A business referral is when someone in your network recommends your business to a new prospect. This may happen spontaneously during organic conversation or as a result of conscious referral marketing efforts – Hubspot
Leveraging client relationships is integral to your organisation’s continued success. Your past customers are your greatest advocates, and in a market where businesses are all competing for the top spot on Google, word-of-mouth marketing is one of the best ways to set your organisation apart from the rest.
In some cases, customers will organically offer a referral; however, this situation is unlikely. The onus lies with the business to prompt their customers. It is idealistic to think that your clients will come to you with a referral, without any incentive or motivation. There is no such thing as a free lunch, so it is crucial to have a plan of attack.
Why do Referral Marketing?
There are many benefits to referral marketing. First of all, it doesn’t cost you much. It is one of the cheapest forms of marketing a business can execute. Further, customers who are willing to provide a referral are most likely going to remain very loyal to your company and recommend your products or services to their family and friends. According to Nielsen, 92% of consumers believe recommendations from family and friends over all forms of advertising. It is no secret that customers trust referrals, so incorporating an appropriate program should become a priority for your business when you build up your client base. Referral marketing inevitably prompts word-of-mouth marketing, which is an inexpensive and easy way to build brand awareness and when successful, lead generation.
In a recent study, 64% of marketing executives indicated that they believe word of mouth is the most effective form of marketing. However, only 6% say they have mastered it. If consumers value word of mouth and marketers believe it is effective, then why aren’t marketers more focused on it? – Forbes
How to Implement and Execute a Referral Marketing Plan
We have identified five key things to consider when establishing your referral marketing plan.
1. Set your goals
The first step is to identify what you are trying to achieve through your referral program. Are you looking to build brand awareness, drive revenue through lead generation or develop content for your channels? Once you have identified your goals, start to flesh out your plan. Map out how you will leverage and market the information – it might be across your social media channels, on your website or through your email CRM.
2. Identify your audience
Once you have identified goals and a plan on how you will take your feedback to market, narrow down a list of potential customers that you believe would be willing to give you a referral. Most likely, these are either going to be long-standing clients but could also be impressed one-time customers. Ensure that marketing and sales are both part of these conversations, as, in most cases, the sales team own the relationship and would have a good understanding of which clients would be best suited.
3. Timing is everything
In a lot of cases, there is a short window of time that your business can strategically request a referral. Most likely, this will be very soon after you close a deal or implement a solution (depending on your business). It is very important for your sales department to be briefed on your referral program, so they can quickly identify the right customers and assist the marketing team with reaching out to those people, at the right time.
4. Create a testimonial template
Once you reach out to people, you want to make it as easy as possible for them to turn it around so be proactive and take some of the heavy lifting. Outline very clearly what you are looking for, including how many words, any formatting requirements or if there is a particular part of your business you want them to focus on. Send them a few questions that you would like answered and then paraphrase their answers into a testimonial or review for them to approve. This takes the effort away from them and is a strategic way to ensure your business goals are being met.
5. Consider offering incentives
We all know that there is no such thing as a free lunch. You have the choice between an incentive and non-incentive referral program. It is not always an option for small businesses to offer a cash incentive, but if you are in the position to do so, it can be a beneficial way of winning new business. For example, Airbnb offers a $20 credit for referring a friend, and both the referrer and referee receive the gift. In the B2B world, this might not be as relevant however, consider offering a complimentary assessment or trial to motivate them further.