Revenue that an individual or company receives on a regular basis and at fixed intervals, as opposed to in lump sums.

Two common forms of recurring revenue are monthly recurring revenue (MRR) and annual recurring revenue (ARR), depending on the cadence with which funds are distributed. Both are common metrics that SaaS companies use to track how much revenue they’re earning.

Reseller partners will often receive recurring revenue from software vendors if they sell a subscription on their behalf. For example, if a value-added reseller (VAR) partner sells a software subscription to a new customer, the software vendor may reward the partner with a 20 per cent of the monthly recurring revenue the company receives from that customer each month.

This mutually beneficial arrangement also incentivizes the reseller to help keep the customer happy because the longer they keep renewing their subscription, the more passive income the partner will earn. Companies benefit massively from this, as it takes some strain away from their customer support and customer success functions.

A referral agreement is a legal contract that defines a partnership between a service provider and a referral partner that earns commission on sales. The contract sets out the terms of a partnership wherein one party is referring qualified leads or customers to the other partner in exchange for rewards or compensation.

Referrals are an effective method of increasing lead acquisition and sales, and a referral partnership is mutually beneficial as one partner sees increased sales and the other earns a cut for their leads. These partnerships are governed by referral agreements to ensure each party is clear on the terms of the partnership, what will be done in the event of a dispute, and how the partnership can be terminated if desired.

Typical inclusions in a referral agreement include (but are not limited to) terms, audit rights, intellectual property, confidentiality, and dispute resolution.

A referral link is a unique, trackable URL provided to partners enrolled in a referral program. This specialized link allows companies to attribute leads or sales generated through that specific link back to the referring partner. It is a helpful tool for incentivizing referrals, tracking the effectiveness of referral campaigns and accurately rewarding partners for their contributions.

Referral links are mutually beneficial. For companies, referral links provide a cost-effective way to reach new audiences, generate high-quality leads and boost revenue growth. For partners, these links offer an opportunity to earn rewards or commissions by simply sharing their experiences and recommending products or services they believe in. Referral links are usually shared through various channels, such as email, social media or websites, making it easy for partners to promote a company's products or services to their network.

When a potential customer clicks on a referral link, they are directed to the company's website or a specific landing page, where their activity can be tracked and attributed to the referring partner. Referral links usually use cookies to track customer activity and ensure that if a potential customer comes back before a certain period, they’ll still receive the commission.

A referral partner is an individual or business that actively promotes a company's products or services to their network of contacts in exchange for a commission for each successful referral. Referral partners send over qualified leads to close and earn a percentage of the revenue when a deal goes through.

Referral partners do not typically have audiences as large as marketing partners, but they typically have a pre-existing relationship with the leads they refer. Because of the trust and personal experience, referral partners have access to higher quality leads that are more likely to convert.

Referral partnerships are often mutually beneficial. For businesses, they provide access to a pre-qualified pool of potential customers, speeding up sales cycles and reducing customer acquisition costs. For referral partners, they offer an opportunity to monetize their network and expertise while providing valuable recommendations to their contacts. A prerequisite for a successful referral partnership is a clear agreement outlining expectations and incentives, comprehensive onboarding and training, and ongoing communication and support.

A B2B referral program is a powerful, structured system designed to transform happy customers into active partners. It uses the inherent trust and credibility that exists between partners and their networks to drive high-quality leads and boost revenue through word-of-mouth marketing.

Unlike broader affiliate programs, referral programs focus on warm leads from a one-to-one relationship, resulting in faster and higher conversions. Successful referral programs are built on a four-pillar framework:

• Recruit: Attract advocates through marketing.
• Onboard: Empower sharing with easy tools.
• Enable: Equip referrers with knowledge.
• Payout: Reward referrals promptly and clearly.

By utilizing their existing customer relationships, businesses can accelerate sales cycles by leveraging trusted recommendations while simultaneously boosting key metrics like pipeline growth, revenue and customer satisfaction. This cost-effective acquisition channel delivers high-quality leads that convert faster and churn less, contributing to sustained business growth.

Read more: The anatomy of a high-performing referral program.

Referrals, in the context of B2B SaaS partnerships, is a business strategy that leverages existing relationships within an ecosystem to generate qualified leads and acquire new customers. This approach capitalizes on the trust and credibility established between partner organizations, creating a natural and effective channel for customer acquisition. Referral partnerships involve one organization actively recommending a SaaS solution to its network of contacts, vouching for its value, functionality, and suitability for specific needs.

This endorsement from a trusted source carries significant weight and often speeds up the sales process, as potential customers are more likely to consider a product or service recommended by a known and respected entity. To incentivize partners and encourage active participation in referral programs specifically, companies often offer commissions for successful referrals that result in closed deals. This creates a mutually beneficial scenario where both the referring partner and the SaaS provider benefit from the expansion of their clientele. Referrals are a valuable tool for B2B SaaS companies as they tap into the power of word-of-mouth marketing and social proof to attract high-quality leads.

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A reseller agreement is a legal contract between a B2B SaaS supplier (vendor) and a reseller (distributor or retailer).

This formalized business agreement lays out the rules for the reseller to sell the vendor's software, which includes pricing, territories (where they can sell), minimum sales amounts and marketing guidelines.

A reseller agreement is put in place to protects both partners: the vendor controls how their product is presented and the reseller partner gets a profit margin by marking up the price for customers.

A reseller partner is a third-party that sells a company’s product or software directly to a customer on behalf of the company. In contrast to the relationship between affiliate and referral partners who are involved only at the start of the customer’s journey before handing it off to the company, a reseller partner owns the whole customer relationship from start to finish.

Reseller partners are paid by receiving a portion of the sale. Reseller partners offer companies a faster path to growth, reduced costs, access to new markets and diversified revenue streams. Being a reseller partner offers a competitive advantage with better credibility meaning much more revenue opportunities.

Some challenges of working with reseller partners are that they can be time-consuming to manage and may risk brand reputation if they don't uphold a company’s standards. Additionally, resellers may face challenges due to lack of vendor support, product limitation, or mismatched target markets.

There are two types of reseller partnerships, traditional and one referred to as value-added. Traditional reseller partnerships focus on reselling a company's product as-is, while value-added reseller partnerships (VAR) provide additional services like consulting, implementation, or training, enhancing the product's value for the customer.

A reseller program is a strategic partnership model where a company works with channel partners to independently manage the entire sales cycle, from lead generation and qualification to closing deals and customer support. In this model, reseller partners act as authorized representatives of the company, selling their products or services to end customers on their behalf.

Reseller programs offer several benefits. Companies can tap into new markets, leverage the expertise and existing customer base of their reseller partners and generate additional revenue streams without incurring the costs of building a direct sales force. Meanwhile, reseller partners benefit from access to a proven product or service, comprehensive training and support and the opportunity to earn attractive commissions or revenue shares on their sales efforts.

To ensure the success of a reseller program, companies must invest in comprehensive resources and training to equip their partners with the knowledge and skills needed to effectively promote and sell their offerings. This includes providing sales and marketing materials, product demonstrations, technical support and ongoing training on new features and updates. Reseller programs typically offer higher rewards compared to other types of partner programs, such as affiliate or referral programs, to acknowledge the greater level of effort and commitment required from reseller partners.

ROI, or return on investment, in the context of B2B SaaS is a key metric that measures the effectiveness and profitability of an investment. This could be a marketing campaign, sales initiative or partnership. By measuring ROI, businesses can understand which strategies are generating the most revenue, helping to make data-driven decisions to optimize their spending and maximize overall impact.

The formula for calculating ROI is: (Revenue - Investment) / Investment * 100.

For example, consider a company that invested in a new affiliate marketing campaign that involves training materials, email templates and marketing. The investment of the campaign was $5,000. After three months, the affiliate partnerships saw an increase in revenue by 33 per cent, resulting in $25,000 more in revenue for the company. The ROI for the campaign was 500 per cent, making it a smashing success.

Measuring partnership ROI allows you to identify your most valuable partners, uncover areas for improvement, and make informed decisions about future collaborations. By quantifying the impact of your partnerships, you can also effectively communicate their value to stakeholders, securing buy-in and fostering further opportunities.

A compensation model where the revenue generated from a deal is shared between a business and a partner. In a revenue share model, the business gives a percentage of the revenue generated from a sale or transaction to the partner who facilitated the sale.

For example, if a $50,000 deal is closed, the business may keep 75 per cent and give the partner 25 per cent for a payout of $12,500.

Revenue share commissions can vary depending on the agreement however, ranging from a fixed percentage of the deal value to a tiered structure that increases with higher sales volumes. This structure incentivizes partners to drive high-value customers so that they earn a larger percentage of commission.

For businesses, it offers a financial safety net as they aren’t required to pay out partners unless they’ve succeeded in the agreed upon transaction.

A revenue share commission structure, while promoting collaboration, can introduce complexities like potential conflicts over earning distribution, intricate payout requirements and potentially diluted revenues for stakeholders.

Revenue tracking is the process of monitoring, analyzing and attributing revenue generated through various channels. In the context of B2B partnerships, it involves identifying which partner interactions, such as referrals, co-marketing campaigns or joint sales efforts, which directly contribute to customer acquisition and subscription purchases.

By doing so, companies can get a comprehensive look at their partnership ecosystem's performance and see which initiatives have the best ROI (return on investment). Revenue tracking encompasses both revenue attribution, which assigns revenue to specific channels or activities and performance monitoring, which tracks revenue performance across those channels or activities.

By accurately attributing revenue to specific partners and channels, companies can measure the effectiveness of their marketing and sales initiatives, optimize commission structures for channel partners and make informed decisions regarding resource allocation.

It also provides valuable insights into which partner-driven go-to-market motions are most successful in driving new sales, and which ones are not moving the needle and draining company resources.

Rewards, often synonymous with payouts, are the tangible incentives partners receive for generating leads and revenue. These incentives are almost always monetary, but can occasionally be leads, giveaways or marketing funds.

The most common reward (also called a commission) structures are a revenue-sharing model, flat structure model, and month-to-month model. Payouts are not just transactional, they are a strategic tool for fostering long-term relationships with partners. A well-structured payout system aligns partner goals with company objectives and creates a win-win scenario where both parties thrive.

Competitive awards reflect the value partners bring, and are one of the best ways companies can attract and retain top-performing partners. Rewards are often the factor that encourages partners to go above and beyond in selling a company's solutions, generating leads and ultimately driving revenue growth. Rewards also serve as a symbol of appreciation for partners.

They celebrate the hard work and value partners bring to the table, and strengthen the overall relationship. In the competitive world of B2B SaaS, a compelling reward system is crucial for attracting top-tier partners and creating a thriving ecosystem.

Read more: Perfect your partner rewards and commissions with these questions.

Top performing partners the MVPs of a company's partner ecosystem by consistently crushing goals and driving significantly more revenue than the rest. These high performers are typically the minority and follow the 80/20 rule, where a small percentage of partners generate a majority share of revenue. What sets them apart is a combination of expertise, market savvy, and drive.

A top performing partner understands customer needs and has an uncanny ability to match those needs to vendor solutions. Companies that recognize and nurture partners often see incredible gains in revenue growth. Tailored support, educational resources and lucrative commissions are all examples of ways companies work to create the best partner experience possible for their top performers.

To find these partners, the best approach is to start by analyzing partner metrics. Partner-sourced revenue, average deal size, and time-to-close are metrics that will help identify the minority of partners that are making the majority of the impact. By digging into the data, companies can find their most valuable partners and then build initiatives around them to scale revenue. [See 80/20 rule]