You’re probably already aware of the power of referrals
...Especially in the B2B world, it’s no secret that word-of-mouth referrals are among the top methods used by professional services firms get new business.
A 2016 study published by the American Marketing Association found that peer recommendations created an average monthly revenue growth of 11.4% compared to its statistical twin that did not participate in the referral program. And a 2011 study found that referred customers generate higher margins and higher retention than other customers, making them more valuable in both the short and long run.
So why do so many providers miss the mark when it comes to getting referrals?
In order to excel at attracting new business through referrals, a business consider these two things:
1. Be referable: offer amazing service
Adding value and delivering on client expectations provides the foundation for word-of-mouth marketing. Even the most best referral program won’t generate results if you can’t offer an outstanding customer experience
2. Develop and implement an effective referral program
So, if you’ve refined your customer experience part, then developing and implementing an effective referral program can have major impacts for your revenue.
I’ve outlined the primary parts you need for creating your own referral program and a few suggestions for getting it going. Just remember this - every business is unique, and your system will need to be revised to work with your business.
How To Attract Referrals For Your Business
Step 1: Target your “ideal client”
Targeting the right people is essential for the success of your referral system.
Take a moment write down the key attributes of your ideal customer. Take a look at your existing most valuable customers – they likely share key characteristics that make them amazing (i.e. company size, revenue range, personality, demographics, psychographics, etc). A deep understanding of your ideal client will boost your bottom line because you can repeat what’s already working for you. It also makes it easier to describe your perfect prospect to referrers.
Next, determine who your best referrers are. These are the people who know you and already think highly of you. Typically, these referrers will have influence with your potential prospects - either through a personal or working relationship. Referrers can be existing clients, vendors, complimentary service providers, and/or business friends.
Step 2: Educate referral sources
Now you have identified your referrers, next you want to equip them with the right tools to help you:
First - Clarify your differentiation. Make sure your referrers understand how YOU are different from your competitors. Ensure they know how you are unique, and how your products or services make a difference to your ideal clients.
Educate your referrers. Talk to your referrers to help them understand what makes an ideal client for you. It's important that your potential referrers know who you want to work with. This streamlines your process and helps your referrers keep their eyes out for the best prospect.
Equip your referrers. This is where many programs go off the rail! You need to develop valuable content that your referrers can share with their networks. This can include reports or guides that can be easily passed along – either in person or via email. When your referrers have great information to provide to people, they get excited to share it.
Connect virtually. Update your LinkedIn Profile so your referrers can provide online introductions and make connections virtually.
Step 3: Ask for referrals
I recognize that asking for a referral can be hard. You may worry that your potential referral partner will think you’re pushy or rude. I'll share this with you – after many years of consulting with a variety of different people, I have only seen positive responses from polite, professional requests for referrals.
Take a moment to develop a system so you can ask for referrals from your clients. This will help your company realize an ongoing stream of prospects who come to you via word-of-mouth (the most powerful form of marketing):
Include “Referrals Appreciated” reminders. You can post these in your email signature, newsletter correspondence, and on your website. This is a good option if you have a broad base of referral sources that you reach out to on a regular basis. If you have forms that you deliver to customers on a regular basis such as receipts of payment, this can be another place to print this message.
One of the best tools that have worked for me is an "end of project survey" asking my client how I did. I ask 5 questions that they can quickly answer and then at the end, I simple say - do know someone who can benefit from using my services?
Step 4: Reward your referrers
When you show your referral sources that you appreciate their support, you’re ensuring their continued enthusiasm for sharing your message. There are many ways to recognize your referral sources:
Simple correspondence is an effective and affordable way to recognize your active referral sources. Make a phone call, send an email, or – better yet – handwrite a note to express your appreciation when they make a referral.
Giving gifts to clients or partners that refer qualified leads not only recognizes their efforts, but it does loads for encouraging additional referrals. Make an effort to send a gift card, or grant them discounted products or services to express your appreciation when one of their referrals converts.
Step 5: Measure referral marketing efforts
In order to leverage your referral program for the best results, it’s critical to track your referrals and analyze data. With the right amount of measurement, you can answer questions like:
- Who are my best referral sources?
- How does my referral conversion rate compare to my overall lead conversion rate?
- What’s the ROI for my referral system?
- How can I refine my referral system for a greater ROI?
Adding these elements into your marketing strategy will put you on track for an effective referral system that drives business and makes you more profitable. You can also tie it into your Customer Relationship Management (CRM) software so that your sales team is sure to input sales made as a result of referrals.
Just remember, a referral program won’t take you far if you can’t fulfill your promise!
So while you’re thinking about ways to implement or update your referral program, you also want to consider how to refine your offerings and to be more referable. Because the greatest way to generate more business is to give your customers something to talk about.
Joe Griffith is a small business consultant in Vancouver, B.C. He specializes in sales and marketing strategies that help businesses create systems that accelerate growth.