It’s no secret that referrals can be extremely effective in driving deals across the finish line. Our survey confirmed it – 81% of sales leaders and 65% of marketing leaders agree that deals close at a higher rate when references are used.
Other research suggests a similar impact.
As macroeconomics force sales and marketing leaders to think about efficient growth, LTV:CAC (customer lifetime value to customer acquisition cost) metrics become increasingly more relevant. According to a study done by SaaSquatch, referred customers are 18% more likely to stay with your company, and have a 16% higher lifetime value than non-referred customers.
Referrals, references, and referral marketing, can be a game-changer for your pipeline. In this guide, we’ll show you how to get started, how to begin creating your referral marketing strategy, and share some best practices to help you make the most out of this powerful marketing strategy. Let’s get started.
What is Referral Marketing?
Referral marketing is the process of promoting a product or service through recommendations or word-of-mouth marketing. It is a way for you to leverage your existing network and customers to promote your business to new prospects. Defining a referral marketing strategy can be a powerful tool in your B2B marketing arsenal, as it can help you gain new business and increase customer loyalty.
Why Referral Marketing Works In B2B?
Referral marketing works well in the B2B space because it is based on trust and credibility. In the B2B arena, customers are more likely to trust the recommendations of their peers, colleagues, or industry experts than any other marketing strategy. Referrals also tend to be more qualified leads as they already have prior knowledge or relationship with your business through the referral source.
While referral marketing tends to drive a lot of impact in industries like B2B SaaS, it can be equally impactful for service providers as well, like marketing and advertising agencies and consulting firms.
At the end of the day, people want to feel good about their purchase, and referrals are an effective way to drive trust in the sales process.
Creating a Referral Marketing Strategy
1. Define Your Referral Program Goals
Before getting started with your referral program, it’s important to define your goals. Questions to ask yourself before starting:
- What is the objective of my referral program?
- Am I looking to acquire new customers?
- Do I need to sell a new product to existing customers?
- Am I trying to improve my pipeline conversion rate?
Defining your goals will help you determine the best approach for your referral program and ensure that you’re measuring the right metrics.
2. Identify Your Champions
According to our survey, finding relevant references was cited as the biggest challenge when it comes coordinating or managing reference calls between customer and prospects. This can be difficult because customers today — especially at B2B SaaS companies — are spread across a variety of departments: sales, marketing and customer marketing, and customer success.
The process of identifying and activating champions to use as referrals and references is manual and quite difficult. If you don't have proper insights, you run the risk of asking customers for favors who may not be a positive reference at the moment — maybe they’ve had a bad experience recently or have open support tickets. Additionally, we've seen the same references used again and again. In this instance, it’s dangerous if you request too many things from a champion (too many sales meetings, too many case studies, etc.), and eventually turn them into a detractor.
So, make sure you actually identify and track those power users and advocates you’ll use in your referral program. Finding a tech solution, such as Champion, can help as well.
3. Make it Easy for Customers to Refer
The key to a successful referral program is to make it easy for your customers to refer others. Once you’ve identified your champions, provide them with clear instructions on how to refer other companies or individuals. Whether it’s a simple way to share their schedule to meet with your prospects or an efficient way to share assets, the easier it is to participate, the higher participation in your referral program will be.
Another simple solution is to create a dedicated referral landing page on your website that can both accept those willing to be a reference or referral, and includes information about the program itself.
Lastly, understand that while referrals are great, customer advocacy — identifying the loyal customers who will act as champions for your brand, products, or services — can unlock an even bigger opportunity.
4. Offer an Incentive
While you want to be careful here (offering incentives can decrease the authenticity of the referral), offering an incentive can help motivate (or serve as a, "thank you!") your customers to refer others to your business. The incentive can be anything from a discount on their own plan, to a gift card, or even some elevated swag or merch.
5. Measure Results and Optimize
Once your referral program is up and running, it’s important to measure the results and optimize your program. Look for trends in the referral data such as when referrals are made, what kind of incentives are most effective, and which champions are the most impactful to your pipeline. Use this data to optimize and improve your referral program. Again, tech can be helpful here.
B2B Referral Marketing Examples
Before you hit go, it’s also helpful to learn from those who already have robust referral marketing programs running. While you may or may not decide that a formalized program is right for you, here's a few examples from software companies to draw inspiration from.
HubSpot's Partner Program
HubSpot's B2B referral marketing program takes the form of a comprehensive partner program, allowing agencies and consultants to refer clients to HubSpot's inbound marketing and sales platform. In return, partners receive commission on sales, access to exclusive resources, and ongoing support. This structure incentivizes partners to actively promote HubSpot, while ensuring that the customers referred receive top-notch service and valuable marketing tools.
This is a great example of a program that offers incentives in a way that doesn’t feel…gross. HubSpot created the idea of inbound marketing, built a platform that empowers businesses to efficiently deploy inbound marketing programs, and a robust agency network that helps distribute their platform.
Salesforce's Customer Success Platform
Like HubSpot, Salesforce also has a remarkable B2B referral marketing program. Through their "Customer Success Platform," Salesforce encourages satisfied clients to share their success stories and refer new customers. This program showcases real-world case studies, demonstrating the platform's effectiveness and generating trust among potential clients.
Dropbox's "Refer a Friend, Get Rewarded"
Dropbox's ingenious referral program is a classic example of how to harness the power of incentives. By encouraging its users to refer friends and colleagues, Dropbox taps into its loyal customer base, rewarding both the referrer and the referee with additional cloud storage space. This win-win approach encourages brand advocacy, while also expanding the platform's user base organically.
Wrapping It Up
Today, sales and marketing leaders are constantly being asked to do more with less. Establishing a B2B referral marketing strategy can improve conversion rates — all through tapping into the people, users, and champions who love you most. In general, referral marketing is reliable, trustworthy, and an effective way for B2B SaaS companies to grow.
By identifying your most loyal customers, making the referral process easy, and optimizing your approach, you can take full advantage of this powerful marketing strategy. So, why not make referrals a cornerstone of your marketing plan? Invite your loyal customers to help you grow your business, and you'll be surprised by the results.