Forging the right reseller or referral program for your business is not too hard if you take a leaf out of large corporates’ books. In today’s economy, partners, resellers and business referrals are common ways for companies, irrespective of size, to team up and deliver win-win relationships. However, there are many aspects to partnerships, this article (the first in 3 series) covers the basics for SMEs getting started, as well as for those who’ve already started but may just need a little inspiration to keep moving forward.Read more: Reseller and Referral Program Initiatives – Partnership Accelerators for SMEs
Strategic partnerships that work Why are more SMEs not forging such partnerships?
Using another channel to go to market can be important, particularly for businesses that have limited resources or a reduced network to promote their service or product. Finding a partner is easier than you think; it can help to open new markets or increase the overall output of a company. Why do all the work yourself when you can collaborate and amplify your reach?
SMEs are some exceptionally prolific networkers and are already exposed to some key partnership opportunities. However, to improve your chances of success, it is important to understand the distinction between a reseller and a referrer:
What is a reseller?
This is where a company or an individual sells a product or service provided by another company for profit. There are many variations in the way a reseller partnership agreement can be structured, and it is important to ensure you have considered all of the opportunities and risks.
What is a referrer?
Referrers pass on qualified leads to an individual or company for either an agreed fixed fee or an agreed commission percentage. There could also be other referral fee agreements such as a contra referrer agreement, where both parties exchange leads. Both agreements can be informal, covered with an NDA (non-disclosure agreement) and no contractual targets. Or, they can be formal and include an NDA and a contract detailing all relevant aspects of the agreement.
Business referrals need parameters
An informal relationship for a period of 6-12 months allows both parties plenty of opportunity to test their respective appetites for the partnership. However, this approach may not be possible for all companies if there are other factors to consider such as consultancy type services. In any event, it is good practice to sign an NDA that sets clear parameters for all concerned.
How can a reseller or referral program drive growth for a small business?
With limited resource or investment, the right partner can open up new markets and help generate business fast. The new channel can be operational quickly, and it can help raise awareness of your company, especially on digital platforms. By establishing backlinks to your website and sharing content and social media postings, you increase your exposure.
The right reseller or referrer can also provide market intelligence and insight on your industry product or service, which can prove invaluable to your overall decision-making and strategy. mad4digital has a progressive reseller and referrer program that is delivering a number of fruitful collaborations. In our first 12 month 70% of our new business has been generated from our referrers and partner relationships. And by focusing on the right verticals for our firm, we close 75% of all leads passed to us by our referrers and partners.
Secrets of a winning business partnership
You have to love your business before anyone else will love it, so be sure that your firm is ready to support a partner or referrer. The right individual or company will have one or more of the following;
- An existing client base that has a need for your service or product
- A proven track record of selling your type of product or service and has the relevant network and is looking to benefit from your offering; commission, value add etc.
- Access to the decision makers who buy your service or product
- A product or service that is aligned to your company’s, and can be positioned as added value or sold as a bundle
- An existing platform that could be a vehicle for distribution or awareness of your product or service
As your own existing client base grows, they will become the best referrers.
When they do, you should consider an incentivised referral program.
All types of relationships take time, so be mindful not to invest too much time without careful consideration of your return. In the next article, we will look at the qualification and due-diligence needed to ensure you cover all the bases in the selection process. We’ll provide tips to help ensure that you choose only the right individuals and companies to represent your business.
Donavan Whyte is a Non-Executive-Director at mad4digital the online marketing agency for businesses that need to grow their online presence. His perspective on referral program initiatives and other similar forms of strategic partnerships are based on over 20 years experience working for both small and large corporate organisations.