Reseller, Referral, and Affinity Programs

Three basic marketing techniques that any ISP can use to build its subscriber base.

by Jason Zigmont HowToSell.net [August 13, 1999]

Reseller, referral and affinity programs are often key sources of new users for young, growing ISPs. Understanding the differences between the three is the first step to harnessing their power.

Reseller programs solicit new users through businesses in your ISP's coverage area. Referral programs encourage your subscribers to refer their friends—and anyone else they can persuade—to sign up with your service. Affinity programs can range from niche marketing to working with a public group (nonprofit or for-profit) to get the group's members to sign up.

The key to success with all three types of programs is persistence. Many ISPs start reseller or affinity programs but don't follow up and keep in touch with the company or organization involved. If you don't remind them that they're part of your marketing program, they'll forget about you—even possibly replace you. Follow up calls, in person or on the phone, are very important. Monthly newsletters accompanying their check can help.

Reseller
These programs typically involve computer stores, or the like; they can be handled in two different ways. In the True Reseller version, the ISP sells the account to the store, which in turn bills the user. In the Referral version, the participating store refers customers to the ISP for a fee or commission.

With True Reselling, the ISP essentially wholesales accounts for the store to sell. Stores may then package the service account with other services or just sell it outright. The big question with this arrangement is who services the account. If the store is billing the customer, are they doing technical support? If not, how does the ISP get the information needed to do the technical support?

A word of caution: If the company is reselling your accounts under your name, you need to make sure they are representing you fairly and not underselling you.

Commission and referral arrangement for resellers vary greatly depending on local custom. In Canada, resellers actually pay IDirect (owners of TUCOWS) to sell their CD with a bundled service and shareware. In the US, ISPs usually pay participating resellers for every sign-up they get from that source. Payment can be on a one-time or a recurring basis. Paying on a recurring basis keeps the company involved, but involves much more accounting effort. Typically, ISPs will pay the first month to the reseller, or 10 to 20 percent of the service fee—varying with the specific service involved.

Tracking the results of your programs is crucial to understanding the effectiveness of your programs—as well as actually paying the referral fees. Make sure that your billing system has the capability and that you can actually give your users credits or cut checks.

Many ISPs have tried to trade services for referrals. This can work, but the key is, make them work for their reward. If you simply set them up with a free dial-up account when they first sign-up as a reseller, they aren't likely to be motivated to do much for you. On the other hand, if they have to meet a quota—sign up x number of customers before you give them the free service—you'll see results. A sliding scale of incentives works well. For example; for 1-10 sign-ups the reseller will receive a free dial-up account; for 11-20, a free dial-up account plus web hosting; 21-50, multiple accounts; 50+, free 56k line, and so forth.

When working with computer stores, the ultimate goal is to have them install your software on every computer that goes out the door. AOL, MSN, and many others have done well with putting their software on the desktop of Windows 95 users.

While reseller programs have traditionally centered around computer stores, the range of resellers has broadened over time. Look for stores that have a demographic similar to those of the ISP industry. Bookstores, training centers, video stores, and others have proven to be a good source of ISP users. Think "outside the box."

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