“People influence people. Nothing influences people more than a recommendation from a trusted friend. A trusted referral is the holy grail of advertising”- Mark Zuckerberg
In recent years, a lot has been written and said about the success that B2C brands like Uber and Airbnb have achieved through referral marketing.
For B2B companies, the sales cycle is pretty long and complex which is why B2B marketers want to double down on referral marketing.
Let’s dig into why referral marketing is a must-have for any B2B toolkit and a few smart tips to help you ace your referral game.
What is referral marketing?
Sometimes the terms ‘referral marketing’ and ‘word-of-mouth’ are used interchangeably but, in fact, they are different. Here’s how.
- Word-of-mouth is when customers talk about your brand with their friends and motivate them to try it. This is more organic and your customers talk on their own accord and you can’t track it.
- Referral marketing is when you use an incentive to harness customer advocacy. This is a more proactive approach to encourage your customers and you can track customer recommendations.
Referral marketing turns your loyal customers into your biggest brand advocates. It is the most cost-effective marketing strategy where your current customers spread the word about your brand.
What makes referral marketing awesome?
We’re living in a world where advocacy is everything. The benefits that come from B2B referral marketing programs are far-reaching and it helps:
- build relevance and trust
- improve customer retention rate
- identify and target loyal customers
- improve brand awareness
- increase marketing outreach
Dropbox grew 3900% with a referral program. It offered free storage to both new subscribers and those who had referred new users. In 15 months, they grew from 100,000 registered users to 4 million, with 2.8 million referral invites.
8 tips for smarter referral marketing
Even if customers love your product, they’ll still need a bit of motivation to introduce your brand to others. We’ve got some essential tips for you to build a killer referral program.
1. Target loyal customers: You need to make sure you target and attract your existing loyal, satisfied, and profitable customers. If you sell products, choose customers who have been long-term users or have used your product frequently. If you offer a service or a subscription, choose customers who have been consecutively enrolled in your subscription or service for the longest time. You can also run a net promoter survey (NPS) to figure out your willing promoters.
2. Combine referrals with NPS and CX: According to a report, 9% of B2B professionals that use referral marketing, linked with their customer experience (CX) program like Customer Satisfaction Score (CSAT) or Customer Effort Score (CES), witnessed over 20% revenue growth and over 82% return on retention. Combining referral marketing with an NPS or CX program can work wonders as you can target your promoters, solidify customer relationships, and improve retention rates.
3. Nurture your current customer relationships: After you make a sale, don’t go MIA on your customers. Keep the gates of communication open and support them after their purchase. For instance, if yours is a software company, assist your customers with the product/service set-up and periodically check in to see if they have any queries or issues.
4. Make the exchange valuable: To motivate your customers, provide some type of incentive that is valuable to them in exchange for the referral. In 2016, Tesla offered $1,000 to both their advocates and the person they referred. They witnessed a 42x return on every dollar spent towards their referral program. There are plenty of positive incentives you could consider offering to customers like discounts, exclusive access, premium features, etc.
5. Keep your referral program simple: Successful referral programs are simple to understand for all customers. If your referral program is too complex, it might fall flat. It should:
- be easy-to-understand
- have clear benefits and rewards
- have simple sign-up methods
- offer fast reward pay-outs
6. Don’t shy away from asking: Many customers appreciate being asked for a review or testimonial because this indicates that your brand cares about their opinion. Remember, the ask needs to be genuine and should happen at the right moment.
7. Ask at the right time: Asking for a referral too early in a customer relationship may sour it. Ideally, you should ask for referrals only after you’ve hit a significant milestone in the relationship and the customer understands the value of your product or service. For instance, you’ve worked with the customer for over six months or if they’re praising your work for a major project that you completed, it would be a good time to ask them for a referral.
8. Measure and tweak: It’s important to have a clear approach to measure the outcome of your referral program. You should look at these key metrics:
- participation rate
- share rate
- impression rate
- conversion rate
With these insights, you can fine-tune your efforts the right way to boost your ROI.
Customers are more skeptical of marketing claims than ever before. Referral marketing can be a powerful component of your marketing mix to get you a bunch of mini-marketers to spread the sweet word.
Do you wish to up the ante for your referral marketing? Talk to us.
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