Referral Partnerships: The Hottest IT Channel Trend for 2017?


In the world of B2B tech sales, one thing that hasn’t changed all that much in the last 20 years is the classic Partner go to market strategy. You can achieve exponential reach pretty cost effectively by having your Partners’ sales teams position your products and services to their customers.

I’m going to go out on a limb here and say that Referral Partnerships will be the hot Partner trend in 2017. They represent a large untapped source of incremental revenue for Vendors and their Partners. Here’s why I think this is:

Expecting Too Much of Your Partners?

Today there’s an expectation that your Partners can build and maintain a salesforce that is masterful across technologies and maintain ‘Line of Business’ sales expertise on all vertical business segments,. So not only must the Partner sales team keep up with all horizontal technologies, they must also be able to have deep and meaningful conversations with specific relevance to vertical industries too. And finally, there’s the need to have open-ended, consultative, conversations, to fully understand customers’ pain and growth challenges, and offer solutions (not individual products, services or software) to deliver measurable outcomes to the customer.

Phew, that’s a lot of expectation. And a hell of a lot of skill and capability that each Partner needs to continually develop amongst their sales teams to maintain success. Lets face it, on the whole Partners do an awesome job, however with decreasing margins is it realistic to have all these expectations going forward ?

Here’s where I think Referral Partnerships maintained via vertically-focused ecosystem clusters, could make a big impact on increasing sales. Let me give you an example.

Referral Partner Example: IoT in Agriculture

IoT is hot. Amongst the many industries where IoT could be a game changer is Agriculture: sensors built into heavy machinery monitoring the soil and assessing what extra nutrients or fertilizers might be needed; devices tracking the location and condition of livestock on your land, or the status of their feed or fencing…the use cases are endless. But if you’re an IT vendor with an IoT solution that wants to target agriculture, how do you go about selling to them? There are a few options to consider:

  1. Sell Direct to Farmers: Few farmers are desk-based or hugely IT-literate so finding them, reaching them and selling to them could be time consuming and expensive.
  2. Sell via selected specialist Software Agriculture IT Partners: You will need to invest heavily in identifying them, bringing them on board your Partner programme, incenting them to sell, and educating them on how to position, install & maintain your products.
  3. Sell via your horizontally-focused solution Partners: You’ll need to invest time into helping them to understand the opportunity and educating them on the Agricultural industry so they can have relevant conversations with farmers

Individually all of these routes to market sound pretty hard-going to me. Success might be expensive to achieve and a long time in coming. So what if we stopped looking at this as a logical vertical flow and considered building an ecosystem cluster leveraging Referral Partnerships?

Here’s how that could work: Farmers generally use Agricultural outlets for the fertilizer, irrigation and other core supplies they use. Just looking at the market here in Australia, there are more than 1,000 of these supply outlets. Now as well as selling “stuff” to farmers, these same outlets also provide them with advice on topics like Marketing, Risk Management, Insurance and Finance. These supply outlets act like trusted advisors to the farmers. They already have business level conversations with them, so it wouldn’t be a huge stretch to have them introduce opportunities around IoT when talking about an investment into new equipment. In fact, IoT would enhance the conversation because it’s connected to topics like efficiency and ROI that farmers care a lot about.

So what if an IoT vendor built a programme focused on creating a Referral agreement with these outlets? They could provide initial guidance on the benefits of the IoT solution and then use and ecosystem of specialist Software Agriculture Partners & IT Partners to sell and fulfil the solution. This is what those outlets are doing today with Insurance and Financing products. Why should buying technology be any different?

Whilst the example of agriculture may not be mainstream for every Vendor, I find in discussions about how we “grow” the business that there are always valuable potential referral partnership opportunities identified, it’s just that we haven’t invested the energy to bring them to life.

Building Your Referral Partner Strategy

Here are four initial main structural components to think about when looking to build a Referral Partner programme:

  1. A Closed-loop Referral System: You need a formal structure which tracks when a Referral Partner suggests your brand or solution to a customer, creates demand and fulfils the sale through your Partner. After all, if you can’t measure it at each step, it has no value.
  2. Build Solid Ecosystem Clusters: You need to start getting to know your Referral Partners and recognise them according to their location, scale of activity and customer impact. Which of your current horizontally solution focussed partners have “Partnering DNA”? By mapping the referral clusters across the ecosystem, you can establish purposeful frameworks for working with them.
  3. Prioritise your Partner landscape: Within any group of Partners you’re going to see different patterns and volumes of sales. Referrals are no different. Not every potential Referral Partner in your ecosystem will actively position every product or service you have to sell, and that’s ok. You need to focus and prioritise the landscape.
  4. Measurement & Forecasting: Forecasting referral business can be extremely difficult to do, but it’s so important to your supply chain predictability and financial stability. In a recent article on Bellamy’s, they failed to anticipate a drop in sales from their Referral Partners because they weren’t spending time tracking or measuring it. Measuring business coming from your referral programme allows you to understand how important that channel is to your overall sales, what demand is coming from that route, and what the close rates are within the referral ecosystem.
  5. Margin and engagement framework: Both the margin model and engagement framework will need to be assessed and developed in consultation with the stakeholders upfront. Within any ecosystem you’re going to see different levels of sales involvement and hand off points and this will require careful architecting. But in the same sentence, it doesn’t need to be perfect either to get started, better to not wait for perfection to get started and evolve the framework as you go.

Bringing It All Together

Establishing a new Partner strategy to drive sales via Referral ecosystems takes time and thought upfront, and effort to maintain. It’s not for the faint-hearted! But the rewards are there if you get it right. And that’s why I believe this is a critical route to market IT vendors should harness in 2017.