Referral marketing is more than just word of mouth. It’s a formal process for making your loyal customers part of your marketing strategy by transforming them into brand ambassadors. Leveraging happy customers to boost business is nothing new–just look at the millions of customer testimonials and online reviews. Where referral marketing differs is the formalized way companies seek referrals and track them within the sales pipeline.
If you’ve considered adding a referral program, or just want to know more about how it works, here are some marketing referral ideas to get you started.
Referral marketing is a program that offers existing customers incentives for proactively recommending a company’s products or services to their industry connections. If that referral converts to a sale, the satisfied customer that made the referral gets a reward, such as a gift card, cash, or discounts on future purchases. Like word of mouth, referral marketing leverages the positive experience of existing customers to entice others into also becoming customers.
For B2B companies, this tactic can be especially effective. Decision makers highly value the opinion of those in similar roles within their industry. When an IT director is looking to add a security solution, they seek out suggestions from others in the industry. According to McKinsey, a high-impact recommendation, which comes from a trusted friend or colleague, is up to 50 times more likely to trigger a purchase than one from a less trusted source.
Data show that referrals and recommendations not only help convert, they make for better overall customers. A study of banking customers conducted in Germany showed that not only were referred customers better customers, but they were more loyal customers as well.
Before we dive into how to start your referral marketing program, let’s clear up the difference between referral marketing and affiliate marketing.
Partners within an affiliate program agree to promote a product through their company and offer a special link for purchase. When someone purchases a product or service by using that link, the recommending company gets a commission.
Where affiliate marketing puts the focus on making the sale, referral marketing seeks to add new customers. Referral marketing is also more authentic, as it often comes from existing customers who wish to share their thoughts for a small bonus. Affiliate marketing is often pitched to partners as a potential revenue stream, which may seem to some like they're being paid to endorse, rather than doing so on their own.
As you start to brainstorm referral marketing ideas and formalize your program, start with an analysis of your current customer base. How do sales and service interact with them? Have they fostered great relationships or do they only touch base once a year? If your company doesn’t have the bandwidth to invest in meaningful client relationships, it will directly impact the number and quality of your referrals.
When selecting customers for the program, look to those strong, established customer relationships. Customers that have been with you the longest are loyal and clearly trust your company to deliver. When a customer shares their trust and loyalty with a referral, it can be a powerful differentiator.
Next, see if these customers have provided positive feedback to your sales team in emails, left positive reviews or sang your praises in a LinkedIn post. Have they offered any constructive criticism? Did your team address their concerns? How you handle conflict is just as important when it comes to referrals as delivering on expectations.
Finally, look at your company’s goals and growth projections. How much new business are you prepared to take on? Make sure you right-size your program to your projections so you can continue to offer excellent service and products on time as you scale up.
Now that you've identified your all-star customers, here are some marketing referral ideas for creating a plan built for success.
Your customer’s time is valuable, so when approaching them about the program, get to the point fast. Make sure your message clearly explains what you want them to do, what’s in it for them, and why you’re asking them–because they are such amazing customers! Be clear about what qualifies as a successful referral, how rewards are earned, and when the rewards will be delivered.
Again, time is valuable, so the referral process should be respectful of their time. Make the process of signing up simple and fast. Provide the client with a sample email or script they can use when reaching out to others. Create a program landing page specifically for referrals and give customers a quick link they can paste into emails and texts.
As brand ambassadors, they need to be ready to answer questions, or at least have a quick resource that does. Give them a product fact sheet or FAQs they can use as their own resource or offer referrals to help move them along in the decision-making process. Remember to keep these resources short and sweet, focusing on the high-level benefits. Give them just enough information to tee up a meaningful conversation with your sales team.
Before you launch, decide how referral leads will be tracked within your customer relationship management (CRM) system. How will you determine where the referral came from and differentiate these leads as they move through the pipeline?
Because these leads came to you via a healthy existing customer relationship, put some extra thought into how to nurture these leads. Consider adding more customized outreach beyond automated emails to give those referrals the VIP treatment. Even if they decide against going with you, offering a positive sales experience ensures your existing customer relationship remains positive too.
Your referral program is only going to work if your customers are motivated to participate. Rewards should be enticing and relevant.
Getting referrals is a great way to build your business, but there needs to be a solid marketing strategy in place for when those referrals dig deeper into what you have to offer. Your company should have a strong website and valuable content that helps guide the referral along the buyer’s journey.
Outsourcing your marketing is one way to seamlessly incorporate referral marketing into your overall strategy. Not only will an outside marketing company do the work of creating the program, it can also identify ways to strengthen existing marketing strategies to make them more effective.
Whether you launch your referral marketing program in-house or outsourced to an agency, always put the customer relationship front of mind. Keeping your customers happy will not only foster loyalty, they could be the source of your next big deal.
Tags: Inbound Marketing