6 Reasons Referral Programs Fail

referral programs failMost companies find asking for referrals to be an awkward task. That’s because referral programs are usually no more than desperate phone calls and emails at the end of the quarter.

It doesn’t have to be this way. According to an Advisor Impact Study, “83% of satisfied customers are more than willing to become an advocate for your brand and refer your company to friends, colleagues and industry peers; but, on average, only 29% of customers do.”

The reasons companies struggle to get referrals from satisfied customers vary. For starters, most companies don’t have formal referral programs. If they do, they’re usually not focused on engaging customers first.

Before you start asking for customers to hand over their contacts, ask yourself if your current referral program is making any of these common mistakes.

1. You haven’t laid the groundwork for a meaningful customer relationship

Before you ask your best customers to jump right in and refer your business, you need to get to know each other better and gain their trust. It’s the same as asking someone out on a date—you wouldn’t ask someone for their phone number before you’ve even had a conversation with them.

An excellent way to do this is to create an advocate marketing program that allows you to connect directly with your top customers in an exclusive online hub. By constantly communicating and engaging your customers, they’ll begin to feel close to you—giving you a better idea of if and when they’re ready to give you a referral. Consider advocate marketing like a nurture program for getting more customer referrals.

2. Your customers are wary of referral programs, and you haven’t addressed their concerns

Customers usually aren’t psyched to participate in referral programs because they tend to have unanswered questions, like:

  • How is the referral process going to work?
  • How should they submit their contact’s info? What details should they include?
  • What kind of prospects are you looking for?
  • How will you approach the people they refer?
  • When will they find out if their referral signs up as a customer?

To resolve these issues, you can set-up a poll or survey to understand any doubts customers have about your referral process. Then find ways to address their concerns and prime them to submit high-quality referrals by giving them all the information they need.

3. You haven’t positioned your “big ask” properly

Your customers aren’t clairvoyant. You need to ask them directly for referrals. But you also need to make it easy for them. Clearly describe your ideal prospect to your advocates by providing details like:

  • Which industries or organizations you want to target
  • The job titles or level of authority you want to connect with
  • Major challenges that your prospects may be facing

Timing can also play a role in how you ask. If your advocates have just given you a high Net Promoter Score, expressed excitement about working on a launch with you, or raved about fantastic results from your product or service, capitalize on these moments of happiness and ask!

4. Your referral program isn’t enjoyable

Submitting referrals should be a simple, seamless process that makes it clear what the next step is. If your program, process or feedback loop is complicated or unclear, customers will hesitate—or give up.

It’s also important to shake things up and find new, creative ways to engage your advocates. Gamifying the referral process is an excellent way to do this. Try creating a themed referral challenge, or running a time sensitive contest to create a sense of urgency. Verafin did both of these things in their ‘Referral Rally’ campaign and ended up receiving 117 referrals in only one month.

The No Fuss Recipe for Hot Referral Leads
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5. Your customers feel used

It’s important to recognize and reward your customers for their help, which will incentivize them to refer again. But this doesn’t mean you have to shower them with expensive gifts.

There are plenty of ways to reward your customers for referring you without breaking the bank. Start with a thank you. A simple acknowledgement of how much you appreciate them opening their personal network to you goes a long way.

Most customers prefer personalized rewards that benefit their professional lives over a generic gift card.

Consider offering perks on your product or service (like upgrades, or discounts that they can share with the colleague that they referred to your program.) You can also provide your advocates with opportunities to advance their career (like a speaking opportunity at one of your events, or special access to your C-Suite).

6. Your sales team isn’t involved in the process

Your sales team must be trained to respond properly to referral submissions and give advocates feedback during the sales process. As a best practice, they should also involve the advocate in the introduction phase of the buyer’s journey to act as an early reference call (most will be happy to do it.)

Aside from involving advocates in the process, sales can also proactively reach out to ask for specific intros based on your advocates’ social networks on Linkedin and Twitter. This will also make life easier for your advocates because they won’t have to spend time thinking about who would be a good match for your business.

Most referral programs don’t consistently engage customers or give them an enjoyable and rewarding experience. If you find ways to give back to your customers and cater to their needs before you ask for a referral, your program can’t fail.

The Little Black Book of B2B Referrals
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3 Responses to 6 Reasons Referral Programs Fail

  1. […] You wouldn’t treat any other critical area of your business this way, so why take such a passive approach to referrals? […]

  2. […] Bad referral programs are like bad dates: their intentions are unclear, they’re no fun and you’re not sure if they’re going to call you back (jerks). […]

  3. […] more modern businesses now understand the effect of referrals on their bottom line, many of their referral programs fail or underperform—and they can’t figure out […]

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