If I had to guess – you are SaaS company. You’ve tried all types of other channels, paid (PPC, Linkedin Ads, etc.) as well as non-paid (social, organic, etc.) and have a good comprehensive strategy for getting customers through those avenues.
But you are looking to scale. You’ve heard of an Affiliate or maybe Referral program as a way to tap into other networks, both customer or other opportunities out there, but you don’t know where to start.
Before you get two far down the rabbit hole there – let’s step back and look at all the different types of partner programs for SaaS companies you could create:
- Referral Program (or Refer-A-Friend)
- Affiliate Program
- Agency/Solutions Program
- Integrations Partner Program
Below, I will dissect each one and describe when it makes sense for you to start one – given what type of SaaS you have or where you are at with your business.
Referral Programs (Refer-A-Friend)
A referral program is the most common entrance point into partner programs. Why? It takes low or not cost investment to create and run one and it taps into the most closely align network you have: your customers.
What sets a referral program apart from the other programs?
- The incentive/commission: you usually offer discounts or credits on your services vs. other monetary options.
- It’s only available to customers.
I talk more about referral programs, their mechanics, pros and cons of them (along with influencer programs), in this post: What’s the difference between an Affiliate Program vs. Referral Program vs. Influencer Program? to give my readers more background on them.
What is the time/investment/resources I need to start and manage one?
- Time: To start one, if it is priority, can be setup in under a month. For time investment of managing one – little to no involvement as most SaaS companies automate it.
- Investment: If you are custom building it into your SaaS application – it would be a small short-term labor costs. If you are looking at 3rd parties, most reputable referral software for SaaS costs a monthly fee.
- Resources: Minimal resources.
What should be my expectations of growth (sales/revenue) if I setup a referral program for my SaaS?
This is a great question – and one will answer for each type of partner program. I can not stress how important it is to check our bias and have the right expectations when you launch a new partner program.
Based on my experience, overseeing affiliate programs for my SaaS clients and having access/insight also, to their referral program data – Referral programs have a low investment/low return as shown in this chart:
However, the LTV of these clients (presumably because they are being referred by trusted friends, colleagues, and family members – and those endorsements go a lot farther than 3rd party partners) is much higher. It’s also good to note there probably won’t be a lot of total referral partners in your program. From my experience, less than 6% of total customers in a traditional B2B SaaS referral program actually refer customers over.
Final words for referral programs:
If you are restricted by time and investment – but have resources to start a referral program rather quickly, then a referral program is a great intro into partner programs. Many of my SaaS clients usually start out with referral programs to get their feet wet before moving on other options.
As I have said before in many of my posts here, the term “affiliate” is a pretty broad term. It just means: one independent party gets compensated for completing some action (usually referring a customer, but can be also for other actions: filling out a form on a website, scheduling a call, etc.) for the other party (the merchant/company) and gets compensated (in the form of commissions) for completing that action.
Affiliates can be: customers, bloggers, one-man consultants, review/comparison sites, large publishers (i.e. Buzzfeed, PCMag, etc.), coupon sites, and also online communities. Anyone or anywhere that uses the affiliate model (Pay for performance/Cost Per Action) model is an affiliate.
What is the time/investment/resources I need to start and manage one?
- Time: To start, it is going to take 1-2 months if you are doing an integration with 3rd party software ((like the ones I talk about here given resources and priority. If you are building something custom – 6 months (at the earliest) to a year if not more is how long it is going to take. In terms of managing it. weekly support + your focus on finding new partners, working with current partners: It can start out as part time and transition into a full time role.
- Investment – If you are looking at 3rd party software (which I suggest vs. building your own), It will cost $69/mo (at the low end) to $800/mo based on functionality and reporting. If you are going with a network (which I don’t support) – it would be a one time network fee ($500-$600)+ 15-30% (depending on network) cut of whatever revenue is made through affiliates in their network.
- Resources – You will need a developer to setup the integration. Ongoing resources would include a stakeholder (usually a marketing manager to oversea at the start as the program grows) to then hiring a competent affiliate manager (more on when to hire a SaaS affiliate manager).
What should be my expectations of growth (sales/revenue) if I setup an affiliate program for my SaaS?
In an affiliate program, you are usually going to have a lot more partners than you would have with practically any other program I talk about in this post. This is because: the barrier to entry is a lot lower (you don’t have to necessarily be a customer, unless you are running a closed affiliate program). Also, the revenue potential is going to be greater because you have a lot more types of affiliates (like I mentioned earlier) that can drive revenue opportunities:
Now, Note: I took LTV off the X axis (vs. the other graphs I had it on there). This is where Revenue or customer growth and LTV need to be separated. Why? When you have a larger # of partners in your program like an affiliate program, the quality of partners they drive can be rapidly different. When you average these together, the LTV is going to be lower (this is apparent). This is something you can work on (talk with low LTV affiliates & examine their promotions, only segment out top performers/high LTV affiliates) but it is worth noting.
Now, this next graph is very important. I get asked all the time – how long will my affiliate program be profitable/contribute XYZ amount of growth to my top line?
There is no straightforward answer and it differs based on your product, industry, and type of partners able to drive you customers. I usually say it takes 6 months minimum to a year for a program to start seeing growth:
Final words on affiliate programs:
Affiliate programs is an easy go to for companies who want to attract/leverage publishers outside of their customer networks and who also have the priority and resources to do so.
Agency/Solutions Partner Program:
An Agency Partner Program differs from all other programs I mentioned as it is targeted to organizations that have services that co-exist around your product or service.
For example, If you are an agency who builds websites for your clients – you would want to either resell hosting (if that is an offering you care to advertise publicly) or be a part of an agency program with a web hosting company. What might that Web hosting agency partner program might offer to agencies, consultants, and solutions providers?
- A recurring commission for introducing the client to the web hosting company and/or retaining the client on their web hosting service.
- Migration assistance (advanced support) from the hosting company to your client.
- The ability to login into your client’s web hosting accounts to setup or service their websites.
- and so on.
As you can see, with this one example, the solutions/agency partner programs are less about just driving a customer to the product and more about servicing the client in conjunction with your product for the long haul.
What is the time/investment/resources I need to start and manage one?
- Time – Out of all the type of programs I mention here, Agency is going to take the most time and patience. Since you are working with agencies/business there is going to be enough room for trust to build between you and the agency as well as you to smooth out the program terms, process, and tools for the program. In addition, You, a manager, or a team will be working with agencies daily to give them what they need (demos, sales materials, support, etc.) to help them close sales for you.
- Investment – Your investment is going to be the highest amongst all other programs because it is going to be a truly “hands-on” relationship. I would expect 1-3 years to start seeing ROI and consistent results, given you have the right strategy and team for your program.
- Resources: Your agency partners are going to need the right platform to handle both their client needs of your software (access to their client accounts, etc) and compensation for their efforts (split commissions, recurring bounty, etc). You might be able to start with current software you use (like PartnerStack or Tapfiliate) but then will need to look at PRM Partner Relationship Management) solutions.
And depending on what your potential agency or solutions provider’s needs and support are to successfully help their clients out (in conjunction with your program), it is going to depend on your level of investment and potential ROI you will get from the program:
One thing I would like to stress here: You get out what you put in.
If you try to throw a partner program together with no tools or support for potential agencies – your agencies a) won’t be interested and if they do (through some fantastical marketing you might have) b) they won’t deliver the results you need.
What should be my expectations of growth (sales/revenue) if I setup an agency/solutions partner program for my SaaS?
It’s also important to understand that agency partner programs are going to amass lower, total # of partners (vs. that of referral or affiliate) but they are traditionally going to deliver you more targeted, longer lasting, higher ROI customers or clients.
Final words on agency/solution programs:
Starting, managing, and growing an agency/solutions partner program really needs all management buy-in. It’s not something you can spin up and hope for success. It is a program that will generate long term results if you put in the proper time, energy, and resources.
Integration Partner Programs
An Integration partner program is departure from all other partner programs because:
- You are working with Developers and 3rd parties
- The intent of the program is different; Where as all other programs I mentioned are based on performance (pay the partner for generating a customer usually), Integration partners might have a performance piece to it, but also have different outcomes.
As such, the ROI is going to look a lot different, but let’s go through each factor as before:
- Time – Time to start an integrations partner programs is going to be indicative of the status/health of your API. Have a limited API or need to build it out more, it’s going to take more time. Ongoing maintenance of the API is also a consideration here.
- Investment – Investment is going to range wildly on the integration aspect of your product/service. You might need an external base to manage new code changes, technical guides, and so on.
- Resources – Having a small team of developers with a Product Manager is basic structure to manage an Integration partner program. Equally, you might have a product marketing manager that would handle any monetization and marketing supported aspects of an integration (if they exist in those cases).
Given these factors it’s no wonder integration partner programs can have a higher investment/ higher years to ROI:
Also – Considering the varying use cases deployed with 3rd parties (not all are revenue focused), usually there is a lower # of partners and lower revenue potential:
Final words on Integration Partner Programs:
Integration partner programs can be powerful ways to grow user bases for some companies. Not all will be focused on new customer acquisition but really maintaining high retention on uses cases where your customer has a multi-use case to use your software with 3rd parties.
Should you have more than one partner program? Can they coexist together?
I work with many clients that start a referral program and then later launch an affiliate program. The serve different outcomes; With a refer a friend program they get lower results, but costs are lower – however, with an affiliate program they get to tap into networks outside of just their customers.
Partner programs can definitely co-exist. One important aspect you need to consider: Be crystal clear on your intent with each partner program. Do not just throw up another partner program to try to capture the attention of that partner target for they payoff of tapping into their network. It never works. Survey potential partner types prior to launching a new partner program to see if it is the right direction you need to go.
If you were me (A SaaS company w/ product marketing fit) – which partner program would you focus on first?
If you have a varied use SaaS product and perhaps more enterprise driven – I would focus in on agency solution partner programs.
If you have a small but loyal customer base – I would start with a referral program.
If there is a lot of competitors and potential outside publishers that you could work with and you have the focus to grow affiliate relations – consider an affiliate program.
All in all, consider the time, investment, and resources it takes to start each of of these partner programs.
Final / tl;dr – Wrap up
As you can see – there is a wide swath of partner program types to use in your SaaS company. Even more – it takes a different kind of focus for each and consideration time, investment, and resources it takes to start each of of these partner programs.
Here are the handy graphs of all the partner programs I spoke of in this article; One for Revenue vs. # of partners an Investment/Cost vs. Time & Return.
SaaS Partner Programs: Revenue vs. # of partners.
SaaS Partner Programs: Investment/Cost vs. Time & Return
Do you have a referral, affiliate, agency/solutions, or integrations partner program? Does this assessment match up to what you see in any of your programs? I’d love to know. Leave a comment below.