Referral: the door, not the program

I have never made a buying decision because of a referral fee. Not once, on either side of the table. As a buyer I did not know the fee existed and would not have cared. As a seller the referral partners I inherited produced a name or two a quarter, usually someone who was already talking to us.

And yet the referral partnership is the one every company sets up first. A partner page, a finder's fee, a form. It takes a week and it lets the CEO say we have partners.

So the honest thing to say about referral is that it almost never moves the revenue line. The useful thing to say is that it is a door.

Here is the one referral relationship that mattered to me. A production company sent us the occasional name under a simple placement agreement. Nothing formal. Small money when one of their events landed on our platform. For a while that was all it was, and if I had measured it as a program I would have shut it off.

What I noticed instead was what their work did to the deals it touched. When their production team was attached, the event was bigger, the customer was happier, and the customer came back. The referral was not the value. The referral was how I found out where the value was.

So we stopped treating them as a source of names and started attaching them to deals on purpose. That is a different partnership, and it is the subject of a later post. The point today is that the door only mattered because somebody walked through it and looked around.

One test for your referral tier. If you shut it off tomorrow, which customer would notice? If the answer is none, it is not a partnership. It is a line on a web page, and that is fine, as long as you stop reporting it as one.

Next Tuesday: the reseller, and why giving them a catalog is the cheapest way to get nothing.

Am I wrong on referrals? Has one ever moved your revenue line?

Part 4 of 15 in the Which Partnership series.