Skim your inbox today and you might find a message from a company that does business with you asking for help in the form of a referral request. This is because there are so many benefits of generating leads from existing customers, not the least of which is that it can significantly bolster sales results.
With B2B companies, loyal customers are especially valuable. For example, a University of Pennsylvania Study shows that referred customers are 16% more profitable. And according to Nielsen, 84% of people trust recommendations from people they know. Importantly, referrals have a shorter sales cycle, making them quicker to convert to a paying customer.
Reasons B2B Referral Programs Fail
However, to capitalize on the benefits of a referral program it’s important to recognize that generating high-quality B2B referrals requires a lot of effort. By being aware of the potential pitfalls and obstacles that may arise, you can more clearly identify strategies to increase your referral program’s success.
This includes continually making customers happy as customer experience is critical to any B2B referral program. Additionally, you must constantly deliver an outstanding product or service. You also need a compelling message along with a thoughtful outreach strategy. You have to offer the right incentives and rewards to show your appreciation. Lastly, you should be regularly evaluating and refining your referral program.
Without these components, you risk poor participation rates amongst your best customers. On the other hand, your referral program can deliver meaningful ROI and be a powerful driver of growth if it is deliberately managed and customers trust you’ll deliver the same level of service they’ve come to expect.
The bottom line is your B2B referral program should not be viewed as “set it and forget it.” It requires constant nurturing, constant analysis, and a deep dedication to the customer experience.
How Do You Ask for a B2B Referral?
When it comes to establishing a B2B referral program, there are three common approaches companies will adopt:
1. Wait for referrals to happen organically
2. Introduce a formal referral program
3. Make individual referral requests
What works well for one company might not be the best strategy for another. How do you know which approach to take?
There are plenty of resources available for download on the internet to build out your referral program. We especially like the content from Referral Rock. They have more than 38 best practices on starting and maintaining your own customer referral program. However, before taking this step, we advise that you first conduct a market assessment to learn what type of referral program would best benefit your organization and why.
Will Customers Refer Your Business?
Recently, we completed a referral study for one of our clients. The goal was to understand when, why, and under what circumstances do customers in their industry make referrals. We gathered these insights through in-depth phone interviews with key decision-makers.
What did our research uncover? Respondents felt that being paid for making a referral would not incentivize or motivate them. The reason was they believed it could compromise their integrity or objectivity if they were getting paid as opposed to making referrals organically simply because they love the company. Some even indicated their company had policies in place to not accept personal monetary incentives.
Is this true of customers in your industry? The answer can only be found by asking your customers.
Referral programs aren’t one-size-fits-all. Without conducting the necessary research to understand what motivates your best customers to refer, you’re just rolling the dice. That’s why we recommend you first talk to customers about their referral habits before spending unnecessary time and resources building out a program that won’t resonate with your customers. Taking this approach will help ensure you always meet customer needs and maintain those strong relationships you have worked hard to develop over the years.
If you’re considering a B2B referral program, let our team help you first evaluate what motivates your best customers to refer. Contact us to learn more.
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