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.