The Problem With Partner Referral Programs

Vendors can drive higher-quality leads via a partner referral program, but most partners aren’t making enough money from referrals to make the effort worthwhile.

On average, partner programs had 1,250 partners enrolled in a referral program, with 69% making a referral. Almost half of active partners made between two and 10 referrals in 2016. Another 45% made one referral, and 8% made more than 11 referrals.

Active partners in a program typically generate 4.6 referral leads per year. For a program with an average of 863 active partners, a vendor can expect 3,970 referral leads. Partners who were previously successful at creating referrals yield a higher average of 6.7 leads a year.

$101 to $1000: 76%.
More than $1,000: 14%.
$40 to $100: 10%.
Average reward: $182.
Maximum single reward: $8,463.

The top 1% of partners by quantity of referrals account for 16% of the overall referral leads generated in 2016, with 16% turning into deals. The top 10% of partners by referral volume are responsible for 53% of referral leads, with 23% turning into deals.

When the sales team played a role in recruiting partners and regularly asking for referrals, those partner referral programs saw a referral lead to deal conversion rate of 41%.

Checks: 60%.
Gift cards: 20%.
Bank transfers: 20%.

While every partner referral program uses a lead form, the report finds that 50% of programs also accept verbal referrals, send emails and share personal urls. 30% use social media, and 10% use print cards.

81% of referrals are being made using lead forms. Social media comes in second at 13%, and verbal referrals, shareable urls, email and print cards make up the remaining 6% of referral activity.

The most successful referral method was the print card, but usage was below 1%. Looking at success rates of methods with the most volume, lead forms topped the list at 37%. Verbal referrals and shareable urls came in at 21%. Social media drove awareness but no closed business. Email was rarely used and didn’t produce referrals.