Ramping up referral business is more important for your success
Ramping up referral business is more important for your success than ever in 2023, B2B NETWORKING WILL BE VERY IMPORTANT AND IF YOU WANT MORE BUSINESS, then you need to read this.
Inflation, product pricing, transportation costs, real estate pricing and rising interest rates are all putting pressure on virtually every business, its customers and its database. Hot leads have simmered, and suddenly business is harder to come by.
And that's why referrals are more valuable today than ever.
We’ll start by providing you with what you need to develop a great referral marketing strategy and you should also consider what you need to do to build a successful referral marketing plan for your business.
How to build a successful referral program for your business?
First things first, let's understand what the heck a referral marketing program is and the benefits of using referral marketing strategies.
Referral marketing uses word of mouth and the power of trusted recommendations from your existing clients and network of other business owners. That makes it one of the most successful ways to reach more relevant clients. This is also why a powerful business networking group of trusted individuals is so important.
Now that sounds pretty simple, right?
But here’s the thing – to do it and be successful - it can be time-consuming and difficult to keep track of every referral.
It can be hard work because running a successful referral marketing program relies on an efficient system and great client service. As you know, when you have a lot of clients and many links in the chain, it can be very difficult to keep track!
But if you want more business, these strategies are going to help!
Because when you use good referral marketing strategies, you have a solid foundation for success. Those strategies aren’t difficult to develop – and usually simple is better.
What is Referral Marketing?
Simply put, referral marketing is when your current and previous clients or your network of business owners refer their friends or family to you through word of mouth, rather than you relying solely upon referrals from outside cold lead sources, ads or relying upon on other traditional forms of marketing.
If you think about it - referral marketing happens all the time and in many different ways. We talk with our business associates, friends and family ALL the time and share our experiences – good and bad – with them. And let’s not forget the power of using word-of-mouth recommendations being shared by someone using social media.
Most of us are naturally inclined to share our experiences with and help, others when they’re looking for a solution or a new product.
And since we’re digitally connected to larger networks of people via social media, the power of referral marketing is even stronger than in the past.
And by creating a formal referral marketing strategy, you’re able to harness that natural process and add an incentive for clients to refer their friends.
Incentives such as a discount, providing them with a gift card or gift or other types of incentives are ways that you can reward your clients for sharing, and in so doing endorsing, your business to their friends and family.
Many referral marketing strategies reward the client who made the referral and the client who was referred. They also motivate new clients to join in and get additional benefits when they refer others to the business. Depending on your business model this may be more difficult to do for some due to limiting regulations so it may take creativity to provide a benefit. If it is another business you could provide 5-star reviews on multiple different platforms for them.
One of the best examples of a successful referral marketing program is Dropbox. They offer additional storage space when you refer your friends. Neil Patel on YouTube talks about Dropbox’s strategy and other ways to boost growth in this short video here:https://www.youtube.com/watch?v=VVTkw5ituFU&t=35s
There are other cloud programs that so the same such as SYNC which I use for my business. Referral marketing creates benefits for everyone. Your existing clients are rewarded and receive additional value, new clients are rewarded and included in the program, and the business benefits from happy clients and an ever-expanding network of new clients.
The 7 Benefits of Referral Marketing.
There are lots of fantastic direct and indirect benefits for you and your business by using referral marketing. These are seven of the most important benefits:
1. Improved Targeting, Trust, and Credibility.
When your clients or business networking associates refer their friends or family to you, they’re actually sharing with a circle of people who are similar to them AND those people are your specific target market.
Why is this a good thing?
It’s because this means that your marketing efforts are automatically more focused and targeted toward the people who are more likely to convert. According to a Nielson study cited on HubSpot, clients are 4 times more likely to buy when they’re referred by a friend.
Tracking through your referral program also allows you to identify which clients and business associates are your most loyal, which helps you further target and segment your marketing efforts.
People trust people. They trust recommendations and information shared by individuals more than those shared by companies or brands. The level of trust increases when they personally know the person sharing the information.
Another study by HubSpot found that 90% of respondents trust recommendations made by friends or family and 70% trust recommendations from consumer reviews. In contrast, 75% don’t trust traditional advertisements.
2. Higher Client Retention and Client Lifetime Value.
When clients come to you for your help and assistance through a referral, they’re significantly more confident in their decision and when you provide a rewarding client experience, they’re more likely to stay. Do not take the fact that they are a referral for granted. If anything the expectation of you is higher and you MUST DELIVER the information and the experience they were referred to you for.
In fact, referral marketing improves client retention rates by 37%, according to Deloitte.
That is a significant number, especially when you consider that the longer a client stays with your company, the more valuable they become.
In addition to that, studies have shown that the client lifetime value (CLV) of a client that has been referred to you is 16% percent higher on average when compared to non-referral clients. So if you are a business owner why are you not putting more effort into recommending other business owners and their services and in turn asking them to reciprocate this for you
3. Greater Reach and Higher Engagement Online.
When a network of clients refers your business to their network and friends and family, the reach is exponentially greater than the reach you can achieve through traditional marketing.
The reach grows organically with every new client who participates in the referral program.
In addition, participating in a referral marketing program keeps your clients engaged with your brand and keeps them coming back to your site.
This kind of activity creates greater awareness of what your business which can often lead to even more business.
4. Increases Brand Awareness and Recognition.
We live in a socially connected online world - and the way word-of-mouth marketing works has changed. It is no longer limited to the circle of friends we see in person and talk to frequently.
The daily use of social media and how we participate in different online communities means that we can reach a much greater number of peers, every day. Some experts have suggested that social media is a waste of your time – but it’s about how you use social media. Engagement with and for others is key.
When you offer an incentive to refer someone to you and your business, it’s far easier for someone on social media to say ‘You’re a great business owner and will do a great job for them" and then send a link that will give you a reward too. And they don’t even need to know the other person well! If you did great work for them, then it’s easy for them to be confident that you will do a great job for someone else.
When someone shares a recommendation on social media, it is seen by a huge number of people. It is not limited to the sender and receiver – it gets seen by everyone who’s connected to that person and others who are scrolling past see those comments, reviews, and recommendations too.
This increases brand awareness, recognition, and credibility.
We all feel more comfortable with a familiar name and remember a name we have seen frequently or heard our friends talking about. We trust it more and we’re more likely to think of it when need that type of product or service.
Referral marketing, social selling, and brand advocacy make a potent combination!
5. Easy Customization and Personalization.
One of the best marketing benefits of a referral program is how easy it makes personalizing your client experience.
When you already have someone’s personal information and their personal connection to your business and your brand, it’s way easier to make your communication with that person personalized from the beginning.
The data you gather from your referral program will also enable you to make relevant recommendations of other businesses to your clients – which can lead to cross-referrals. There cross-referrals will further build trust in you and your network.
A recent article from Forbes shows just how important personalization is for developing client relationships and increasing client loyalty and sales:
- 91% of consumers say they are more likely to shop with brands that provide offers and recommendations that are relevant to them.
- 80% of consumers are more likely to make a purchase from a brand that provides personalized experiences.
- 72% of consumers say they only engage with personalized messaging.
- 80% of companies report seeing an uplift since implementing personalization.
Personalization is essential for modern marketing and sales, especially knowing a client’s purchase history and tailoring your recommendations based on those.
6. Cost-Effective Marketing and great ROI.
Referral marketing is one of the least expensive and most effective forms of marketing. Because when you use your existing clients to find new clients, those clients are more likely to buy, more likely to use your services again, and more likely to have a high client lifetime value.
This means the cost of client acquisition is reduced and the value of the clients acquired is increased.
7. Easy Ongoing Management and Automation.
The joy of a referral marketing strategy is that most of the work is done by your clients. The hardest part of the process is the initial strategy development and setting up the program – and then the follow-up.
Once that is done, you can use dedicated CRM software solutions to manage the program going forwards, which makes it quite simple. Referral software allows you to implement and track your referral program using a high level of automation, which takes care of most of the heavy lifting.
Additionally, CRM software will provide you with analytics and reporting that gives you important information to manage and adjust your program for the best results.
Many also automate personalization and customization, making it even easier to provide the best client experience for your clients.
If it's about trying to make clients happy, get them better deals, or try to make their life better, what better way to help your clients (leading to more referrals) than by recommending other business owners you already know, like and trust. Referring your clients by sending an introduction email builds even greater trust and further raises the success rate.
Now, more than ever, it’s time for us all to take the time to help each other and other business owners whenever we see the opportunity to make a referral, introduction or recommendation.