Channel Partners May Be Your Biggest Source for Sales Leads
Wednesday, April 25, 2012
Sometimes, the cost of a single business dinner can add up to your entire online advertising budget. That may be okay if the dinner is with a top referral or channel partner. Channel partnerships are among the biggest sources of sales leads for large businesses, and you can implement their techniques into your own business.
Channel partnerships are relationships you create with companies in complimentary industries. These partners have an existing base of clients who they can refer to you in exchange for a percentage of the sale. Because they already know their clients, this usually speeds up the sales process and lands you more deals than any other marketing tactic.
Usually you pay a referring partner 10 to 30 percent but sometimes more depending on your agreement and how much work is involved. That may sound like a big chuck of revenue, but often you can make it up in volume after that partner refers 6 or 20 or 50 new customers.
In big businesses like information technology and computer networks, there are a variety of different channels for referring partners. A management consulting or accounting firm may recommend that a business cut down on IT costs or improve efficiency, and that means hiring an IT firm to do the work. By partnering with that firm, the IT company may get a direct referral. Other channels might include commercial real estate agents because businesses need help configuring their networks when they move offices.
As always, your marketing strategy starts with knowing who your target audience is. Then determine where else that audience buys products or services. Anyone who does business with the elderly knows that estate attorneys, CPAs and insurance agents can have a large client base and refer to one another. Retailers can also have referral partners. A movie theater, for instance, might receive a commission for passing out coupons for patrons to visit neighboring restaurants and shops after the movie.
The key to successful long-term partnerships is having a written agreement in place that outlines expectations on both sides. Partners will only refer clients if they feel they will be accurately paid a commission that is worth their time. Partners who aren’t paid – or say they are happy to refer people for free – generally won’t do it. They simply have no incentive, so they forget or spend their time doing more profitable things. You want your partners to view you as a secondary revenue opportunity.
Partners also need to know how much effort to put into a deal, and often commissions are tiered to reflect that effort. Providing you with the name and phone number of a client should be compensated less than if the partner personally pitches his own client. Even more commission is paid if your partner services his client on your behalf. What you don’t want is a partner who makes an iffy sales effort and then expects big bucks.
It may take some time to vet partners and perfect your relationship, but channel partners can be a terrific – and free – sales force for your business.