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Building Your BD Lead Engine: Top 5 Mistakes To Avoid

February 28, 2020
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When we think about driving growth at a startup, we generally break it down into 4 broad buckets – Sales (Outbound), Marketing (Inbound), Renewals/Upsells, and the sometimes-overlooked Channel Partnerships (often called BD, Referral Partnerships, Channel Sales, Strategic Partnerships, etc.). When done correctly, Channel Partnerships are a great way for early-stage companies to increase quality pipeline through a BD lead engine, boost credibility, reduce customer acquisition cost (CAC), all while staying close to the customer.

Channel Partnerships break down into a few categories – reseller, alliance, affiliate, and referral partnerships. This blog series will focus on referral partnerships as they are often the most relevant to building your BD lead engine for early-stage startups. Why? Because they are generally applicable across industries, easy to set up, focus on building pipeline, and allow you to stay close to your prospects, which is absolutely critical in your early days when you are working on messaging, product/market fit, confirming your ICP/target buyer persona, etc.

Throughout this blog series on “Building Your BD Lead Engine,” we’ll dig into when/why/how to get started, what type of organizations to partner with, how to build trust with partners, and how to make these partnerships successful over the long-haul. In this first post, we’ll look at some of the most common mistakes startups make with their referral partnerships:

Signing the deal, thinking you’re done, moving onto the next one

Especially when you’re first starting out, it may seem like a big win when you get your first referral partnership signed. You might be tempted to pop the champagne, high fives all around, and call it a day. Unfortunately, no matter how long it took you to get that agreement signed, this is only the beginning, not (even close to) the end. It’s nice to think “if you build it, they (aka the leads) will come,” but you aren’t Kevin Costner, and this isn’t the Field of Dreams. Partnerships take effort, and you’ll need to dedicate resources to launching and maintaining the partnership. This includes everything from figuring out who to engage, building up trust (across partner leadership and individual reps), getting them excited about the partnership, educating partner reps, making a splash in the market, collaborating on marketing/events, and (most tiring of all) staying top of mind. We’ll dig into all of this in subsequent posts.

Not incentivizing the front line reps

So you’ve signed what you think is a lucrative rev-share deal for your partner. Surely they’ll do everything they can to throw a bunch of qualified leads your way, right? Well…not so fast. What happens to the rev-share inside their org? Does it get shared with the individual rep (front line sales, account manager, solutions consultant, etc.)? Do they get quota retirement, cash spiffs, anything? These are the questions you should be asking your partner to make sure their reps (the people who have the power to refer you qualified leads) actually have an incentive to engage with you. Everybody is thinking “what’s in it for me?” and you need a strong answer to that question. Ideally your partner gives part of the rev-share to the rep, but if they won’t introduce any type of individual rep incentive then you have to get creative. A rep sends you a great lead? Shoot them a gift card (think Amazon, not Red Lobster). That lead ends up signing a contract with your company? Send the rep another (these can even be in the $1000+ range depending on your deal size, make sure it’s enough for them to care).

Allowing rev-share to extend in perpetuity

Let’s say you’re a SaaS company: $50k average ARR deal size, $5k implementation fee, and a services arm that can tack on $0-10k depending on the deal. Do your very best to limit the rev-share to Year 1 and not give in to multi-year, auto-renew on an upsell, or perpetual rev-share terms. You are better off giving up 15% rev-share just for Year 1 ARR vs. giving up 10% across Years 1, 2, and 3. If you get pushback on this, then be sure to introduce some kind of cap to protect yourself (and your margins). Implementation and service fees should be off the table – it’s not standard for partners to get a piece of these.

Spending time with the wrong teams

Your partners are hopefully large, well established companies with a bazillion customers that are right in your ICP wheelhouse. Given that large companies serving large clients typically have at least dozens if not hundreds/thousands of individual sales, account management, and solution consultant reps, you’ll need to be strategic about where within a partner org you spend your time. You sell an enterprise product but you just spent an hour with your partner’s SMB team? Congrats, you may feel accomplished, but really you just wasted your time. Leverage your partner champion to educate you on their org structure and be strategic about which teams/reps you focus on.

Lack of planning around events

Big partners have big budgets, which come in handy because conferences and events are expensive. Can’t afford your own booth? Buddy up with a partner to see if you can offer some kind of promotion (exclusive to them and their clients/prospects) in exchange for exposure at their booth/event. Partners are always looking for ways to drive booth/event traffic, so anything you can do that gives their clients a reason to stop by is a great value-add to offer your partner. To do this, you have to start planning early because once event teams have locked in on a plan, it’s an uphill battle trying to change it.

This is a brief taste for some of the topics, strategies, and tactics we’ll be covering throughout our “Building Your BD Lead Engine” blog series. If there are specific BD topics or questions on your mind, send them to and we’ll do our best to cover it in future posts.

If you liked “Building Your BD Lead Engine: Top 5 Mistakes To Avoid” and want to read more content from the Bowery Capital Team, check out other relevant posts from the Bowery Capital Blog.

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