How to Ace Referral Management in 5 Steps

Updated July 10, 2024
Published in Channel Management, Channel Ops

Referral management is top of mind for every partner leader.

Why? Because referrals are an instant win-win: your partner helps one of their customers, and your company gets a sale.

And while referral programs seem fairly easy to set up — most companies have an informal one going already — they can be the hardest to maintain.

  • How do you source referral partners you can actually count on?
  • How do you keep leads coming?
  • How should you vet the referrals themselves so you don’t waste time talking to customers outside of your ideal customer profile?

Keep reading — we’re answering all of those questions and more with the help of four professionals who’ve nailed the art of referrals. But first, a quick refresher on referral management.

What is Referral Management?

You’ve likely heard of referral partnerships before — mutually beneficial partnerships in which one company refers a potential customer to the other (and vice versa). Companies typically initiate referral partnerships when they start to receive referrals organically or during a particularly convenient time.

For example, Stefan Chekanov, CEO of Brosix, a secure instant messenger, says, “We launched our program in 2020, just as a lot of businesses shifted to remote work and needed messaging software specifically designed for teams. This made it easy to gather referrals and reward our customers who made them.”

If referral partnerships are the “what,” referral management is the “how,” the end-to-end process of extracting revenue from referral partnerships. It involves:

  • Deciding who referral partners should be (existing customers, influencers, service providers, software that integrates with your product, or all of the above)
  • Brainstorming effective incentives
  • Equipping referral partners with adequate resources
  • Encouraging partners to generate leads
  • Tracking referrals throughout the sales cycle

Therein lies the challenge. For partnership teams with limited resources (unfortunately, most teams), trying to balance all of these activities feels overwhelming. The key is to take referral management one step at a time, thoughtfully considering each element of your program and refining it as you go. 

referral management

5 Steps to Streamlined Referral Management

Follow these five steps to start your referral program off on the right foot.

Step 1: Target the Right Referral Partners

The goal isn’t to sign up an abundance of referral partners or the biggest partners; it’s to sign up and engage the partners who will send you high-quality referrals.

Jake Atwood, CEO of Channel Builder, a partner recruitment agency, explains, “Most referral partner programs aren’t choosy enough, which wastes time and energy in the long run. Focus on recruiting companies that have highly complementary solutions and a near-identical audience. I’ll put it this way — they should be the hot dog to your bun.”

Start by thinking about all the tangential services and products that would benefit your customers.

For instance, Alex Birkett, co-founder at Omniscient Digital, an SEO agency, has created a “referral partner universe” of complementary agencies. These providers specialize in other services his clients may need, such as messaging, web design, web development, and conversion rate optimization, making it easy to give and get referrals.

Bloggers, podcasters, and LinkedIn influencers can also be fantastic B2B referral partners — they already have a captive audience that trusts their judgment.

Need help with partner recruiting? Check out our blog post — Partner Recruiting: What It Is and How To Do It.

Choosing great referral partners from the get-go can help your referral program take off. But sometimes they’re only good on paper. As you start to onboard referral partners and monitor their progress, you’ll get better at identifying the types of people or companies that will excel in your program and can refine your ideal referral partner profile.

Step 2: Offer Compelling Incentives (Not Just Rev Share)

Revenue kickbacks are the most common way to reward referral partners. But they’re not the only way.

Partners are looking for deals themselves. They may also be looking to boost brand awareness or for a co-selling partner. Besides rev share, consider:

  • Dedicating a certain number of resources to marketing activities for every referral
  • Offering marketing development funds
  • Giving partners guest speaker or guest blog opportunities
  • Paying for admission to an event or co-host a conference booth
  • Making intros to other potential partners

Note that each of these incentives will require extra tracking time and effort. So, if rev share is all you can contribute bandwidth-wise, think of ways to make that more compelling.

David Kemmerer, CEO of CoinLedger, a cryptocurrency tax software, shares, “We offer a 25% recurring commission annually. Every year a referral uses our service, they get another commission. We also make sure to pay partners on time — this motivates them to continue referring clients.”

Stefan’s company takes a similar approach, “We have a recurring commission as well, but our pricing structure is based on users. That means partners that refer companies that need to buy hundreds of user licenses can generate significant commissions very quickly. We also give our referred customers a 20% lifetime discount on our Premium plan.”

Step 3: Fit Your Company Into Your Partners’ Sales Processes

You’ll have the most success if you make it easy for partners to refer you. And the best way to do that is to slot yourself into an existing sales process.

In your initial meetings with a referral partner, try to suss out how their marketing and sales engine works.

Jake says, “If they seem willing to share, I start by asking partners about the state of their own pipeline. How many people do they want to speak to each day? How many leads do they need this quarter? This organically leads into a conversation about how you can support those goals.”

A conversation like this may reveal an opportunity to bundle your products or services. Or maybe you’ll see an opportunity to bring up the benefits of your integration at a specific point in their sales cycle. You might even find that your product is less complex or you have a feature that everyone wants. Framing your product as a potential lead magnet can get prospects’ foot in the door for you and your referral partner.

Step 4: Pay it Forward

Your reasons for starting a referral program may be selfish — bigger deal size and easier sales cycle — but to achieve that, you need to be a little selfless.

Jake explains, “Taking the lead is a good mantra to have in referral management. Make the first move, whether promoting them in an email sequence you’re about to launch or referring them a lead. People will feel the need to return the favor.”

Giving your referral partners something valuable upfront shows you’re willing to invest in the relationship and builds a solid foundation of trust.

If you’re not 100% sure what would be a good first move, ask how you can be most helpful. And don’t make it a one-time conversation; check in with partners periodically so you can adapt to any changes in their strategy. Jake says:

“To get ongoing referrals, you need ongoing communications. Consider your referral partners to be in a constant state of deterioration. There will always be a newer, shinier company offering something you don’t have. And if you’re not on partners’ radar or you’re not in alignment, you’re not going to get referrals.”

Stefan agrees, “Regularly asking our partners for feedback and sending them reminders about the benefits of being a partner is a good way to stay top of mind and prompt new referrals.”

Step 5: Refine the Handoff

At this point, it may feel like you’ve got referral management down pat. But there’s one more critical step: nailing the handoff.

If partners misrepresent your product’s capabilities or fail to provide adequate context for a sales meeting or demo, you’re on your way to losing what should be an easy sale.

You can get partners up to speed on what your product does or the scope of your services in one-on-one or in group sessions, but the most robust way to ensure partners know what they’re talking about is to establish a training and certification program. In a self-serve partner portal, referral partners can access helpful resources (like case studies or sample intro emails) and test their knowledge on their own time.

Another way to avoid a sales faux pas is to spend time vetting your referrals. Be thoughtful about the fields you ask partners to fill out when they submit a referral — they should line up exactly with your ideal customer profile.

Measure your success

The last step in referral management? Reporting. And it’s not just about having numbers for QBRs. Assessing how your program is performing can give you insight into changes you may need to make to partner recruiting, partner incentives, and your referral vetting process. But that’s easier said than done — particularly if you’re trying to track referral activity in multiple spreadsheets.

Referral management software like Channeltivity eliminate the manual work that can come with referral programs, prepopulating intuitive reports with referral metrics for you. You and your partners can access these reports in real-time, which helps everyone get and stay on track. And with a built-in Resource Library, Co-branded Collateral, MDF, and Training and Certification modules, Channeltivity has all you need to jumpstart the referral partner journey.

Want to see it in action? Book a demo today.


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