Customer referrals are something your sales team will always value. For sales professionals, a customer referral is the key that can unlock many doors, from sales to customer retention. In fact, customers referred by other customers are seen to have a 37% higher retention rate.
A referral from a happy customer is more powerful than any cold call, sales materials or data. According to LinkedIn, 84% of B2B decision makers start their buying process with a referral. Referred prospects are also 30% more likely to convert than other generated leads, and have a 16% higher life-time value.
In this post, we’ll go through how referral marketing programs work, and the best referral marketing features to be successful.
What is Referral Marketing?
Referral marketing is a marketing tactic that brings new customers in through the recommendations and word of mouth of your existing customers.
The aim of this is to grow your business’ customer base through the connections of your existing customers.
Referral marketing has many benefits, but its main purpose is to get your customers to spread the word about your brand and effectively turn them into brand advocates.
The main feature of referral marketing is that companies reward their customers for their loyalty with incentives like gift cards, coupons and other benefits.
That way, your existing customers receive an incentive for recommending your company – which will encourage them to do so.
Unlike other types of marketing which are aimed at a general audience, referral marketing focuses on your existing customer base and the trust they’ve built among their friends, to generate potential leads.
How to Implement Referral Marketing into Your Marketing Strategy
Here are our top tips on how to implement a referral marketing program into your marketing strategy:
Most referral marketing programs struggle to succeed because companies haven’t laid the groundwork for meaningful customer relationships. Before you can ask customers to refer their friends, you’ll need to consistently engage them and turn them into brand advocates.
To do this, why not invite your best customers to join an exclusive online hub, known as an advocate marketing program? With an advocate marketing program, they can get to know your product or service even better, and interact with you directly by sharing feedback and participating in fun or educational challenges.
By communicating regularly with your customers, educating them about your brand and offering them valuable resources (like networking opportunities or exclusive access to new product features, for example) they’ll be excited to tell friends about their experience with your brand.
2. Ask for referrals at the right time
Asking your customers for a referral out of the blue won’t be helpful to your team, or your advocates.
Here are five great times to ask customers for referrals:
- When they sign and are excited about working with you
- Right after they give you a Net Promoter Score® of nine or above
- Just after they launch your program or implement your service, as they’re looking forward to seeing results
- When you learn that they got amazing results from your product or service
- When they say nice things about your company
You should also have methods to remind customers to submit their referrals, such as:
- Include a link to your referral submission page in your email footer, blog posts, newsletters, login pages, etc.
- Launch a referral contest to fuel their competitive streak, and keep them engaged
- Integrate your referral process with your advocate marketing program to stay top of mind for your customers, and recognize them for referring their peers
Advocates are more likely to give you referrals if they know you will treat their referred friends, family and colleagues like gold. That’s why it’s vital to give advocates transparency into your referral workflow.
Advocates want to know how a referral is going and if they can do anything to help because they want to see the referred lead turn into a customer. Involve them at all stages and close the feedback loop so your advocates feel good about referring again and again.
Although referrals represent just a small fraction (3%) of the overall leads generated by our marketing team, their impact on our sales pipeline and revenue is extraordinary.
Nearly one quarter of our opportunities in 2014 were created from referred leads, and 38% of our customers can be sourced from our referral marketing programs.
Build an Effective Referral Program with Influitive
Why not take a look at Influitive’s referral’s management platform today? You’ll soon see how easy it is to build a community that’s engaged with your brand, to generate high quality referral leads that convert. Request a demo today to get you started.