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Which sales tactic generates warm leads and requires very little financial investment?

Referrals.

Why are referrals so valuable?

  • Seventy-eight percent of B2B marketers report that referrals capture good or excellent quality leads. (1)
  • Sixty percent of marketers see a high volume of leads from referrals. (1)
  • Fifty-four percent of marketers indicate that referral marketing offers a lower cost-per-lead. (1)
  • Eighty-four percent of B2B decision-makers use a referral at the outset of the buying process. (2)

Referrals create a sense of excitement because they come from a trusted source. The recipient of the referral instinctively expects a positive outcome, and they get excited about the possibilities. When a prospect begins the buyer’s journey with a business on a positive note, they are more likely to purchase from them.

The level of trust that referrals generate also lays the groundwork for larger sales. It is similar to an existing customer making a repeat purchase. The company already has a positive association with the customer. This association makes the customer more likely to order more products or make a larger investment in the services.

Referrals create a ripple effect. If a buyer makes a purchase based on a referral and has a positive experience, they are inclined to spread the word. Telling even a few people about the business drives significant sales growth.

How Referrals Support B2C Sales

Word-of-mouth is one of the most powerful forms of marketing. Buyers trust recommendations from people they know. Getting a recommendation makes buyers feel like they are not entering into the process blind.

Referrals are similar to reviews for B2C buyers, only better because they come from people the prospects know personally. They offer the company being referred a distinct advantage over competitors for this reason. A referral can mean the difference between getting a sale and losing it.

How Referrals Support B2B Sales

B2B purchases are typically sizeable. Also, the buying process can be lengthy. This makes referrals even more critical for B2B sales than B2C sales. The trust nurtured by referrals helps gently nudge buyers through the sales funnel.

B2B purchase decisions also rely heavily on the allocated budget. A company will be more willing to consider exceeding the budget if they feel like the product or service will prove valuable. Of course, trust is a vital part of inspiring this belief.

A Referral Program Is Essential

Getting customers to say “yes” to referrals requires more thought than simply asking them. The business should create and follow a referral plan across departments. The plan should be company-wide, with all departments involved to a certain degree. This is imperative for the success of the program.

So, what are some elements of a solid referral plan?

Referral programs should always be designed with the typical customer in mind. After all, if they do not appeal to the company’s target audience, they are less likely to get buy-in from existing customers. The business should create messaging and offer incentives that will motivate the audience for which they are intended.

Think about what kind of incentive to offer. Ideally, customers should feel compelled to give referrals because they are thrilled with their experience and results. However, it does not always work this way. Offering an incentive is a solid backup plan. Examples of incentives include a free service, product discount, an upgrade on a service or product and a gift card. Remember, the incentive value should align with the value of the service or product the customer purchased.  Another method is to offer referral points which can be redeemed for merchandise, gifts, or other items.

PRO-TIP:  When offering incentives, be clear about redemption.  For example, if offering a referral of three friends for B2C customers, the email addresses should all be valid to earn a $5 coupon toward the next in-store purchase.  On the other hand, a referral bonus of $100 for B2B customers should only be offered only when a qualified buyer makes a purchase rather than just at the point of referral.

In addition to contacting customers individually who show referral promise, leverage social media for potential customers. Posting an incentive offer for any current customer who tags three friends and mentions the company is an excellent tactic. This strategy underscores why getting other departments involved in the referral program is essential. The marketing department will need to execute this part of the plan.

Every referral program should have a system to keep track of the following:

  • Existing customers with strong referral potential
  • Incentives offered and the success of each
  • Referral campaigns including email, social media and phone calls
  • Customers who have agreed to give referrals
  • Customers who have firmly declined to share referrals

The plan should guide company personnel on the best time to ask for a referral from a customer. Ideal timing includes the following:

  • After a customer leaves a positive review or offers to give a testimonial
  • When a customer indicates that the service or product solved their problem
  • When the customer service team pleases a customer by fixing an issue for them
  • After a customer has purchased the service or product

Timing is everything when it comes to referrals. It can play a significant role in determining whether a customer agrees or declines.

Consistency should be built into the referral program. Around 47 percent of top sales performers ask for referrals consistently, versus just 26 percent of their peers. (3) Organizations can enforce this consistency by setting benchmarks and reminders to check in with salespeople. They can do so in a way that does not infringe on sales professionals’ freedom. Explaining that they are doing so to help salespeople will go a long way.

The benefits of referrals are many. When companies recognize these benefits, develop a solid referral program and adhere to it, they will watch their sales skyrocket.

Uncertain times call for creative thinking. Contact Gavel International to be inspired with solutions that connect and engage your people.
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SOURCES:

  1. https://www.socialmediatoday.com/content/5-powerful-reasons-you-need-referral-program
  2. https://influitive.com/blog/infographic-17-stats-about-b2b-referrals-you-should-know-but-probably-dont/
  3. https://salesinsightslab.com/sales-research/

 

Jeff Richards
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