Customer Marketing - Lead Generation - Referral Marketing
Finding and nurturing new leads can be a very challenging process. Businesses invest vast amounts of resources into marketing their brand in an attempt to attract new prospects. In order to attract new prospects and to nurture them, companies will focus much of their efforts on increasing brand awareness as well as improving their reputation by building brand authority and trust. Common marketing techniques implemented to achieve these goals include content marketing, social media marketing, paid advertising, email marketing, SEO, and more. While these can be effective ways to generate new leads, don’t lose sight of the resources that you already have — such as your existing customers.
Your customers can play an important part in helping to build your company’s reputation and to attract new, more qualified prospects. Customers who are particularly happy with the relationship that they’ve built with your organization are more likely to refer other customers to your products or services directly. In fact, it’s estimated that around 91 percent of customers are more than happy to provide referrals; however, only 11 percent of salespeople ask for them. This means that most companies are not taking advantage of the fact that their customers are likely willing to provide referrals.
If you’re not attracting many leads via customer referrals despite having a strong relationship with your existing customer base, then it may be time to implement a customer referral program.
What Is A Customer Referral Program?
Calling or emailing your customers and clients to request referrals is not a very efficient way to get them. By setting up a customer referral program, you provide your company, as well as your customers, with an organized process that makes referrals easier. To encourage your customers to participate, customers receive some sort of incentive (for example, a discount on products or services) for providing you with successful referrals. At its core, a referral program streamlines the referral process while also incentivizing customers to take part.
When you have an organized referral program in place, it makes it less of a hassle for customers to refer your company to new prospects. Your customers and clients likely have a network of business partners, clients, vendors, and associates of their own that could benefit from your products or services. Without a referral program in place, they may not even think to recommend your company to these potential prospects. Some businesses will not only reward customers for their referrals, but they’ll also offer a reward to the referred prospect as well as the chances of closing a sale with a lead that comes via referral increases exponentially over a lead that starts off with a cold introduction.
The Benefits Of Customer Referrals
On the surface, the benefits of getting more customer referrals are obvious. More referrals equal more leads and more leads equal more potential sales. But there’s a lot more to it than that. Here is a closer look at some of the specific benefits that a good customer referral program can provide:
When it comes to the traditional methods of generating new leads, it can take a while to sort out the good leads from the bad leads. Many businesses use lead scoring tools to collect personal information and track user behavior to determine if a lead is qualified or not. Unfortunately, a lead is not a sure thing. Even leads that are qualified through lead scoring efforts do not automatically translate to sales. This is where leads referred by existing customers can differ.
Your customers and clients will only refer your products and services to another company or person if they think that you’ll be a good fit for each other. For example, maybe a client has a business partner that is looking for a specific solution that you happen to offer. If this is the case, they’ll refer you to them. That referral is likely going to be of high quality since they are matching a solution to a need. Your customer or client would not recommend your business if the offered products or services aren’t relevant to the company or person that they are referring you to. Doing so could hurt their reputation and potentially hurt their business relationships.
Even if you are offering a great incentive in return for referrals, customers and clients will be careful about who they refer your business to since their reputation and their relationship may be on the line. So if they do make the referral, it’s safe to assume that the prospect they’re sending your way is qualified.
The cost of acquiring new leads through customer referrals is minimal, limited to whatever incentive you’re providing to your existing customers for making the referrals. The traditional method of generating leads requires you to put money towards not just brand exposure (such as paid advertising, your website, your social presence, content generation, and more) but also through actually nurturing leads past the awareness stage.
Compared to how much it costs to obtain leads via more traditional methods, customer referrals are way more cost-effective. They can even help bring down your customer acquisition cost, which is determined by dividing the total amount you spent on generating new leads by the number of sales within a specific period of time.
Shortened Sales Cycle
Once you’ve obtained a new lead, you’ll generally have to spend a lot of resources nurturing them through the sales funnel. You have to build trust and convince them that your product or service is the best solution for their problem or need. The amount of time it takes to close a lead can vary greatly as a result.
When you obtain a lead via customer referral, you won’t need to spend as much time nurturing them. The fact that you were referred to them by a trusted source means that it won’t be nearly as difficult to close the sale. Shortening the sales funnel will not only help save money, but it will also allow your sales team to work more efficiently.
Increased Size Of First Deal
The leads that you obtain through referrals are often worth more, not just because you’ve spent less to obtain them, but because they will often make larger purchases as well. First-time customers that you’ve attracted and nurtured in the more traditional way won’t always go “all in” on your products or services. They may make a purchase, but it will be a smaller one — to test the water, so to speak. Customers gained through referrals are more likely to make bigger purchases right off the bat because of the trust that you’ve inherited from the referral.
According to Nielsen, which surveyed more than 25,000 consumers throughout the world, peer recommendations are trusted over any other channel. Around 90 percent of respondents either completely trusted or somewhat trusted recommendations made by their peers. Decision-makers will take seriously any referrals that your customers or clients make and greatly increase trust in your organization even prior to making initial contact.
Easier Conversion Of Leads To Customers
It’s estimated that around 74 percent of consumers are heavily influenced by word-of-mouth when making a purchasing decision. By encouraging existing customers and clients to make more referrals, you’ll obtain leads that are much easier to close. This is because decision-makers will have already been convinced by your customers to consider whatever product or service you offer, meaning that you’ll already be halfway there.
You’ll quickly find that converting leads referred to you by customers or clients are not only more likely to convert than other types of leads, but they’ll convert faster as well.
Minimized Pricing Objections
One of the potential roadblocks that can jeopardize a sale is price. Leads who you may have qualified can still back out at the last second because of a pricing objection. This generally means that the product or service you’re offering is out of their price range — but it can also mean that they are unsure whether they want to pay the price you’re requesting even if they can afford it.
With customer referrals, pricing is rarely an obstacle. If a prospect has been referred to your company, they won’t typically object to your pricing or fee as you’ve come recommended by someone that they trust. The more that a prospect trusts a company, the more willing they are to pay for the products or services.
By implementing a customer referral program, you’re showing your customers that you value their relationship and that you want to rely on them to grow your business. This in itself can improve loyalty among your existing customer base. By providing incentives, your customers will become even more loyal to your organization as they will be more likely to go out of their way to refer your company — essentially acting on your behalf.
Finally, when you are referred to potential prospects by customers, those prospects are more likely to become loyal customers faster. They already trust whoever referred you to them and if that person is loyal to your company (which they must be if they are referring you), then there must be a reason for it. Customers gained through referrals already trust you, which means it will be easier for them to become loyal to your brand.
Building A Foundation For Your Customer Referral Program
Your existing customers need to feel some sort of loyalty towards your company. Otherwise, they won’t be motivated to take part in a customer referral program. The most effective way to build this loyalty is through the customer service that you provide. If your customer service is poor, they won’t want to refer your business no matter what kind of incentive you offer. And if the prospect that your customer refers your business to also experiences poor customer service from your company, that will reflect poorly on them.
On the other hand, if you make an obvious effort to provide the best customer service possible, your customers will feel valued by your company. They will be more willing to refer your business. We’ll offer you a few ideas to ensure that you’re providing excellent customer service:
Respond To Customers Quickly
Nobody likes to wait. If a customer tries to contact you and it takes you too long to get back to them, they will feel like you don’t value their business. You need to make sure that your turn-around time is fast.
Provide Customer Service Across Multiple Channels
Different customers have different preferences when it comes to contacting your company. Make sure that you’re easy to contact and that you’re available across multiple channels, such as via phone, text, email, live chat, and social media.
Address All Feedback
Always address feedback, even if it’s negative. Be as friendly and helpful as possible when it comes to addressing questions, concerns, and complaints. You might have a long-term customer who posts a complaint on one of your social media pages. If you don’t address their complaint politely and attempt to find a solution to their problem, you risk losing their loyalty.
If it’s inconvenient for customers to reach you or to make a purchase, then they will assume that your customer referral program is a big hassle as well. It should be easy for them to reach you as well as to make purchases, whether online, in your store, or over the phone.
A lot of businesses spend a significant amount of time engaging with leads in order to nurture them. However, as soon as they make a purchase, their level of engagement drops off. Keeping existing customers engaged is important for several reasons. It will help keep your business at the top of their mind (if they forget about you, they’re not going to remember to refer you) and it will help you to continue developing your relationship. By further building on your existing relationship, you’ll strengthen their sense of loyalty.
There are multiple ways that you can engage with existing customers, such as these examples:
Asking for feedback about the experience customers have had with your company or about the product or service they purchased shows that you care about them and that you value their input.
Send Relevant Content
Just because your customers are already customers doesn’t mean you can’t continue to nurture your relationship with them. Email them personalized content that is relevant to them. For example, content that better educates them on how they can get the most out of the product or service they purchased from you.
Identify More Sales Opportunities
While you don’t want to flood your customers’ inboxes with promotional material, identifying potential cross-selling opportunities can actually help improve their experience with your company as long as those opportunities are relevant to their needs.
Send Friendly Notes
Simply sending an email wishing a customer a happy birthday or happy holidays shows them that you haven’t forgotten about them — and ensures that they don’t forget about you. Such notes are also a nice way to engage without any kind of ulterior motive.
While you’ll want all of your customers to have the opportunity to participate in your customer referral program, you may not necessarily want to target all of your customers for referrals. There are certain mid-to-high-tier customers that you know can provide you with higher quality referrals.
Some of your customers may have relationships with potentially high-quality prospects that you want to work with. Do some proactive research to determine which customers to target for referrals and to find prospects within your customers’ networks that you would like to be referred to. This information will make your customer referral program much more effective.
In addition to doing proactive research to identify referral opportunities among your existing customer base, do everything you can to make it easy to take part in your customer referral program. The more convenient it is, the more likely your customers will be to participate. Here are a few ideas to streamline the program:
Email Your Customers
Email customers who you’ve identified as referral opportunities to inform them about your referral program. Give them the information they need, such as what kind of incentives you’re offering, what kind of prospects (or specific prospects) you want to target, and simple instructions on how they can actually make the referral.
Set Up A Referral Website Page and Landing Page
Make sure that you have a page on your website dedicated to your customer referral program. The webpage should provide information about your program as well as a link to a landing page that prompts customers to provide the referral’s contact information.
Provide Pre-Filled Messages
Sometimes it can be difficult for customers to know how to go about referring your company to one of their partners or clients. By providing a template that has a pre-filled message, you make it easy for them to send a referral.
Implement A Customer Referral Program Today
Customer referrals are a valuable source of leads. Motivate your customers to provide high-quality referrals by implementing a customer referral program. Just remember, a good referral program is built on the customer’s desire to refer, which means that you need to focus on developing your relationship with your customers in addition to providing them with an incentive to participate.