Don’t Underestimate the Value of B2B Referral Marketing
Few things are as valuable to a business as a steady lead generation strategy that produces hot leads. Unfortunately, most companies don’t have this luxury. For the majority of B2B organizations, generating leads involves cold calling, intensive networking, and the occasional organic lead. While there’s nothing wrong with any of these approaches, it’s tough to reach your potential without a referral marketing program.
Understanding Referral Marketing Programs
Referral marketing is simply a fancy term for “word of mouth.” It’s essentially the act of spreading the word about your brand’s products and services by leveraging existing business clients and their networks – rather than traditional marketing efforts.
A referral marketing program is a company’s organized and concerted attempt to develop strong referral partners through a formal strategy. These programs essentially allow businesses to play a more direct role in facilitating and controlling the recommendation process.
While referral marketing looks different for every business, the truth is that businesses continue to pursue it because it works. Here are a handful of stats that prove the high-returning nature of referral marketing:
– Approximately 65 percent of all new business comes from direct referrals.
– The lifetime value of a new referral is 16 percent higher than that of a random customer.
– People are four times more likely to make a purchase when referred by a close friend.
– An impressive 92 percent of people trust referrals from people they have preexisting relationships with.
You could isolate dozens of other statistics like these, but you get the picture. Referral marketing programs are valuable because they produce consistently high returns. When implemented over a number of months and years, referral marketing programs have been shown to simultaneously spur growth and reduce marketing expenditures. If these are two things you’re interested in, then it’s time to listen up.
5 Tips for Implementing and Maintaining a Successful Program
The tricky part about starting a referral marketing program is that no two programs are the same. What makes your primary competitor’s program effective likely won’t impact your own. What doesn’t work for your friend’s business may be the key to your success. These programs depend on a number of brand-specific circumstances and you have to learn through trial and error.
With that being said, there are some common tips and knowledge points worth entertaining before getting started. The following ideas are universally relevant for B2B organizations, regardless of industry or niche:
1. Deliver Unbelievable Value and Service
The number one key to implementing and maintaining a successful referral marketing program is delivering unbelievable value and service to your clients. If you aren’t serving your clients and blowing them away with high quality products offerings, attention to detail, and incredible responsiveness, why would they feel comfortable recommending your business to someone they know?
At the heart of successful referral marketing is a deep care for existing clients. You must wow the customers you have if you want to add more clients to the mix. At the same time, it should be noted that it’s never a good idea to rush into asking for a referral. It takes months – sometimes even years – to build up enough trust with a customer to ask them to participate in your referral program. Rushing into this can make you seem self-centered.
2. Don’t Assume Monetary Compensation is Necessary
Many businesses that lack experience with referral marketing assume that cash incentives are the best way to encourage clients to send referrals their way. This isn’t necessarily true. According to the University of Chicago, non-cash incentives are actually 24 percent more effective at boosting referral performance than cash incentives.
While you definitely want to offer some sort of reward – as this does increase the likelihood of earning referrals – the size of the reward isn’t as important. You may find that alternatives, such as discounts, freebies, and upgrades, are better than cash.
3. Leverage the Power of Social Media
As a business, you need to be investing in social proof. B2B customers are typically very informed – and have a lot more on the line than the average B2C consumer – and want to see proof of concept before making a purchase. The best way you can do this is by leveraging social media and sharing reviews, testimonials, and other positive word of mouth. Ask your referral partners to be very vocal, and ensure social media is an integral part of your program.
4. Put Someone in Charge
While you may not be able to hire a full-time employee that’s specifically dedicated to your referral marketing program, it’s a smart idea to have someone in charge. Give one of your employees a title that indicates they are the head of the referral program and make sure they have a significant amount of time to dedicate to the task each week. By giving someone ownership of the referral program, it becomes that much more of a priority.
5. Return the Favor
Finally, don’t be afraid of returning the favor. In fact, making referrals should be a key part of what you do in your business. You want your clients and business partners to know that you are well-connected to the best people and you have access to those resources. Make sure you genuinely believe in the other business, as you don’t want to harm your reputation by referring a business that isn’t good at what they do.
At WH & Associates, we provide progressive marketing and consulting services for small businesses in a variety of industries. We leverage our decades of experience and business success to help our clients grow their own businesses, increase profits, and develop strong brands with bright futures. Our coaching services are available on a group or individual basis and we would be happy to customize our programs to fit your specific needs.
Whether you need coaching to help you understand what’s holding your business back or consulting to point you in the right direction, we’d be happy to connect with you. For additional information regarding any of our services, please don’t hesitate to contact us today for a complimentary marketing assessment.