Implementing a ‘High Impact’ Referral Strategy

Implementing a High Impact Referral Strategy: How to Turn Referrals into Revenue

Ask any successful software executive and they will undoubtedly claim with great confidence that leveraging referrals is a critical component of their sales strategy. That certainly makes sense given the dramatic results from a recent study that quantified referral program outcomes. The study of over 600 B2B companies across North America found the following revenue-generating benefits for those companies with formalized referral programs, when compared with organizations without such programs:

  • 71% of prospective sales deals are more likely to close;
  • 69% of prospective sales deals close faster; and
  • 59% of customers coming via referrals bring higher lifetime value*.

You’re always looking for ways to increase the number of high-quality prospects and accelerate them quickly through the sales funnel. So, upon seeing these results, you could conclude that it’s time to re-direct marketing and sales resources to programs that optimize referrals.

However, before you do this, there is a harsh and overlooked reality upon which all successful referral programs are based: not all referrals are created equal. With that said, you must address three issues to effectively leverage B2B referrals that deliver top (and bottom) line results:

  1. Focus on the kinds of referrals that are most effective at generating profitable business;
  2. Call out the obstacles that prevent you from tapping into the most effective referrals; and
  3. Take specific actions to harness the most effective referrals.

B2B Referrals That Mean Business: Focusing on High Impact Referrals

As a successful software executive, you have seen a host of referral behaviors over the years. Those behaviors have produced a variety of outcomes where you’ve expressed everything from ‘That was a waste of time and expense’ to ‘Wow, we just got a big win’. What’s frustrating is that such outcomes can appear to be unpredictable or random. The good news is that you can identify, measure, and manage the specific kinds of referral behaviors that lead to consistently acquiring new and profitable business – those behaviours that result in High Impact Referrals (HIR). By managing these referral behaviors, you can better predict likely outcomes and refine your sales plans accordingly.

To begin, you need to recognize that underpinning all types of referral behaviours is trust, specifically two kinds of trust: 1) The trust a referral has in you, your product and/or your organization; and 2) The trust that the prospective customer has in your referral source. These two kinds of trust evolve independently. But, they combine to shape your referral sources’ referral behaviors – which determines how effective they are at successfully converting a prospect into your new customer. To see how this plays out daily, let’s plot today’s most common referral behaviors along the Continuum of Two Trusts (see Figure 1).

Figure 1: The Continuum of Two Trusts

One common referral behavior includes connecting in person at a business function or on a social media platform such as LinkedIn. This kind of referral behaviour happens typically when both types of trust are low. That’s because for a referral source to initiate an introduction (or make a “connection” in social media), they know you but they don’t need to have a high level of trust in you. At the same time, a prospective customer knows how easy it is for a referral source to make a connection (or social ‘Like’ or re-tweet). So, the level of trust that accompanies the connector (that is, the trust in your referral source) is low. This type of referral behavior is at best spotty when it comes to consistently increasing the likelihood of gaining a new customer or reducing the time to acquire a new customer. Other referral behaviors that are displayed when one or both kinds of trust is low include acting as reference on a proposal and making a recommendation in response to generic needs like, ‘We’d like to lower our HR admin costs.’

In contrast, when both kinds of trust are high, your referral sources behave in ways that are most effective at converting prospects into your new customers. These High Impact Referrals result when your referral sources demonstrate the following behaviors:

  • Proactively identifying potential opportunities and bringing them to you
  • Qualifying opportunities so that you don’t waste time pursuing the wrong opportunities
  • Facilitating meaningful interactions between you and the right people rather than simply ‘connecting’
  • Initiating opportunities when the time is right given the prospective customer’s unique conditions and constraints
  • Initiating opportunities when your company has the capacity to on-board and satisfy the unique needs of a specific prospective customer
  • Placing their personal and/or professional reputation on the line by providing a hearty endorsement for you (often in a public setting)

Implementing a High Impact Referral Strategy B2B (Part 1): Identifying the Obstacles

Having pinpointed the measurable behaviors that lead to High Impact Referrals, let’s focus on the obstacles preventing software executives from enabling, and realizing the benefits of, these referral behaviors. They fall into two broad ‘buckets’ (see Figure 2). The first set of obstacles are misaligned attitudes about referrals which give rise to the second set of obstacles, a lack of organizational support. The former prevents initiating structured referral programs and the latter hampers their implementation.

Misaligned Personal Attitude

About B2B Referrals

Resulting Lack of

Organizational Support

Your company’s reputation will produce referrals by itself (i.e. organically) and that any referred business is worthwhile. Absence of processes for evaluating the contribution to your top and bottom lines of referred business.
Referral sources are limited to your ‘satisfied’ customers. Restriction of tapping into referrals until after completion of customer engagements.
Referrals will only happen consistently when there is a financial benefit for your referral sources. Development of reward programs that miss out on the wide range of reasons that referral sources do and don’t refer your company.
Referral sources just need to know more about your products or services to be successful. Absence of initial and/or on-going assessment of referral sources’ evolving skills and opportunities to refer your company.
Relationship management is not scalable compared to online demand-generation and lead nurturing. Absence of any referral targets and limited emphasis on relationship-building skills in the marketing of your product or service.

Figure 2: Obstacles to Leveraging High Impact Referrals

Implementing a High Impact Referral Strategy B2B (Part 2): Overcoming the Obstacles

While overcoming these obstacles requires a concerted effort, doing so can be part of a growth strategy that catapults companies in highly competitive markets. After all, the number of companies that have adopted structured referral programs has remained at 30% over the last half-dozen years* – despite findings like those in a recent study where 74% of companies concluded that leveraging referrals is the least expensive method of acquiring new customers**.

Here’s a quick 5-point step plan for overcoming the obstacles preventing you from harnessing high impact referral behavior and achieving the benefits of High Impact Referrals.

Step 1: Ask your Sales (or Marketing) Department to identify how much revenue your business received over the last 12 months that can be attributed to referrals.

Step 2: Ask your Sales (or Marketing) Department to review the profitability of the business that originated through the five to ten referral sources that have brought you the greatest number of opportunities in the last 12 months.

Step 3: Along with your Sales (or Marketing) Department leader, speak with the three referral sources that have brought you the most profitable business opportunities to you in the last 12 months so you can gain an understanding of why they consistently bring you profitable business.

Step 4: Assign a relationship-manager responsibility for identifying the reasons why referral sources bring you opportunities that are/are not profitable.

Step 5: Set initial benchmarking referral targets for a sample of your referral sources – just as you would for your direct sales efforts, your proposal response efforts, and your demand-generation campaigns.

By implementing these five steps, you can outline personalized and measurable action plans that address the strengths and weaknesses of each referral source. In doing so, you will be able to continually assess in which organizations and industries your referral sources are recognized as being trustworthy. The result: you will be able to facilitate high impact referral behaviors and achieve the enviable business benefits of high impact referrals.

**Send an email to abrown (at) BridgemakerReferralPrograms.com and you could win one of five Referrals for Revenues ‘action plans’ customized for your company (Value: $25,000 each).**

This article was originally published on Software Business Growth Magazine with the editorial guidance of John Oncea.

*Study: What You Should Know About B2B Referrals. Benchmarking B2B Referral Program Adoption and Results. (Heinz Marketing and Influitive).

**Study: The State of Referral Marketing in 2017 (Web Profits).

Andrew Brown is Founder and Chief Innovation Officer of Bridgemaker Referral Programs. He is the lead author of the ‘How to Grow Your Business Through Better Relationships’ series – which includes books on getting the most from referral sources, channel partners, and strategic alliances.

Harnessing ‘Centers of Influence’: A Targeted Growth Strategy

Harnessing Centers of Influence: An Introduction

They are the people who are most important to your company’s success and on-going growth. Their well-honed interpersonal skills, nuanced business acumen and targeted enthusiasm allow them to catapult you far ahead of your closest competitors. And yet, if you are like the vast majority of software company leaders you don’t really know who these people are.

They are Centers of Influence (COI)but, before you turn away thinking that you’ve found yet another ‘influencer marketing’ article, it’s important for you to recognize that the COI that play an essential role in your company’s future success are not those people who are most commonly described as ‘influencers’ in today’s business and popular media.

In fact, you may be surprised to find that the COI that will help your business thrive:

  • Do not spend a lot of time using social media to share their business and personal experiences online;
  • Are not necessarily vocal advocates of your company or your product;
  • Do not necessarily have many LinkedIn followers; and
  • Are not motivated by money or free gifts.

So, who are these COI that will help you achieve the growth you need to meet your company’s short- and long-term goals? And, once you’ve identified them, how do you approach them? Furthermore, what’s the best way to leverage them wisely – given your company’s evolving priorities? And, once you begin tapping into this group of powerful individuals, how do keep them engaged?

This new monthly series entitled, ‘Harnessing Centers of Influence answers all these questions and provides you with the tools and practical insights so that you can tap into the unique power of COI. As a result, you will have the building blocks of a COI program that will be a cost-effective growth strategy.

What’s more, this series kicks off an opportunity for you to quickly reap the benefits of having COI grow your company. Send an email to abrown (at) BridgemakerReferralPrograms.com and you could win one of five Centers of Influence ‘action plans’ customized for your company (Value: $25,000 each).

In this 10-part series, we’ll draw upon executives – in software companies from across industries and software associations – to tackle the day-to-day challenges and strategic issues that you will face in rolling out a cost-effective COI strategy. Specifically:

The Pros and Cons of a Centers of Influence program. We’ll review the quantitative benefits of having a COI strategy and identify the risks of having/not having such a program in place.

How to Prepare for a Centers of Influence program. Having explored the tangible benefits of implementing a COI program, you’ll likely want to jump right in. We’ll identify the foundations you need to put in place to ensure your COI program helps grow your company.

How to Identify and Recruit Centers of Influence. Finding the right COI involves setting specific criteria and actively pursuing these people. At the same time, the criteria evolve along with the success of your program. We’ll review how, and where, you can target your COI.

How to Manage Centers of Influence. While business development professionals, account professionals and channel sales professionals all help grow your company’s revenue, they each bring to the table their own unique talents to achieve this common goal. Similarly, the person(s) managing your COI program have a distinctive combination of skills that we’ll identify.

How to Support Centers of Influence. Each COI has their own reasons for, and abilities to, help your company grow. That means the support you provide them needs to be mapped against their current strengths and weaknesses. We’ll help you develop that mapping.

How to Turn Around Centers of Influence. Stuff happens. And, occasionally you’ll go ‘off the rails’ with your COI program. We’ll identify the mostly likely ‘breaking points’ of your COI program and the steps you can take to get it up and running again so that it contributes to your company’s growth.

How to Integrate Centers of Influence with Sales and Marketing. You have several programs, plans, initiatives, budgets and metrics – all of which are aimed at helping your company grow. So, where do COI fit into all of this? We’ll outline different ways you can combine your COI program with all your growth strategies.

How to Integrate Centers of Influence with Customer Success and Product. Your company’s success hinges on your software products and the ways you engage with your customers. We’ll explore how COI play a key role in how your company’s offerings expand and evolve.

Your Centers of Influence Program – the First 100 Days. Getting your COI program of the ground correctly is key to its ability to rapidly grow your company. We’ll help ensure that your program is successful by identifying the potential ‘traps’ you’re most likely to face and how to avoid/overcome them.

This article was originally published on Software Business Growth Magazine with the editorial guidance of John Oncea.

Andrew Z. Brown is Founder and Chief Innovation Officer of Bridgemaker Referral Programs. He is the lead author of the “How to Grow Your Business Through Better Relationships” series — which includes books on optimizing growth by leveraging referral sources, channel partners and strategic alliances.

 

What’s not to Love?

Okay, let’s try a quick ‘word association exercise’ that will tell you just how successful you will be achieving your revenue targets for this year. So, here goes: What’s the very first thing that comes to mind when you hear the word referrals?

Whatever your response, chances are it reveals that referrals play some role in you achieving your sales goals. But, that shouldn’t be a surprise. After all, here’s what recent studies conclude about how leveraging referrals systematically positively effects sales:

  • 69% of companies find deals move through the sales funnel measurably faster when they leverage the right referral source*
  • 71% of leads coming through referral sources are more likely to close than leads coming without referrals*
  • 74% of companies conclude that using referrals is the least expensive method of acquiring new clients**

It’s because of these kinds of surprisingly strong outcomes that this series has been tackling how you can best harness the unique power of referrals to achieve sales goals. In part one, we reviewed the tangible business benefits of referrals and tactics used to generate new revenues with referrals. In part two, we dispelled the most commonly held myths about referrals that are preventing you from generating more revenues, faster.

Here, we address the good, the bad, and the ugly of leveraging referrals. In other words, we explore what people and organizations that truly value referrals, referrals strategies, and referral programs like and dislike about them. Once again, we turn to Motorola Solutions, Ceridian, Trader, and Sandler Training for their practical insights.

The Positive Side of Leveraging Referrals

Saving time and expense

When referral programs are implemented properly they help organizations redeploy sales and marketing resources to those efforts that have an impressive return on investment. The result: the ability to reduce the costs on sales activities that underperform. For example, according to Shannon Pinto, Trader’s Senior Manager, OEM and National Business Development, ‘Tapping into referrals has meant that we’ve been able to minimize the considerable costs associated with cold calling to generate new leads or to help move sales along the sales funnel.’

Gathering unexpected insights and opportunities

Leveraging referrals is the most effective method of keeping in touch with, and learning from, those people who trust you, your product/service, and your organization. According to Ceridian’s VP, Corporate Marketing, Sarah Terrelonge, ‘Our evangelists run the gamut – from frontline users of our solutions through to executives using sophisticated dashboards to oversee global H.R. departments. So, they have tremendous insights into those companies and industries where we can make a huge difference. Capturing those insights on an on-going basis is essential to our continued growth and success.’ Sandler Training’s Chris Kelly adds to that, ‘In addition to validating what we know about a particular business or industry, leveraging referrals helps us bridge the gap in knowledge about opportunities in new or emerging areas. Because of our referrals, we’ve found ourselves making inroads in industries that weren’t originally on our radar.’

Ensuring a Sustainable Culture

Focusing on referrals as a method for increasing the volume and speed of sales has an immense impact on a company’s corporate culture. This is particularly the case in those industries where growth is historically measured by quantity of transactions. According to Motorola Solutions’ Channel Marketing Program Manager, Ron Hutzul, ‘Leveraging referrals reflects a corporate culture that truly values long-lasting relationships. Such a focus ensures a company’s longevity by helping them successfully ride the wave of business trends without being swept away.’

The Not-so-Positive Side of Leveraging Referrals

Staying on top of Changing Circumstances

Any successful sales program means you must spend time and effort to stay on top of evolving trends, competitors, new offerings and key decision-makers. Similarly, when leveraging referrals, you must keep your ‘finger on the pulse’ of key influencers (i.e. your referral sources). According to Hutzul, ‘that means educating referral sources on new products and services to keep them aligned with sales goals. At the same time, he emphasizes that ‘in addition to keeping referral sources informed, you never want to put them in a position where they may feel awkward.’

Staying on top of Evolving Motivations

The reasons why referral sources refer business to you are varied. However, the key is not to fall into the trap of simplifying down to compensation. A referral program that relies solely on any single form of motivation is destined to fail. Rather, the motivations to refer business is different for each person. And, what makes matters more complicated is those motivations evolve over time. According to Ceridian’s VP, Corporate Marketing, Sarah Terrelonge, ‘Sometimes the reason why referral sources take action is completely out-of-sync with what you had originally thought. But, it’s always more complex than you think.’ So, keeping on top of these motivations means clearly identifying, monitoring, and adapting to the evolving motivations of each of your referral sources.

*Study: What You Should Know About B2B Referrals. Benchmarking B2B Referral Program Adoption and Results. (Heinz Marketing and Influitive).

**Study: The State of Referral Marketing in 2017 (Web Profits).

Andrew Brown is Founder and Chief Innovation Officer of Bridgemaker Referral Programs. He is the lead author of the ‘How to Grow Your Business Through Better Relationships’ series – which includes books on getting the most from referral sources, channel partners, and strategic alliances.

Crushing 6 Myths Preventing You from Turning Referrals into New Business

A recent study found that 74% of companies concluded that leveraging referrals is their least expensive method of acquiring new customers. At the same time, roughly 44% of these companies claim that referrals are the best way to acquire new customers*.

And yet, over the last half-dozen years, the number of companies that have adopted structured referral programs has stalled at 30%. The obvious question that needs to be answered is: Why do most organizations miss out on embracing a sales method that produces positive topline and bottom line results?

To answer this question, in Part 1 of this series, we turned to companies across industries that truly value referred business, referral sources, and referral strategies. Specifically, we began to draw upon insights from Motorola Solutions, Ceridian, Trader, and Sandler Training to help us chip away at answering this question.

Here, we dispel six common myths about referrals that are contributing to why companies are slow to embrace structured referral programs. Once again, we draw upon the same organizations for their unique insights.

Myth about who referral sources are

If you believe that a referral source can only be a customer, you are far from being alone. However, a transaction should not define whether someone is a viable and effective referral source. Rather, the key dimension to focus on is trust. Specifically, a referral source must trust you, your offering, and/or your organization. At the same time, they must also be trusted by the organization, or type of organization, that you want to count among your customers.

Lesson for you to put into action: Consider expanding the types of potential referral sources well beyond your customers.

Myth about why referral sources do refer business to you

One of the most widely-held myths about referrals and referral programs concerns the reason why referral sources refer. The assumption is that it’s all about compensation. The reality is that there is a host of reasons why people actively refer. A referral program that relies solely on this single form of motivation is destined to fail. Rather, the motivations for referral sources to refer business to you is different for each person and those motivations continue to evolve over time. According to Ceridian’s VP, Corporate Marketing, Sarah Terrelonge, ‘Sometimes the reason why referral sources take action is completely out-of-sync with what you had originally thought. But, it’s always more complex than you think.’

Lesson for you to put into action: Make sure that your referral program clearly identifies, monitors, and adapts to the evolving motivations of your referral sources.

Myth about why referral sources don’t refer business to you

Just as referral sources are not driven to refer business solely because they’re receiving compensation, their lack of referral behaviour isn’t because they are simply ‘unmotivated’. In other words, to refer business to you, referral sources need to have more than their motivation clearly articulated and accounted for. They also must have the right opportunities to refer and the right combination of skills.

Motorola Solutions’ Ron Hutzul, suggests another reason that discourages referral behaviour: ‘Organizations can unintentionally, or deliberately, convey that they are uncomfortable receiving assistance from potential referral sources’.

Lesson for you to put into action: Make sure your referral program accommodates and builds on referral sources’ skills and opportunities to refer. Also, make sure that your program is ‘known’ to those who you would want to include.

Myth about why referral programs are successful

If you review the providers of referral marketing technologies it’s easy to think referral programs can be easily automated. However, according to Shannon Pinto, who manages strategic alliances at autoTrader.ca’s commercial and recreational verticals, ‘Being successful at leveraging referrals takes a disciplined approach. That means setting specific goals, creating processes, and making sure that the program is being managed by those with the right combination of skills’.

Lesson for you to put into action: Make sure your referral program includes time-specific targets, well-defined processes, and is overseen by someone with referral management skills.

Myth about when to engage your referral sources

The prevailing myth is that you should only ask your referral sources for referrals after you have successfully provided your product or service. Chris Kelly, owner of Sandler Training office in Toronto instructs his clients to structure their ‘asks’ for referrals at very specific times of their relationship – for example, when they are on-boarding a new customer. He also recommends reaching out and asking existing clients (and previous clients) for referrals on a regular basis. But, he emphasizes: 1) ‘Don’t ask for referrals when your sales funnel is empty’; and 2) ‘Manage expectations so that your referral sources know in advance that you’re expecting them to refer business to them’. That way, you don’t ask referral sources for referrals when they are either unable or unwilling to do so.

Lesson for you to put into action: Make sure that you identify those times in your relationship with referrals when they can make referrals and are most willing to do so.

Myth about the value of a referral

It’s easy to think that ‘a referral is a referral’. Particularly, if you haven’t implemented a program where referral activity is defined, measured, and optimized to bring you new business. But, the reality is that not all referral activity is equal nor does it provide equal value to you — not by a long shot. Just consider three different scenarios: a reference in an RFP response, a connection being made on LinkedIn, and a public endorsement. These three referral behaviours reveal a very different level of trust that a referral source has in you. At the same time, during each of these activities, your referral source is looked upon differently by those organizations that you are targeting. As a result, each of these referral activities provides a different value to you during the sales process.

Lesson for you to put into action: Make sure your referral program defines the kinds of referral activities that are important to you achieving your sales targets.

In the next article in the ‘Harnessing the Power of Referrals’ series, we’ll review what people truly love (and dislike) about managing referrals. We’ll continue to draw insights from Motorola Solutions, Ceridian, Sandler Training, and Trader.

Those interviewed for this series include:

*Study: The State of Referral Marketing in 2017 (Web Profits).

Andrew Brown is Founder and Chief Innovation Officer of Bridgemaker Referral Programs. He is the lead author of the ‘How to Grow Your Business Through Better Relationships’ series – which includes books on getting the most from referral sources, channel partners, and strategic alliances.

 

Motorola, Ceridian, Sandler Training, and Trader on Harnessing Referrals

Motorola, Ceridian, Sandler Training, and Trader on Harnessing Referrals

Ask any successful senior sales executive, business owner, or Managing Partner at a professional services firm, and they will undoubtedly tell you with great confidence that leveraging referrals is a critical component of their sales strategy.

That certainly makes sense given the dramatic results from a thorough study that quantified referral program adoption rates and program outcomes. The study of 600 B2B companies across North America found the following ‘upsides’ in companies with formalized referral programs, when compared with organizations without structured referral programs:

  • 69% close deals faster;
  • 71% have higher conversion rates; and
  • 59% of customers coming via referrals have higher lifetime value*.

So, kudos to those sales and/or marketing folks who recognize the tangible business benefits of referral programs – your efforts to leverage relationships have an enviable return on investment. But, then something in the study truly flummoxed us: only 30% of organizations have formalized referral programs in place. How could that be? And, why do the vast majority of organizations of all shapes and sizes miss out on embracing a method that consistently produces positive topline results?

In this series, ‘Harnessing the Power of Referrals, we will tackle this question as well as provide practical insights that you can apply so that you can better make a case for implementing a referral program and/or get more from your referral program.

To begin, we’ll see how some forward-looking companies, that do much more than just talk about having a robust referral strategy, tap into what is arguably the most cost-efficient method of moving a prospective customer through the sales funnel.

We explore how companies – across industries – value referred business, referral sources, and referral strategies. Specifically, we turn to Motorola Solutions, Ceridian, Trader, and Sandler Training to gather their insights on three questions that are on the minds of every person considering when, or how, to build a successful referral program:

  • What are the most tangible business benefits of managing referral activities?
  • How much revenue can you expect by managing referral activities?
  • What are some of the tactics used to create revenue from referral activities?

Tangible Benefits of Managing Referral Activities

According to Ceridian’s VP, Corporate Marketing, Sarah Terrelonge, ‘Referral activities produce key business benefits. Specifically, leveraging referrals increases the speed with which business deals are closed, creates higher ‘win rates’ and, when used in the context of proposals, helps to shape the competitive context’.

You might expect that to be the case for Ceridian, a global human capital management (HCM) software company with over 4,000 employees. But, the benefits from managing referrals extend well beyond software companies like Ceridian, so suggests Chris Kelly, owner of a Sandler Training office in Toronto.

Sandler Training is recognized as one of the premiere sales methodologies and boasts blue chip clients across every industry. Kelly adds to Ceridian’s list of business benefits resulting from referrals by emphasizing that ‘managing referral activities strengthens relationships with referral sources as well as with members of the organizations you are targeting’. In addition to echoing Kelly’s insights, Shannon Pinto, who stickhandles strategic alliances at autoTrader.ca’s commercial and recreational verticals, concludes that establishing and sustaining strong profitable relationships is a key reason why the auto-focused digital marketing giant leverages referrals.

Revenue Growth by Managing Referral Activities

Every organization sets revenue targets in ways that make sense given the ease with which they take products/services to market, the actions of key competitors, and their financial obligations to various stakeholders. Having said that, organizations that truly value managing referral activities set ambitious referral targets.

For example, Sandler Training’s Kelly aims to achieve 50% of net new revenues from referrals each year. In contrast, revenue targets from referrals take on a very different form in the world of Motorola Solutions according to their Marketing Program’s Manager, Ron Hutzul: ‘Because referral activity tends to be informal or originate where ‘quid pro quo’ is inappropriate, revenue from referrals is more about securing business that is ‘low hanging fruit’ within existing channel relationships’.

Tactics to Achieve Revenue Targets via Referral Activities

Successful referral programs recognize the varied and evolving motivations that spark and sustain referral sources to act in ways that produce positive business results. That’s why there is great variety in the tactics used by organization to entice and propel referral sources into action.

For example, Ceridian hosts a conference solely for partners and alliances where potential referral sources gain sight into the company’s performance and, according to Terrelonge, ‘really become part of the company’s extended family’. autoTrader.ca takes a slightly different approach according to Pinto by ‘sharing deep industry insights that help potential referral sources can apply to strengthen their businesses’.

Sandler Training’s Kelly instructs his clients to structure their ‘asks’ for referrals at very specific times of their relationship – for example, when they are on-boarding a new customer. He also recommends reaching out and asking existing clients (and previous clients) for referrals on a regular basis. But, he emphasizes: 1) ‘Don’t ask for referrals when your sales funnel is empty’; and 2) ‘Manage expectations so that your referral sources know in advance that you’re expecting them to refer business to them’.

In the next article in the ‘Harnessing the Power of Referrals’ series, we’ll tackle some of the misconceptions of referral programs, referred business, referral sources, and referral strategies. We’ll continue to draw insights from Motorola Solutions, Ceridian, Sandler Training, and Trader.

Those interviewed for this series include:

*Study: What You Should Know About B2B Referrals. Benchmarking B2B Referral Program Adoption and Results. (Heinz Marketing and Influitive).

Andrew Brown is Founder and Chief Innovation Officer of Bridgemaker Referral Programs. He is the lead author of the ‘How to Grow Your Business Through Better Relationships’ series – which includes books on getting the most from referral sources, channel partners, and strategic alliances.

Making Sense of Referral Programs and Influencer Marketing

Making Sense of Referral Programs and Influencer Marketing

You’re ambitious. You’re energetic. And, what’s more, you’re ‘on the hook’ for generating revenue. So, like many folks in the same boat, you’ve got your eyes peeled for efficient ways to achieve your top-of-line growth goals.

To that end, chances are you have come across – either deliberately or by happenstance – a new category of solutions that help boost your growth by tapping into the power of referrals. But, understandably, you’re skeptical because you’ve seen the all-too familiar promise of ‘everything you need’ applied to new offerings many times before.

So, how can you make sense of the rapidly expanding selection of referral programs and related technologies that are now captured in the broad category that is labelled ‘Influencer Marketing’?

Well, to start getting a handle on the offerings let’s explore the differences between solutions that aim to bring you customers who are consumers (i.e. B2C) and those that will bring you customers that are businesses (i.e. B2B). But, why do this? After all, a ‘referral’ is a ‘referral’, right?!? It turns out that there are very real differences that can help you decide which, if any referral program, is right for you and which is right for you now. In an upcoming article, we’ll tackle some of the pros and cons of the key players in this growing field and how some blur the line between B2B and B2C. But, to begin, let’s compare the nature of B2C vs. B2B programs.

To clarify the difference between B2B referral programs and B2C referral programs, we’ll focus on seven important dimensions, specifically:

  • The core purpose of the programs
  • The primary motivations for referral sources to refer
  • The primary mechanisms for recruiting, and engaging with, referral sources
  • The kinds of skills that referral sources need to be effective
  • How to determine if a referral program is right for you and right for you now
  • Measures of success
  • What you should have in place before looking to leverage a referral program

To help provide clarity around B2C referral programs, I’ve summarized the insights from Arash Alborz, the Founder of Echomybiz. In just one year, his company has grown rapidly and now has a handful of marquee clients and several thousand active referral sources using their disruptive ‘white label’ platform.

So, let’s begin…

The Core Purpose

B2C and B2B referral programs share a common goal: to increase sales. However, the focus of how that increase is achieved differs drastically. B2C referral programs look to grow sales by increasing ‘word of mouth’ – that is, targeting the frequency and breadth of coverage that a product or service receives in online/offline conversations and publications.

In contrast, B2B referral programs focus on helping you achieve a sustainable increase in sales while shortening your sales cycle. This is achieved largely by eliminating the most expensive and time-consuming hurdle in your B2B sales efforts: the costs of building brand awareness and recognition.

The Primary Motivations for Referral Sources to Refer

B2C referral programs are built on referral sources having one over-riding motive to take action: receiving some sort of financial reward. That reward can be in the form of a fee, a credit, or a coupon. As a result, B2C program technologies build in rewards and/or gamification functionalities. The secondary motivation for referral sources is assumed to be being recognized as an opinion leader or influencer (hence, the term ‘influencer’ used to sell many B2C referral program technologies).

The motivations in B2B referral programs on the other hand are far more complex. These programs recognize that your referral sources are spurred into action in part due to their position and/or title within and organization(s) combined with personal motivations that extend beyond a formal organizational role. To make matters even more complicated, the motivations for your B2B referral sources to act evolves drastically over time – reflecting their personal, career, and life aspirations. The result: an effective referral program must acknowledge and address the unique motivations of each of your referral sources.

The Primary Mechanisms for Recruiting and Engaging with Referral Sources

B2C referral programs draw heavily on technologies that facilitate the sharing of product knowledge and making endorsements. These technologies, by their very nature, are built so that referral sources can easily spread the word on popular social media platforms (e.g. Instagram, Facebook, Pinterest, YouTube, Twitter, etc.). These platforms, along with App stores are the primary method by which referrals are drawn into, spread, and publicize the referral program and its benefits.

In contrast, B2B referral programs can be completely ‘technology agnostic’. That is, they do not have to be bound to any specific platform or enabling tool. Rather, recruiting effective referral sources is a deliberate and targeted effort that reflects the unique value that each referral source brings. And, engaging with your referral sources throughout these programs requires a broad set of inter-personal skills combining elements from multiple disciplines such as project management, change management, account management, sales enablement, loyalty marketing, and data science.

The Key Skills Referral Sources Need to be Effective

Because B2C referral program success is based largely on the ability for referral sources to make endorsements easily, technologies that facilitate these programs do not demand referral sources have any particular skills or knowledge.

In contrast, successful B2B referral programs are built on leveraging and enhancing the skills of your referral sources and those who are responsible for managing them. As a result, in addition to having domain-specific knowledge, your referral sources need to have a range of interpersonal skills and sales enabling skills.

How to Determine if a Referral Program is Right for You and Right for You Now

As mentioned earlier, B2C referral programs aim to grow sales by increasing ‘word of mouth’ – that is the frequency and breadth of coverage that a product or service receives. So, not surprisingly, organizations that want to leverage and/or build upon a strong reputation look to these referral programs to accomplish this goal.

Your need to reduce the time it takes to close sales deals faster is the most compelling reason for implementing a B2B referral program. Common symptoms that organizations exhibit that spark programs to be adopted include: sales cycles increasing rather than reducing, and sales stalling – particularly during the ‘middle of the sales funnel (MOFO).

Measures of Success

B2C and B2B referral programs share several quantifiable metrics because they have a common purpose, specifically, increasing sales. These shared metrics include: the number of newly referred purchase transactions within a defined period; the amount spent by the newly acquired customers within a defined period; and the number of specific products or services purchased within a specific period. Furthermore, there are shared metrics of efficiency such as reducing customer acquisition costs within a given period. There are also longer term metrics such as the lifetime customer value (as defined by factors other than sales transactions).

At the same time, B2C referral programs have some metrics that are not used in B2B referral programs. These include the frequency with which existing customers, would-be customers and others mentions a brand or product on specific social platforms. These same programs also look to measure the degree to which messages have been amplified – i.e. being taken to new members of targeted groups. Finally, B2C referral programs also look to measure different levels of referral and customer engagement – such as the number of times someone visits a specific website and/or visits a ‘bricks and mortar’ property.

In addition to the measures of success shared with B2C programs, you should measure your B2B referral program by its ability to reduce the time it takes to close specific sales or types of deals. Over time, you should measure the program by how it is stabilizing the flow of revenue during times of the year when sales are slow or unpredictable. Finally, you will measure B2B referral programs with relationship-building and/or trust metrics.

What You Should Have in Place Before Looking to Leverage a Referral Program

Regardless of whether you are considering to implement a B2C or B2B referral program (or both), you need to conduct a thorough analysis of your internal capacity to establish, manage, and integrate the learnings from the program. At a minimum, you need to have the following in place:

  • A person who will own responsibility for the program;
  • A budget for building, managing, and sustaining the program; and
  • A means to collect, analyze, and report on data collected throughout the program.

Andrew Brown is Founder and Chief Innovation Officer of Bridgemaker Referral Programs. He is the lead author of the ‘How to Grow Your Business Through Better Relationships’ series – which includes books on getting the most from referral sources, channel partners, and strategic alliances.

Article Template 1 – Full Page 3

In Part 1 of this series on how to make referrals work for you, we reviewed the types of referral sources that, if managed well, can bring new revenues to your business.

But, let’s dig a little deeper now by looking at these types of referrals and map them against two key qualities that are essential for them to be effective. And by that, I mean, being able to shorten the sales cycle and increase the volume of new sales opportunities:

  • Key Quality #1: How well the type of referral source knows your organization.

To bring you business opportunities that you want, referral sources need to understand: your product/service offerings, what’s unique about your company, and your company’s culture.

  • Key Quality #2: How well the type of referral source knows your targeted companies.

At the same time, referral sources need to understand your preferred, or targeted, companies in ways that go beyond answering the BANT (i.e. budget, authority, need, and timetable) questions. They also must have a handle on targets’ goals, their plans to pursue these goals, and the challenges preventing them from reaching their goals.

That might seem obvious, but, you’d be surprised how much effort and resource are spent on engaging referral sources that lack these both qualities. So, to help you focus your time on leveraging those referral sources that will have the most positive impact on your sales funnel, consider the following mapping. (Just keep in mind this serves as a starting point. There are outliers and exceptions for every referral source type.)

If you want to optimize referral sources and their activities:

Andrew Brown is Founder and Chief Innovation Officer of Bridgemaker Referral Programs. He is the lead author of the ‘How to Grow Your Business Through Better Relationships’ series – which includes books on getting the most from referral sources, channel partners, and strategic alliances.

Article Template 1 – Full Page 2

In Part 1 of this series on how to make referrals work for you, we reviewed the types of referral sources that, if managed well, can bring new revenues to your business.

But, let’s dig a little deeper now by looking at these types of referrals and map them against two key qualities that are essential for them to be effective. And by that, I mean, being able to shorten the sales cycle and increase the volume of new sales opportunities:

  • Key Quality #1: How well the type of referral source knows your organization.

To bring you business opportunities that you want, referral sources need to understand: your product/service offerings, what’s unique about your company, and your company’s culture.

  • Key Quality #2: How well the type of referral source knows your targeted companies.

At the same time, referral sources need to understand your preferred, or targeted, companies in ways that go beyond answering the BANT (i.e. budget, authority, need, and timetable) questions. They also must have a handle on targets’ goals, their plans to pursue these goals, and the challenges preventing them from reaching their goals.

That might seem obvious, but, you’d be surprised how much effort and resource are spent on engaging referral sources that lack these both qualities. So, to help you focus your time on leveraging those referral sources that will have the most positive impact on your sales funnel, consider the following mapping. (Just keep in mind this serves as a starting point. There are outliers and exceptions for every referral source type.)

If you want to optimize referral sources and their activities:

Andrew Brown is Founder and Chief Innovation Officer of Bridgemaker Referral Programs. He is the lead author of the ‘How to Grow Your Business Through Better Relationships’ series – which includes books on getting the most from referral sources, channel partners, and strategic alliances.

Referral Program Tune-up — Clone

Referral Program Tune-up

Tools to Tune-up

Choose ‘Referral Program Tune-up’ when you need to improve the results from your current referral program.

Deliverables: 1) A thorough analysis of your current referral program plan, activities, and successes; and 2) A customized plan detailing how to modify your current program to see improved results.

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