Blog Post

Does Referral Marketing really Work for B2B?

Widely considered one of B2C’s most effective lead generation techniques, referral marketing might be on its way to becoming just as effective among enterprise companies.

A lot has been written and said about the incredible success Uber, Airbnb, and other B2C brands have achieved through referral marketing.

And several studies have highlighted the impact referral programs can have on sales pipelines and revenue acceleration. But most, consider referral marketing a consumer-focused strategy.

But can referral marketing be an effective tool for B2B companies?

That’s the million dollar question.

Data provided by several B2B referral marketing studies indicate that referral marketing can work for B2B just as well as it does for B2C.

  • 86% of B2B companies with a structured referral program in place experience more revenue growth and 71% report higher conversion rates (Influitive and Heinz Marketing).

  • But only 30% of B2B companies have some sort of formal referral program in place (Influitive & Heinz Marketing).

According to a research study conducted by Ambassador called ‘Referral Marketing By the Numbers: B2B Software and Services’, B2B customers generate higher success metrics compared to that of their B2C counterparts. 

In fact, the report claims B2B companies average revenue ($558,000) was more than 3X higher than eCommerce ($155,000) and 1.5x more than financial services ($374,000) over a one year period.

B2B companies’ generally have higher customer LTV, therefore it’s difficult to make a definitive apples-to-apples comparison to eCommerce brands.

However, it’s particularly interesting that those same eCommerce customers see an average ROI that exceeds 500%, according to the findings in the report.

According to Ambassador, when they examined average ROI (total investment in Ambassador plus customer acquisition costs, divided by total revenue generated) and typical conversion metrics for our B2B customers, the argument in favor of referral marketing working for B2B grew even stronger.

Influence and Peer Reviews Gaining Ground in the B2B World

Other studies indicate that B2B referrals are not just effective, but are generally preferred.

According to DemandGen’s 2016 B2B Buyer’s Survey Report:

  • 80% of respondents said their company spent more time researching purchases.

  • 73% said they use more sources (online reviews and peer recommendations) to research and evaluate purchases.

  • 62% said they rely more on peer recommendations than ever before.

  • In fact, in the report, almost half (49%) listed their peers and colleagues as a top source of information, up significantly from 20% in 2015. It ranked third behind “web search (can be classified as online reviews) and vendor websites.

  • At the point of evaluating solution providers, 55% of buyers said reviews were a “very important” consideration.

In another report, ‘The State of Business Customer Referral Program by Amplifinity’:

  • 3 out of 4 B2B buyers engage peers on buying decisions.

  • 80% of buying decisions rely on direct experience or peer influence.

It should come as no surprise that more buyers are turning to trusted sources for advice when choosing between vendors given the sheer amount of research done and the length of today’s purchase process.

From social media to review sites, long a staple of consumer marketing, B2B buyers have more options than ever when it comes to finding feedback from their peers.

The bottom line – in today’s day and age where more are skeptical of marketing claims than ever before – the statements made by outside third parties (customers, reviewers, expert consultants, etc.) about your company tend to carry more weight with prospects than anything you might say about yourself.

Because referral marketing can be effective in generating more of these statements, it merits consideration as part of any B2B company’s marketing strategy.