Referrals are one of the most effective ways to increase sales. Research shows that the customers they generate have greater lifetime value than other types of leads. What’s more, they convert faster, at a higher conversion rate.
You might expect that because they generate higher-converting leads, referral programs are in widespread use. If so, you’d be wrong…
So extrapolating from this stat, 7 out of 10 companies are doing nothing to promote referrals and whatever referrals they do get are occurring purely by chance.
So why aren’t more B2B companies taking advantage of the apparent benefits of having a formalized referral program?
According to a comprehensive report by Influitive & Heinz Marketing where they surveyed 600 B2B professionals (in all sectors and positions) across North America, successful referral programs are more associated with larger companies that have sophisticated sales machines.
The report also revealed that the most successful B2B companies have a formal referral program in place that is primarily managed by Marketing, using software or tools specifically dedicated to the generation of referrals.
Depending on a company’s size and nature, formal referral programs can be difficult to implement.
Most small and mid-sized B2B companies don’t have the resources to build all of the 6 key components required to properly implement and successfully maintain a structured referral program. These are:
Few small and mid-sized B2B companies are in a position to create a strong formalized referral program based on these parameters.
Which is one of the main reasons why formalized referral programs are farther down the priority list of the smaller B2B companies.
But what if your company does not have the resources to build the 6 key building blocks for generating referrals? Can you still do something to boost referrals?
There are many different ways you can accelerate revenue growth by employing less structured referral programs that are more suited to your small business and your customers.
Here are 5 examples of referral program ideas that has worked for smaller companies:
The curated wardrobe delivery service entices new subscribers with generous bonus packages for both referring member and referral.
The referring member will get a free package for every successful referral because there’s no limit to the number of referrals for each referrer.
With this program, both sides get something for free which is a great way to motivate existing customers to keep bringing in new customers.
If people are already buying your products, it means they probably want more of it, plus everyone loves to get free stuff that’s of value to them.
And you can amplify the appeal of your giveaway by offering your premium or limited edition products making them feel even more grateful.
This online baby and parenting shop encourages repeat business through a different form of giveaway. This time it’s not cash, it’s point-based.
After making a referral Pupsik customers will earn 250 points when the referred makes their first purchase. The referral gets 100 points plus a bonus discount to boot.
What’s even more enticing is the reward is unlimited as the referring customers will continue to earn points for any succeeding purchases that their referrals make.
While not as direct as the cash-based reward, the points system encourages the advocate to make more than one referral so that they will have enough points to redeem their rewards. Naturally, more referrals lead to more chances of landing new customers.
Most importantly for you the small business owner it’s a great way to reward customers with a limited budget.
The restaurant management software has an interesting twist in its referral program that appeals to a different source of motivation. Whenever a user refers a friend and that friend signs up, the company donates $200 to the Clean Water Fund.
This works because this type of referral program creates a sense of pride and an opportunity to give back.
Research by social psychologist Liz Dunn and her colleagues appearing in the journal Science shows that people’s sense of happiness is greater when they spend relatively more on others than on themselves.
Upserve’s values is “to impact our community in a meaningful way” so their referral program is simply a natural extension of their mantra.
In some cases, people choose to be loyal to a company not just for their products or services, but because of what they stand for.
This type of referral program allows companies to do community outreach as well as endear themselves to customers at the same time.
Online education site Skillshare offers the gift of learning with their referral program. When a Skillshare student refers a friend, that friend will get two months free access to Skillshare Premium.
When the friend continues with a paid plan, the referring student gets a free month.
This works because online courses are very popular these days. It’s never been easier to learn anything from the comfort of your home and Skillshare makes it even easier with this generous referral program.
Offering a “trial” of your product or service is one of the best ways to win over a customer. Whether or not the referral converts into a paying customer, that person will still get to know Skillshare’s service and might even recommend it to others.
Toy company Riff Raff ran a simple Facebook referral contest where they gave away customized sleep toys to lucky winners.
Contest participants were asked to share via email, Facebook, and Instagram and when a person makes five successful referrals, he or she gets a free customized toy valued at $80.
What’s most interesting about Riff Raff’s method is that they were mindful of their customers – busy moms and dads who spend most of their time at work or taking care of their children but aren’t too busy to spare some time to check social media, especially if there’s a desirable reward on offer.
Knowing your customer’s habits, where and what they spend their time on along with their motivations, is vital for the success of your referral program.
Research shows that formal referral programs can have a significant positive impact on sales growth and revenue acceleration. But resource-strapped small and mid-sized B2B companies often find it challenging to build a full-blown referral program.
Nevertheless, they can still take advantage of a smaller, less structured program to help grow their businesses such as the creative, well-executed referral program ideas provided above.