they are more likely to have your ideal clients within their network. This kind of program is formalized in an agreement, which outlines details on customized incentives.
One excellent example of a SaaS referral program is Framer. Framer's partner program allows creators, agencies, and freelancers to earn commissions by referring Framer's website design and publishing platform to their clients. They also outline different ways their partners could earn commissions, such as selling templates with a unique referral link.
Why you should build a referral partner program
In early 2024, Ebsta and Pavilion released their B2B Sales Benchmarks 2024. 4.2 million opportunities, generating over $54 billion in revenue, from 530 of the world’s best performing companies were analysed.
The main takeaway? Top sales reps rely on partner referrals, which deliver a 3.8x greater sales velocity, as a source of leads.
How is that so? Firstly, top sales performers prioritize their time on the right accounts and personas based on intel on their specific contexts and needs, which can be obtained from trusted sources such as referral partners. Secondly, top sales reps prioritize building networks of relationships with as many people as they can, as early as possible. This way, they could utilize their networks for the right occasions.
By establishing a robust referral partner program, B2B SaaS companies can tap into a high-quality source of leads with rich intel that are more likely to convert quickly.
How referral partnerships work
Referral partnerships typically operate on a commission-based or revenue-sharing model, where partners are incentivized to promote and recommend each other's products or services. The mechanics of these partnerships can vary, but a common approach involves:
1. Partner Recruitment and Onboarding: Companies establish clear guidelines and criteria for selecting and onboarding referral partners, ensuring alignment with their values, target markets, and quality standards.
2. Training and Support: Partners receive comprehensive training on the products or services they will be promoting, as well as ongoing support and resources to facilitate effective referrals.
3. Lead Tracking and Commission Management: Robust systems are implemented to track referrals, attribute leads and sales, and manage commission payments or revenue sharing agreements.
Is a referral partner program right for you?
While referral partnerships can be a game-changing GTM strategy, sales managers need to consider whether a referral partner program is suitable for their SaaS companies. Generally, referral partner programs work well for businesses that:
Have complementary products/services that cater to a similar target audience. This allows for cross-promotion and bundling opportunities.
Serve different stages of the customer journey or value chain. For example, a SaaS CRM partnering with a SaaS marketing automation tool.
Operate in non-competing, adjacent markets where their offerings can create added value for each other's clients.
Have an established customer base and strong brand recognition, making their referrals valuable.
Offer high-value, sticky products with recurring revenue models, incentivizing partners to refer for long-term commissions.
5 steps to create a high-performing referral partner program
Building an effective referral partner program requires careful planning and execution, and designing a well-thought-out plan will ensure your program will benefit your referral partners and generate consistent revenue.
Here are 5 essential steps to consider for implementing a referral partner program:
1. Identify the right partners.
Anyone can refer clients to you, but are they relevant to your business? If not, then you’re wasting your precious resources.
That is why it’s crucial to define your ideal referral partner (IRP) before you design a referral partner program.
Consider the following questions when thinking about who your ideal referral partner is:
What are some interests that they share with you?
Do they share a similar pool of clients without potential for conflict?
How can you be of value to their network, and how can they be of value to yours?
By asking these questions, you can easily identify referral partners that are ideal to your business and expand your referral network with purpose.
2. Establish clear expectations for referral partners
Once you have selected your potential partners, the next step is to plan out the guidelines for your partnerships.
Schedule a meeting with your would-be partners and outline the commission or revenue-sharing structure of your referral partner program and the expectations for both parties.
Then, once all aspects have been agreed upon, formalize the content of the discussion with a referral agreement.
Remember: For the partner program to succeed, both parties must always benefit from the partnership. Do not expect to reap significant value without benefitting the other side.
3. Train and educate your referral partners
To ensure partners are communicating the right message about your product, it’s important that they understand the basics of your offering.
Set up a 1-hour presentation about your SaaS product and answer any clarifying questions to help your partners get a clear idea of who they can recommend your product to. Some topics to cover include:
Who are your ideal clients?
What sets you apart from your competitors?
What are some powerful success stories you would like to tell your clients?
Additionally, make sure you provide as much information about your company and product as possible online so your partners can also dig up relevant information on their own. That includes updating your website, videos, and other online materials.
4. Foster ongoing communication
Whether referral partners need support, always maintain open lines of communication with your partners.
Choose communication channels that work best for your partners. This could include email updates, video conferences, Slack channels, etc.. Also, be sure to give regular updates and address any questions to ensure they stay informed and continue driving relevant referrals.
5. Measure and optimize
To iterate the process and drive data-driven optimization, it’s key to implement a robust system for tracking referrals and attributing leads and sales.
Monitor metrics like lead volume, conversion rates, and revenue from referrals closely. Use these insights to evolve your partner criteria, tweak commission rates as needed, and enhance training or support.
While this may be a tedious task, fortunately you don’t need to do this on spreadsheets. Consider implementing a Partner Relationship Management platform to automate the process.
By implementing these best practices and leveraging the power of referral partnerships, businesses can unlock new avenues for growth, expand their customer base, and strengthen their competitive advantage in an increasingly crowded marketplace.
