Do you need a (semi) quick cash injection into your business?
How about a sustainable cash cow for long-term growth?
Well, dare I say, why not both?!
Dear readers, I’m about to make your dreams a reality.
Let me introduce you to referral partnerships.
Trust me, if you don’t see the value in a referral program, you:
- Haven’t tried to build a referral program
- Haven’t found fruitful referral partners
- Don’t have a pulse (and are quite possibly dead)
Buckle up, folks! Because referrals are the adrenaline cash shot your small business needs!
Key Takeaways
- Referral partners are a great way to grow past a million in ARR
- Referral partnerships are a lot like friendships, it's a give and take
- In order to attract the best partners, you need to be the best partner. See tips below.
What are Referral Partners, and why do You Need Them
What exactly am I talking about when I say “referral partnerships.”
What I mean is – partnering with other businesses or entrepreneurs to create a mutually beneficial relationship.
Aka, you scratch my back, I’ll scratch yours.
In this case, the “scratching” involves referring each other’s businesses to potential customers.
But why are referral partners so important for your business? Well, let me break it down for you:
- Steady Flow of Leads: Referral partners can act as a consistent source of leads for your business, especially if they have a similar target audience.
- Recurring Revenue: If/When you find a partner with a recurring revenue stream, you get a small slice of the pie!
- Cost-Effective: Unlike traditional marketing methods, referral partnerships don’t require a hefty budget. Just a little elbow grease and a “can do” attitude.
- Easier to Close Deals: People trust referrals from friends or business contacts. These hot leads are more likely to convert, boosting your sales without breaking a sweat.
- Additional Opportunities: These partnerships can open doors to new networking opportunities and potential business collaborations.
If that doesn’t excite you, I’ll refer back to bullet point three above, you don’t have a pulse.
How to Build a Referral Partner Program
Alright, let’s get down to business.
How do you build a badas* partner program?
Step 1: Make a List of Potential Partners
The first step is pretty obvious, but it’s crucial to mention.
You need to make a list of potential partners.
Consider your target audience and who they might already be doing business with.
Here are a few examples to get you started:
Direct Competitors
Direct competitors can make great partners. Direct competitors might have a customer conflict, exclusivity agreement issue, or a price point that’s higher/lower than yours.
Lawn Care Business Example: Lawncare company A does large commercial properties. Occasionally they get requests for small residential lots. That’s where company B comes in. Boom. Partnership created.
Complementary Businesses
Think about businesses that offer complementary services or products to yours.
SEO Agency Example: An SEO Agency constantly gets asked about social media from their clients. It sounds like this SEO agency needs a social media partner.
Technology Partners
A tech partner is typically a software, systems, or tech service with the same or similar audiences as your business.
Web Design Agency Example: An eCom web design agency partners with Shopify to refer business back and forth. When Shopify refers a customer over, the eCom agency builds with Shopify. It’s a win-win.
Manufacturing Partner
Like a tech partner, a manufacturing partner offers a product in your industry. Think about businesses that provide materials, parts, or components for products in your niche.
Roofing Company Example: A roofing company partners with a shingle manufacturer. Every time the shingle company gets a roofing lead, they send it over (because the roofing company uses their shingles).
Industry Influencers
Industry influencers can also make great referral partners. They already have a loyal following and can easily promote your business to their audience.
Accounting Firm Example: An Independent CPA partners with a finance influencer to offer tax services to their audience. In return, the influencer gets a percentage of sales made through their referral link.
Once you have a solid list, it’s time to start reaching out!
Step 2: Build Relationships
Building relationships with potential partners is about more than just the initial introduction; it’s about fostering a connection that’s mutually beneficial and built on trust.
Remember, at this stage, you’re NOT selling a partnership; you’re establishing a relationship.
Treat this relationship-building process as you would building a friendship – be patient and supportive.
Start by taking your list from above ^^^ and finding who the decision-maker might be.
From there, reach out on Linkedin, attend industry events, etc.
Start fostering genuine relationships through open dialogue and great communication.
In this step, I’d start with 20 or so partners. You’ll notice quickly which ones can be easily reached.
Start with Linkedin. Reach out to a potential partner about a piece of content they did.
Here’s one that I did this week:
Step 3: Provide Value
Before you can tap into the power of referrals, you must show your worth to your potential partners.
This is the “provide value” stage, and it’s all about proving that you’re not just another business looking for a handout.
Here’s what that could look like:
- Send them business
- Collaborating on a webinar together
- Offering a free trial or exclusive discount for their audience
Make it clear that this partnership is a two-way street.
The goal here is to build a relationship of mutual respect and reciprocity, making them more likely to refer you to their network.
Remember, it’s a give-and-take world, and no one likes a taker. So, showcase your value and give before you take.
Step 4: Create an Attractive Offer
Now, if you’ve done your job right, it’s time to go in for the right hook.
By now, you should have established a solid relationship with your potential partner, and they should see the value in working with you.
That’s where an attractive offer comes into play.
Create a referral program that is mutually beneficial to both parties. This could include:
- A steady flow of leads FROM you to THEM
- A percentage of sales for each referral made
- Exclusive discounts or deals for their audience
- Joint marketing efforts to promote each other’s business
- Exclusivity agreements
Remember to think outside the box here. Is it a bottle of Pappy Van Winkle for every landed customer? Let’s get creative.
Step 5: Communication & Follow Ups
Now that you’ve got some awesome partners, it’s time to keep the lines of communication open.
One of my favorite ways to do this is through Slack (a mentor in business told me about this one).
Add your partners to a “partner” Slack where you can freely message them.
From here, continue to build the relationship over time.
Yes, send business to them, but also try a funny meme, ask them about their weekend, remember their birthday, and overall, genuinely get to know them.
Remember, the better the relationship, the more fruitful your partnership will be.
Step 6: Partner Pivot
Swapping out unproductive partners is as vital as securing new ones.
Remember your goal: Get more business so you can grow your business.
If a partnership isn’t bearing fruit, it’s time to reassess its worth and, if necessary, make what we’ll call a “Partner Pivot.”
That’s a fancy way of saying that you should find a new partner and stop providing value to the old partner.
Typically, you’ll know when to do this.
If you’ve sent five referrals to a partner, and they haven’t sent you one—it’s time to cut them loose.
Final Thoughts on Referral Partnerships
Creating referral partnerships is a powerful way to grow your business.
But like anything worth having, it takes time and effort to build strong relationships that bring consistent referrals.
Be patient and genuine, and always strive to provide value.
With these steps in mind, you’ll be well on your way to establishing successful referral partnerships that will help take your business to the next level.