Referral Marketing: 8 tips for building a powerful referral channel

Prospects that come to your organization because of peer recommendations are two and a half times more responsive than any other marketing channel, according to a study by the American Marketing Association.

A member of our B2B Lead Roundtable Group underscored this statistic when she noted recommendations are how one of her clients earns most of its customers. It’s no wonder she wanted to find the best way to formalize her client’s referral process.

, Referral Marketing: 8 tips for building a powerful referral channel

I brought her question to three referral marketing experts:

  • Angela Bandlow, Vice President of Marketing, Extole, an advocacy management platform
  • Gal Borenstein, CEO and Chief Strategy Officer, the Borenstein Group, a branding, marketing and public relations consultancy
  • Richard Beedon, Founder and CEO, Amplifinity, a brand advocate management platform

All agreed the most powerful referral programs aren’t campaigns or tactics, but rather executed as long-term strategies that build new marketing channels.

Here’s some of their advice on how to make this happen:

1. Identify your audience

Be warned – this may not be the person who signed the contract, or whose name is in your database. That person could be the chief financial officer instead of who you really want – the person who works with your product every day.

“You could offer someone a flight to the moon, but it will only be relevant if the person getting the message is actually interested in your product,” Borenstein said.

2. Know precisely why they chose your product

Borenstein related this illustration:

“Let’s say your customers bought a piece of electronic equipment. Your marketing and sales department could insist that customers bought the equipment because they loved the product. In reality, they purchased it because the price was right or the shipping was convenient,” he said. “If your messaging is misaligned with their motivations for buying from you, it won’t be believable and they won’t respond.”

Make sure internal perceptions align with external reality by going to customers directly, through surveys and interviews, to identify the top three to five reasons why they buy from you. Never assume you already know.

3. Identify when they’re most excited about working with you

“The best time to ask for a referral is when customers are happiest and most engaged with your company,” Bandlow said. “There’s no one set formula to determine this. It’s going to change with the types of products and services you’re selling.”

4. Know what motivates your audience and know their regulations

Bandlow shared a story of a client who sold very technical products. They sampled multiple incentives to identify what their audience would like best. While most of what was sampled fell flat, one item succeeded against expectations – a t-shirt featuring the words “data nerd.”

Here’s what happened when they expanded the program to their entire marketplace:

  • They identified more than 400 brand advocates
  • Advocates shared across Facebook, Twitter, PURLs and email
  • They drove 156 sign-ups for their services
  • Their average order value was 28% higher than leads from other sources

However, some organizations have strict rules around gifts.  Bandlow points out you can get around that by offering:

  • A contribution to a favorite nonprofit in their name
  • Discounts on services
  • A free pass to an annual industry conference

5. Make it personal by using your salespeople

“It’s not all online and digital,” Beedon said. “The best way to acquire referrals is face to face. Furthermore, calling it an Ambassador or VIP Program as opposed to just a Referral Program can make it more appealing and personally rewarding.”

“Make the prospect feel special through a personal, face-to-face invitation by their account representative,” he continued. “Design a mobile app so that it’s easy for your sales professionals to enroll people anytime, anywhere.”

6. Remember referral sources aren’t just customers

“Employees and third-party affiliates can recommend you to as many people as your customers – sometimes more,” Beedon said.

7. Promote your program across all marketing channels

“Place your referral program on banner ads, in newsletters, on the front of your website – anywhere you’re touching your customer, employee and partner audiences,” Beedon advised.

8. Have reasonable expectations

“If customers don’t buy in the winter, don’t launch a program on January 1 with the hope of increasing your numbers. Make sure your expectations are aligned with what the market will bear,” Borenstein said. “Furthermore, don’t focus on the leads you’re going to get that quarter, consider lifetime value. A handful of customer referrals for a $100,000 piece of equipment, for instance, can result in millions of dollars in business over time.”

Related Resources:

Should lead generation ignore current customers?

Lead Generation via Industry Experts

8 Questions to Steer Your Marketing Priorities

On Lead Nurturing: Looking for a “hot” date?

Why Customer Advocacy Should Be at The Heart of Your Marketing

Andrea Johnson

A born communicator who loves connecting people to ideas, insights, and opportunities that can make their lives better

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