5-Day Plan to Crush a Referrals Program
It’s time to get personal with your customers. We don’t mean whispering sweet nothings into their ears. We mean getting them on board with a win-win customer referrals program. They get a referral reward (a deal, a cool gift) and you get the power of word-of-mouth marketing in return.
A 2016 Nielsen poll revealed that, across industries, 82% of Americans seek recommendations from friends and family when considering a purchase. That makes referrals the most credible form of advertising out there.
Are you ready to get on board with a five-day plan to crush your referrals program? Here’s a day-by-day plan that brings you from zero to referrals hero.
Consider this: 56% of B2B purchasers look to offline word-of-mouth as a source of information and advice, and this number jumps to 88% when online word-of-mouth sources are included (BaseOne).
Day One: Put Yourself in Your Customer’s Shoes
Is your product referrals-worthy?
Referral marketing is best suited for products with strong customer benefits and successful support.
To determine how referral-worthy you are, conduct a Net Promoter Score (NPS) study. NPS measures your customers’ willingness to recommend your product to other buyers. If an NPS study is not feasible, assess your customer retention and subscription renewal rates.
What if your product isn’t so hot? Before you go back to the drawing board, know what has to be fixed.
- Run user testing sessions.
- Aggregate online opinions and reviews.
- Identify what you want to improve and what you really can improve.
Get your NPS score to 70% before you move on with a referral program, or you’ll just be blowing budget and resources.
Day Two: Target Your Perfect Ambassador
Know your perfect referral. Target that ambassador.
What industry are they in? How big is their company? What type of role are they in? What’s their product? Do they need you on retainer, for a single project, or for a series of jobs?
Knowing these details makes it far easier to request referrals. Instead of saying, “Do you know anyone who might need a direct mail solution?” you can say, “Do you know any marketers that work for tech security firms that need to triple demand gen?” Here are some tips on how to target that perfect ambassador:
- Payment: Start with targeting customers who are willing to pay for the product. If they are paying, they believe in its value. Avoid targeting customers that have just started on free, or trial, plans as they may not have experienced the full product benefits. For these customers, you need to first focus on making them successful before asking for referrals from them.
- Activity: Target customers who actively use your product as they can best communicate its value to others.
- Achieved ROI: Customers who have used your product to achieve measurable results can illustrate the product’s value better than those who have just started using it.
Day Three: Decide How To Reward Your Ambassadors
Build incentives, mind your budget.
Even if customers love your product, they’ll still need a little motivation to introduce your brand to others. This is especially true given the cost of most B2B products and services. As a result, many B2B referral programs use rewards to motivate and thank the referrers.
Here are some factors to consider when choosing an incentive structure:
- Reward Type: What type of reward will resonate best with your customers? Product discounts, free training, conference passes and gift cards with tangible value are a few options. Choose the appropriate reward type (or types, if you are going to let customers choose) based on your customer demographics.
- Reward Size: How big does the reward have to be to matter to your customers? In general, senior-level buyers require larger reward sizes. What will your budget permit?
- Milestone Rewards: Will you provide rewards only when the lead makes a purchase? Given a typical B2B sales cycle, this can sometimes take weeks or months, so consider whether it make sense to provide a smaller reward as soon as the lead engages, is qualified or passes some other milestone.
- Single or Double-Sided: Will you reward only the referrer? Or is there something you offer the lead as well so that they too benefit from coming in as a referral?
- Send them a snazzy thank you, or package in the mail alongside digital communication.
Budget tip: Referrals programs are one of the best ways to make your money work for you. Don’t plan on spending more than $7 for every new customer. Looking at a Cost Per Acquisition (CPA) basis, consider a program around a $3 CPA mark (a common referrals program budget). Now compare this to $40 CPA for display ads, pay per click, or other channels. The math is simple!
Day Four: Automate Your Referrals
How do you measure success?
Consider the following questions in order to help define how your marketing automation platform and CRM can support your referral program:
- How will you capture referred leads?
- Can you automatically qualify leads before handing them off to sales?
- How will you know when a purchase has been completed so that you can thank the referrer?
- Can you automate reward delivery?
Now consider this. While email may be your top-line referrals program tactic, we at PFL believe that using an offline channel is the secret weapon that will really get ambassadors off the fence and on board with spreading your good word.
You can’t rely on a single digital channel to launch a successful referrals program. People ignore emails, and they really ignore ads. Sending a gift as a real thank you means more, and it will actually get you a referral. PFL makes all that happen, at scale, and within your marketing automation platform.
Day Five: Plot Your Promotion
Cadence is key.
Know the right time to ask for that referral! We suggest:
- In the middle of a project, after they’ve just given you positive feedback
- At the end of the project, when they’re discussing the great job you’ve done
- When they sign on for another project or renew your project
- A couple weeks after you’ve completed your work for them
For the most part, it’s better to start with a small, targeted push by sending invitations to customers who are most likely to become referrers. You can do that through a targeted email campaign or by asking sales to send personal invitations.
Once your program starts to take off, you can then begin to promote referrals more extensively through your website, blogs, newsletters, social media and direct mail. You can also extend the referral program to your partners if you have an active channel program.
Now that’s you’re prepped, it’s time to launch!
Nervous about the outcome? Don’t be. Get ready get stoked about your new, committed customer base who will be happy to spread your good news.
Referred customers are more loyal and profitable — by a 16% margin — than their non-referred counterparts. (University of Pennsylvania)
But remember to keep your program simple. First and foremost, never (ever!) make a client have to login to access your program. Forcing one can lead to up to a 90% drop off from expected performance. Secondly, it’s imperative that you work with your sales team to establish a system for tagging referred leads and directing their information to the right person who will follow up promptly. Confusion with this key step can lead to be trouble. And last, but not least, remember that the extra touch of an offline channel is key.