Word of mouth is a powerful thing.
Why? Because people trust people, and you should definitely take advantage of that. In fact, customers are 4X more likely to buy when referred by a friend. (Neilson)
How often have you actually asked one of your customers whether they would be happy to tell their network of friends and colleagues about you and what a great service or product you offer?
In a B2B environment businesses find that they are far more likely to win a new customer if they have been referred from a previous happy customer. We probably all know small businesses who have never really marketed their businesses but have grown entirely through referral. In a B2C situation, consumers are brilliant at marketing your business for you if they love your service or products – and if you reward them for that they will be even more proactive.
Did you know?
Referral schemes are becoming more and more popular as they can increase sales and are proven to be low cost and extremely effective. Referred customers can soon become your most profitable; you can expect at least 16% more in profits from these customers (Extole). But not only are they going to spend money with you because they were referred, they are also much more likely to recommend you themselves later down the line; making these customers some of your most valued. In fact, a customer who came to you through a referral is up to 5X more likely to refer other people to your brand, than those who weren’t. (Extole)
Some of the key benefits of referral marketing are:
- A happy customer extolling the benefits of your business is far more powerful than you selling it.
- Launching a referral scheme gives you an opportunity to get in touch with lapsed customers too.
- The reach potential via each of your customer’s networks could be extensive.
- Your customers may know people or businesses you would find it really hard to get in front of.
- Knowing your business is growing through referrals shows you and prospects how good your offering is – after all, who recommends someone if they don’t truly believe in them?
Depending on your business, there are a number of ways you could plan and implement a marketing strategy based around referral. If you have an e-commerce business you can look at affiliate schemes as well as rewarding with voucher codes. Affiliate functionality can be integrated within your website to encourage and reward bloggers, influencers and advocates who promote your products – all legitimately of course. But once you’ve set something up and it gains momentum the benefits to your business and your referrers can be significant.
How to win with a win-win-win approach
I recently started using Mindful Chef because I loved the idea of really good quality, ethically sourced ingredients delivered to me. I wanted healthy, unprocessed meals at home rather than another takeaway or ready meals. I love their food, their recipes and their values. So I want to tell other people about them and the great experience I’ve had. Each week, in a beautifully designed envelope, I have a few little vouchers which I can pass on to my friends to get £20 off their first order – brilliant – I feel like I’m giving them a gift even though it costs me nothing. But that’s not where it ends. When one of my friends decide that they will try them out because of my enthusiastic recommendation (and the £20 voucher) I get a thank you back from Mindful Chef and get the same amount off my order. So it really is a win-win-win situation. The company potentially gets a new long term customer and my friend and I have had a great discount. (Psst: If anyone reading this wants to try their awesome recipe boxes which are gluten free, dairy free but not free of deliciousness, then get in touch and we can give you an intro discount. We will of course benefit too, but isn’t that great?)
How to implement a B2B referral strategy
Most people don’t understand how to apply referral in a B2B situation though. There are lots of different ways to implement a referral strategy, all of which could help you grow your customer base. Starting with the most obvious – but probably the one businesses do least of all – actually ask people to refer you. If you’ve worked on a project with a client, they love what you do and the results are impressive – surely this is exactly the time to ask. Maybe make it part of your project management process to ask for a testimonial at the end of a successful project. If your client writes a glowing testimonial then you have the perfect opportunity to also ask them to recommend you if there was ever an opportunity. Let’s not forget that the whole premise of a case study is a referral tool. It may not be quite as powerful as a direct recommendation from a trusted colleague – but a well written or filmed video case study can be really effective. Are yours up to scratch? There are other variations of referrals too – review platforms which we are so used to using in a B2C environment, such as Amazon, Trustpilot, Trip Advisor and Google, all affect the choices we make. You can also find reviewing platforms that are specific to your industry. For example, in our world of brand, web and marketing we are members of an organisation called The Drum Recommends (previously Recommended Agency Register or RAR+). This is a platform on which our customers recommend us after a project has completed. They rank us on everything from our effectiveness in the discipline we’re working on i.e. brand through to effectiveness, customer service etc. Each review lasts 12 months only so to retain our high scores we have to consistently maintain our standard of work. Maybe there’s a similar platform for your industry which could help prospects learn what a good partner you could be for them.
We know these strategies work because we actually practice what we preach – well most of the time. We’re proud to have had much of our business growth through referral. We’ve had leads through the indirect referrals on the Drum Recommends platform through to our customers who feel confident to recommend us to other businesses. However, we actively encourage this by having referral processes in place. We offer a reward to any business who helps us win a new customer. Some businesses like to be rewarded with our time – so a reduction in time and therefore cost on a project. One customer almost managed a full new web build with time accrued from multiple referrals – they really love us. Some clients have preferred us to donate to a charity they support. And there are others who just prefer a deliciously, decadent treat. And all because they told someone else about the great work we did for them.
It’s simple and effective.
If you would like help with planning or implementing a referral strategy or would like us to review your case study approach, please do give us a call or drop us a line? You can reach Tina at email@example.com or call us on 01252 783106 to discuss how to get started.