The Borenstein Group

The end of the year is a good time to take inventory of your customer, partner and colleague referrals. It gives you a chance to look back at the referrals you’ve received and put plans in place to receive even more in FY 2017. Are you getting as many referrals as you would like? A better question is: are you getting as many qualified referrals as you would like. It’s always surprising to us how many firms are disappointed in the quality of referral business they receive.

But there’s good news here. And as is often the case, it’s made possible by marketing.
If you received fewer referrals than you projected, or you would like to improve your organization’s referral program, read on.

Referrals come from three sources: current and past customers, business partners and other colleagues. Employees, too, are a lead source that should never be taken for granted. But like sales, referrals don’t just fall out of the sky. As marketers, you have to help make them happen. Referrals take solid strategy and well-executed tactics.

Here’s the formula for receiving quality referrals:

Provide excellent services and/or products + Stay at the top of prospects’ minds + Enjoy good relationships + Provide Motivation = Receive High Value, Sustainable Referrals

How to Earn More Referrals

You should be getting lots of referrals. If you don’t have a program in place that’s working for you, now’s the time to begin implementing. Follow the tips below, and by the end of FY 2012, you will be reaping measurable returns:

1. Institute a Formal Referral Program
Measurable results start here. There is absolutely no substitute for having a structured program with incentives in place to encourage your customers to refer you. You must stay top of mind. For a good example of this, think about your real estate agent. He or she knows that referrals are a major part of their business. They are always incentivizing by giving away restaurant and movie certificates and other gifts. They know we have plenty of options and understand the value of being at the fore of our thinking.

Define what the program “payout” will be based on the sale that’s closed. The amount of money you spend on a referral program should be consistent with the dollar value of what you’re selling. If you’re a low margin reseller, the referral gift will be very different than if you’re making product sales of $50,000 and up. You must pick a referral gift that is to scale.

As for the payout, it’s recommended to only give these referrals gifts upon close of the sale.

2. Look Outside Your Customer Base
The program should apply to more than your current customers. You should also open it to past customers, as well as business partners and other colleagues. Anyone who has interaction with prospects you’d like to add to your roster is a candidate for the program. If you have a board of directors, they should be bringing you leads. If they’re not, find out why.

3. Promote the Program
Without promotion, your referral program is like a tree falling in the woods. Your customers and partners won’t always be thinking of you. They certainly won’t go out of their way to identify opportunities to bring you business. But if they respect your organization, know you appreciate referrals and have incentives for bringing you good ones, then you’re on the right track.

It’s essential to continually remind clients and partners of your services and value proposition. Tell them you value their referrals. You can promote the program through newsletters, invoice mailers, special direct mailers, or when sales representatives or project managers meet with your customers. Special events to thank customers for their business are a powerful way to build good will and encourage them to provide you with qualified leads.

4. Give Them Something of Value
It’s always recommended to give your customers standard referral gifts, particularly if the product or service you’re selling is a standard item. People talk. If one customer finds out that they got a $20 gift certificate, and another got a gift of 10 times the value for the same type of referral, you could burn bridges, all in the name of trying to build relationships.

If your organization has clients on maintenance contracts, think about giving “gift certificates” that can be applied to service contracts, additional services or sponsored company events, such as customer conferences. This is a gift that benefits both the customer and your company. We have seen this company gift certificate approach work well time and again. It’s well received by the client base, costs the company soft dollars, and improves your relationship with your client. There aren’t any losers with this type of program.

5. Arm Sales to Gather Referrals
Your sales people understand the value of referrals. Make sure they are part of the program. If sales is integrated into this program, they can use it as a tool to touch base with your customer base, warm up leads that have cooled, or resume contact with a customer who hasn’t purchased from you recently. In this way, your referral program is an integral part of your sales and marketing strategy, not a bolted on after-thought. Integration is essential!

6. Measure the Success
The only way to know if your program is successful is to measure its results. Results of this program should be relatively straight forward and easy to measure. Since your client or partner will be receiving a gift for referring you, they will help ensure that the lead is traceable back to them. Otherwise, how do they get their gift? If you are promoting the program and your customers are talking to other qualified leads, you should notice an increase in the numbers of referrals you’re getting and the number of sales closed. The only way to be sure of this impact is to measure it.

Referrals can be a valuable part of the growth strategy for your business. If you need more motivation, think of the opportunities you’re missing by not putting a program in place.

For more information on creating a successful B2B Marketing Referral program, contact us at The Borenstein Group at 703-385-8178 or via our web site’s contact us page.