Sales Referral Partners Lead to New Customers

Coins and plant, isolated on white backgroundUsing partnerships to grow your business is smart business. Partnering drives market awareness, aligns your brand with other credible brands, opens doors to new customers and can even provide value-added products and services to increase your average sale.

There are different types of partners, which are defined by the level of engagement and the agreements each party enters into to manage the relationship. Sales Referral Partners are the entry level of business development partnerships. This type of partnership has little accountability and responsibility for performance. The value of this strategy is often used to grow market credibility or to align with a partner that has strong relationships with your prospective customers.

Entering into a partnership for referrals is a first step to test the waters in a relationship. It allows both entities to measure the commitment, willingness and effort required in working together to develop business. A sales referral partnership gives you the ability to determine if this is simply a PR initiative or will actually grow revenues. You can also monitor the organizational support in sales and marketing required to get deals closed.

The relationship can be a one-way lead pass or a two-way referral agreement. Both parties need to determine the best opportunity to refer business by passing on leads, receiving referrals or both.

Sales Referral Partners can be “handshake” in nature if you do not plan to hold anyone accountable for the outcome. It is commonplace for business service professionals who network together to develop non-binding relationships to help open doors and extend value by making credible introductions to other service providers or their respective clients.

If you plan to use compensation as an incentive to drive referrals you need a legal agreement, signed and executed between both entities. Compensation is a way to show appreciation for the referral and is an incentive to work together. If your partner offers to pay you for referrals, you also want to make sure it is in writing.

There are two ways you can determine the referral compensation.  Referrals can be compensated at the same rate as your sales commission.  For example, you can offer a set figure between 5-10% of the net proceeds of any closed deal.  You can also set the commission rate at the percentage of your average marketing spend to acquire a new customer. No matter the rate chosen, it should be perceived by your partner as rewarding and drive the expected behavior. Make it worthwhile for someone to act as your front-line sales person and help find you new customers. If the rate is not worthy of the effort, you can expect to pay few or no commissions, as you will likely not drive the behaviors needed to get a referral.

If you do choose to enter into a binding agreement that includes compensation for referrals, you need to set rules just as you do for your own employees. Specifically outline in your agreement how payments will be made and when the partner will be paid. For example, will you pay when the sale is made or when you are paid by the new customer? Be sure you state in your referral agreements if the referral fee will be paid over the lifetime of the relationship or for only the first sale.

It is critical that you track all your sales referrals, whether you enter into a formal agreement or simply take an email of a lead pass from a trusted business partner in your network. Enter the lead into your CRM with the proper tag to identify who gave you the lead. Enter when you receive the lead and monitor the progress of the lead as it moves through your sales pipeline. Measure all your partners quarterly to see how they are helping you grow revenues. It will provide you intelligence in how to manage the relationship for maximum profitability.

If you do enter into a sales partnership where the other entity is representing you on the front-line, you need to equip your partner with the same tools and resources you provide to your own sales team. You need to give them the ability to introduce you, what you do, the problems you solve and the value proposition of your products and services. Spend time providing regular updates about your business and services to keep your partners informed and engaged.

Top of mind awareness in this type of partnership is essential to getting value from your relationship. When you provide value, you will get value in return.  A partnership requires efforts by the giver and the receiver. Be persistent in developing good partnerships, measure activities and reward the efforts of those that help grow your business.

“Try not to become a person of success, but rather to become a person of value.”
– Albert Einstein

Other types of partnerships that will be discussed in future posts include Co-Selling Partners, Channel Partners, Strategic Partners and Investment Partners.

Jamie Glass, Founder, President and CMO of Artful Thinkers

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Prepare for a Happy Business New Year

There are only a few weeks left that will define how your business performed this year. Are you happy with the anticipated results?  If the answer is yes, are you prepared to deliver the same performance next year or go to the next level?  If the answer is no, are you prepared to deal with the obstacles and challenges that prevented you from achieving your goals this year?

There may be little time to change the results of 2012. There is plenty of time to prepare for changes in 2013, if you start now.  Pivoting from your current trajectory requires strong leadership and preparing a detailed plan to execute starting the first day of the new year.

Reviewing the past several months, is your business foundation strong enough to build the next phase of your expansion?  Your foundation needs to be durable, providing the necessary support to accelerate current business practices that will generate more revenues and improve overall performance.  A business that is built from repeatable practices for product development, sales, operations, marketing and service, is a business that is ready for sustainable growth.

In your evaluation of the past year, if you are not convinced your business is running at maximum capacity or operating efficiently, it is well advised to spend the final weeks of the year to identify the primary obstacles and demands your business require to get on track for better performance in the coming year.  In other words, now is the time to invest in your business to get it on track for growth.  Do you need to invest in people, products or infrastructure?  What will it require in time and finances to build a strong foundation for future growth?

One of the biggest challenges for small business owners is to look outside the day-to-day operations to see the threats and opportunities for growth.  If you do not have an advisor, seek help from peers who can give you an objective assessment.  You want to have a comprehensive plan with orientation toward your business goals and tactics that can be executed upon by your committed team members at the start of the year.  Your plan needs to be opportunistic and realistic.

Now is the time to plan for the coming year.  How much do you need to invest?  Will you need to pivot from plans that have not provided expected results in the prior months?  Your team is waiting for your definitive plan of action.  They want to know where they are headed so they can meet your expectations.  Take the steps necessary to get ready for the best possible outcomes in the coming new year.  The action you take today, will impact where you end up next year.

“If you don’t know where you are going, you’ll end up someplace else.” ― Yogi Berra

By Jamie Glass, CMO & President of Artful Thinkers and Managing Director of Sales & Marketing Practice at CKS Advisors.