As a B2B executive, not much is more important than boosting sales and acquiring new customers. So figuring out the most effective way to grow your business should be at the forefront of every marketing strategy.
When properly employed, a referral program can be a vital contributor to revenue growth.
According to a study by Influitive and Heinz Marketing, 86% of companies with a formalized referral program experience more revenue growth.
Need further proof? Consider these statistics from the same study:
• 71% of companies with referral programs report higher conversion rates.
• When the marketing department is primarily responsible for a formalized referral program, B2B companies are 3 times more likely to attain their revenue goals.
• Formal referral programs help B2B companies generate 2x more high-quality referrals.
• 84% of B2B businesses start the buying process with a referral, according to Edelman Trust Barometer.
The study surveyed over 600 B2B professionals across North America with the objective of understanding the impact of formal referral programs on sales pipeline growth and revenue acceleration.
In addition to the metrics above, the study found that B2B referrals convert better, close faster and have a higher customer lifetime value than any other type of lead.
With that in mind, you might think that most organizations have a formalized referral program in place. You’d be wrong. Only 30% of the surveyed B2B companies said they have a formalized referral program in place.
Why don’t more B2B companies have a referral program in place when the evidence of their impact on sales is so conclusive?
One possible reason may be that many still consider referral marketing to be a consumer-focused strategy. Also, it’s a strategy that doesn’t get a lot of coverage in the trade press.
But if you want to generate greater lead volumes, lower marketing costs, and improve sales forecasts, a customer referral program – done right – can be a guaranteed win.
Today’s consumer demands an exceedingly high level of customer service from brands. B2B buyers are also scrupulous when making purchases, and they are scrutinizing potential vendors more closely than ever.
Results from DemandGen’s 2016 B2B Buyer’s Survey Report reveals:
• 80% of respondents said their company “spent more time researching purchases.
• 73% said they use more sources (mostly online reviews and peer recommendations) to research and evaluate purchases.
• 62% said they rely more on peer recommendations than ever before.
Even more compelling is the report by Amplifinity, “The State of Business Customer Referral Program”:
• 3 out of 4 B2B buyers engage peers on buying decisions.
• 80% of buying decisions rely on direct experience or peer influence.
Considering the data, it’s clear a referral program must be a crucial part of your marketing strategy if you want to accelerate revenue growth.
However, not all referral programs are created equal. The highest performing referral programs have two things in common:
1. Marketing manages the program – according to the Influitive/Heinz report, when marketing is in control, the program is 3 times more likely to achieve revenue goals. But only 10% of companies give their marketing departments this control.
2. Leverage technology to create a better referral process – when referral tools are used it’s 3 times more likely to accelerate referral generation and conversion.
But only 22% have a tool in place to scale their programs.
To generate referral business at scale, asking individual prospects and clients for one-off referrals won’t cut it.
Therefore, the responsibility for generating referrals should not rest solely on the shoulders of front-line sales reps. It has to be a long-term collaborative effort with sales and marketing.
Patience and consistency are critical components of successful B2B referral programs. B2B companies that play the ‘long game’ – giving their referral program time to evolve and gain traction will see far more significant results.