Why are referral partners better than reseller partners for SaaS?

Brands with mature affiliate programs currently see over 28 percent of their total revenue driven through partnerships. Many experience channel growth of over 50 percent year-over-year (YoY). 

But how do you create a strong SaaS affiliate marketing program? It starts with establishing the right partnership structure. 

SaaS reseller and SaaS referral programs are two of the most common affiliate partnerships. Both partnership types have pros and cons, so understanding the difference between reseller and referral partners can help you decide the right path for your business.  

What is the difference between resellers and referrals? 

Both reseller and referral programs encourage affiliates to market and sell another brand’s products or services. How that affiliate engages with the brand differentiates the two programs:

• Reseller partnership: A reseller acts as a broker between the SaaS and the customer, selling directly to the end user. Resellers have more control over how the partner sells the product, so they can typically include the product in bundles, sales, or other offers. Resellers usually get paid a percentage of the deals they close.
  
• Referral partnership: A referral partner provides recommendations or suggestions to an end user but ultimately hands the prospect to the SaaS brand to close the deal. A referral partner gets paid if the leads they provide convert. For example, a lead signs up for a free trial or purchases software. 

Ultimate guide to SaaS affiliate marketing

Gain a broad understanding of SaaS affiliate marketing to boost your B2B software brand’s ROI, business growth and brand awareness. Download the ebook: Ultimate guide to SaaS affiliate marketing.

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Resellers vs. referrals: What is better for SaaS? 

Both reseller and referral partnerships come with pros and cons. SaaS brands considering building an affiliate program should be aware:

Reseller partnership pros and cons:

Pros:

• Resellers have more control over the sales process and pitch
• Resellers sometimes close higher value deals or sell more products 
• Resellers are deeply invested in the product and have a better understanding of its benefits and uses 

Cons:

• Resellers require more training and onboarding, which is time-consuming and expensive 
• Resellers require SaaS brands to give up control over their reputation and standards 
• Resellers create a middleman with customers, making it more difficult for SaaS brands to build relationships with users 

Referral partnership pros and cons: 

Pros:

• Referral partners can get involved with less training and onboarding
• Referral partners can add value and receive compensation without needing to perform the heavy lifting of closing the deal 
• Referral partners allow SaaS brands and leads to connect directly to build their own relationship

Cons:

• Referral partners are more likely to start promoting another SaaS brand if they’re offered a bigger payout
• Referral partners might send unqualified leads 

What partnership type is better for B2B SaaS?

Reseller programs can help B2B SaaS brands scale. The upfront investment, continuous training, and lack of control can create complications for the company and the affiliate. 

On the other hand, referral programs create win-win scenarios for both parties. They allow partners to get involved without extensive training or oversight. This creates a larger pool of participating affiliates, which leads to: 

• Broadening affiliate participation in connecting with a diverse group of new leads and prospects 
• Giving the SaaS control over the sale process to maintain quality standard 
• Allowing the SaaS to connect directly with the end user builds a relationship separate from the affiliate 

How to measure the effectiveness of a SaaS referral program 

A referral program offers a top marketing channel for SaaS, but effective partnerships require the right planning, implementation, and tracking. Follow these key steps to create and measure the effectiveness of your SaaS referral program. 

1. Establish program and partnership goals. The obvious goal of a SaaS referral program is to attract new customers. So it’s important to clarify how you want lead generation via referrals to impact your business. How much do you want to grow? How big do you want your referral program to be? What percentage of acquired leads come through referrals?
   
   Setting clear goals helps establish success indicators you can then use to measure the effectiveness of your program overall.
   
2. Make partner expectations clear. Give partners all the information and resources they need to be successful.ss.
   
   Establish what conversions warrant commissions and when you’ll pay referrals. For example, if you only pay a referral partner when a lead becomes a paying customer, you need to set clear expectations about the free trial sign-ups needed to convert. Setting expectations and guidelines early prevents these kinds of issues from popping up.
   
3. Use a partnership management platform. Managing an effective SaaS referral program without software becomes complicated and confusing quickly. A partnership management platform like impact.com handles various tasks, from recruiting and contracting referrals to tracking conversions and managing payments.
   
   Using your partnership management platform as a centralized hub for all your program data will make it easier to get a full-picture view of your plan’s performance.
   
4. Gather feedback from referral partners. The number of new customers or conversions indicates how your SaaS referral program serves you. An effective program benefits your partners just as much. When measuring success, communicate with affiliates to get their feedback and input on how the program works for them. 

An effective SaaS affiliate program will look different from company to company. If you’re ready to learn more about how to build a referral program that helps your SaaS meet it’s goals, check out this video on How to grow your SaaS business through partnerships.

Ultimate guide to SaaS affiliate marketing

Gain a broad understanding of SaaS affiliate marketing to boost your B2B software brand’s ROI, business growth and brand awareness. Download the ebook: Ultimate guide to SaaS affiliate marketing.

Get my free ebook

For more ideas and guidance on SaaS affiliate marketing, check out these other impact.com resources:

• Partnerships drive SaaS growth (one-sheet)
• How to evaluate partnership compatibility (worksheet)
• How to manage a successful affiliate program today (ebook)
• Why affiliate marketing is a good strategy for B2B SaaS to support the software buyer’s journey (blog)
• Why affiliates and referrals are the top marketing channels for SaaS (blog)