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:
- Ron Hutzul (Motorola Solutions)
- Christopher Kelly (Sandler Training)
- Shannon Pinto (Trader)
- Sarah Terrelonge (Ceridian)
*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.