There is one way to grow business that is heads above any other - and that is through creating a referral program to seek referrals, give referrals, and grow visibility. For companies in growth sectors, such as managed service provider organizations it makes a lot of sense to consider this strategy for customer and partner growth.
Why referrals in the first place?
When you get referred to a buyer, you have a huge advantage to bring a sale to closure (rather than it not closing) and you have a huge advantage for it to come to closure sooner.
A referred lead has typically a 50% chance of closure compared to a cold lead which typically has a 20-30% rate of closure. (B2B Study)
When you are referred by a trusted source, the buyer can make a decision more quickly than if they did not know the person or company who referred you to them. The trust they have in their referrer pulls you in too. Suddenly, you’ve become trusted as well.
The Wharton School of Business found that the lifetime value of a referred customer is 16% greater than one that is not referred.
“Customers acquired through word of mouth add two times the lifetime value of customers acquired through traditional marketing. Customers acquired through word of mouth spread more word of mouth and bring in twice as many new customers.” – Villanueva, Yoo, and Hanssens.
So How Do I Set up a Referral Program
Make referring a natural and measured part of your sales process. Since 83% of satisfied clients are willing to refer, but only 29% actually do, according to Texas Tech, then a system needs to be put into place so that sellers set the expectation up front about asking for a referral if they provide a great customer experience.
I like to say at the very beginning of working with a prospective buyer that I imagine they will be so pleased by working with us that they will be happy to recommend us and refer us to others. This way, once we’ve gone through the buying process, and it is time for me to ask about a recommendation, they expect it. In fact, they’d be disappointed if I didn’t ask.
So I do. And amazingly, new buyers recommend us to others.
What Zappos Does
“We take most of the money that we could have spent on paid advertising and instead put it back into the customer experience. Then we let the customers be our marketing. Historically, our number-one growth driver has been from repeat customers and word-of-mouth.” – Tony Hsieh, Zappos CEO
Start Wherever You Are
Today make a list of those companies and individuals that can refer business your way.
Make a list of those you can refer your clients to.
Set up a stage in your CRM system where you routinely ask for a referral or recommendation.
Train your reps to ask early on and set the bar high for your delivery of services.
If you do those four things you will have a great start to get and give referrals - and grow revenues.
This post was brought to you by IBM for MSPs and opinions are my own. To read more on this topic, visit IBM’s PivotPoint. Dedicated to providing valuable insight from industry thought leaders, PivotPoint offers expertise to help you develop, differentiate and scale your business.
Lori Richardson is recognized on Forbes as one of the "Top 30 Social Sales Influencers" worldwide and is a Top 25 Innovative Sales Blogger. Lori speaks, writes, trains, and consults with inside sales teams in mid-sized companies. Subscribe to the award-winning blog for sales strategies, tactics, and tips.
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