Business Models in the Software Industry

Referral


Referral means that the software vendor has outsourced lead generation to a partner company. The partner company creates the leads, passes the leads back to the software vendor. The software vendor pays a referral fee to the partner for a qualified lead and/or a closed deal with the lead.


Referral is very popular in the software industry. It can be used as a one-time or repetitive form of cooperation between two software companies. Advantages of referral are easy creation of the program and of the leads, low impact on both organizations, partner and software vendor, and limited risk.


A Referral program has a very low entry barrier and low maintenance effort.




Business Model Canvas for Referral

Mapping referral into the business model canvas results in the following: The value proposition of referral for the partner is the additional revenue he/she can get via the referral fee from SAP or the SAP VAR. Customer relationships: the software vendor has to care for the referral relationship to the partner and the customer. The key channel is the partner network.





Revenue streams for the software vendor are the usual license, support, maintenance fees.

Key activity is enabling partners to properly present, position and show the value of the solutions to customers. They might need marketing material, price lists, demo systems to make referrals happen.

The cost structure is referral fee cost besides normal software vendor cost structure.

CONTINUE TO RESELL BUSINESS MODEL

More details and background information can be found in these two books:


Profit from Software Ecosystems

Title: Profit from software ecosystems

Author:

ISBN: 3842300514



Mergers and Acquisitions in the Software Industry

Title: Mergers and Acquisitions in the software industry - Foundations of due diligence

Author:

ISBN: 3732243818


(c) Dr. Karl Popp 2017

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