Referrals

At align.me, we're fond of using LinkedIn for recommendations, but that's more properly described as a testimonial than a referral. Referrals are active, or at least permission for the seller to be active in using their name. Here are a few tips on how to gain B2B referrals.

Why bother?

  • Referrals have a 16% higher lifetime value, and
  • 92% of consumers trust referrals over all forms of advertising

Source: SaaSquatch

Build a complete referral system

SaaSquatch, from whom we borrowed (and linked) a couple of these stories also offer some don'ts:

  1. Don't hide the invitation
  2. Don't offer a miserly incentive. Make it good or goodwill, but don't be stingy.
  3. Don't even try if your service is a 'secret weapon' that's best kept as a secret

Close.io argue a simple process:

  1. Ask for a referral as soon as the customer buys.
  2. Ask again immediately if you don't get a referral there and then.
  3. Make it dead easy for the referrer by sending them a thank you email and include a template.
  4. If you close a referral, get the new customer to thank the referrer.
  5. Don't pay for referrals.

Earn the referral, don't just ask for it

Highly Recommended: Harnessing the Power of Word of Mouth and Social Media to Build Your Brand and Your Business puts it even more succinctly: "Live a recommended life." Seth Godin agrees. "The only thing that will make you remarkable is being worth remarking about."

Consider two-way benefits

UK-based SaaS accounting vendor FreeAgent has an attractive version of referrals especially geared to the SaaS model like DropBox.com has:

  1. Refer a friend and you and they each get 10% off in perpetuity (as long as both of you remain subscribers)
  2. Refer another, and they get 10% off and you are now up to 20%
  3. Refer a third, and they get 10%, and you are getting 30% off
  4. Continues all the way to 100% off (free)
  5. And then continues to become a fee earned rather than a fee paid for super-active referrers.

For FreeAgent, referrals have a 60-70% higher closure rate than leads from other sources. They subsequently dropped the 'overage' incentives - payment for successful referrals after 100% discount was achieved - as it became 'affiliate light'. Interesting.

Promote the referral request well

Click-tracking software company Yesware plasters its site with 'invite a friend' invitations and clicking the invitation takes the visitor to a pre-filled email form with well-written referral copy.

Time your request right

If it holds true that customers are most willing to refer when they have just bought, that would be because their expectations of value are highest at that point. So we should also consider asking customers who have just expressed their satisfaction with us. If you use NPS, you'd know that Net Promoter Score is a measure to help you determine customer satisfaction by determining if your customers would be likely to recommend. If you know which customers indicated a high propensity to recommend, then call them on it.

"Thanks so much for letting us know how happy you are and how likely you would be to recommend our services. We work hard to serve a special type of company well [insert this happy customer's situation, objectives, challenges here]. Other than you, who does that sound like to you?"

Summary and your referral campaign

  1. Address the strategic questions:
    • Which customers / recommenders / prospects do we want to get referrals from?
    • Who do we want them to refer?
    • When do we want them to refer? Think of the moments when their enthusiasm is highest.
    • What do we want them to do?
    • What is our offer / incentive?
  2. Sort your tactics:
    • How will we tell the referrers? Think of:
      • announcement emails
      • web invitations
      • phone calls
      • include notes in your invoices
      • A blog article.
      • What will work best at the 'happy moment'? How can we make it easy for the referrer?
    • How will we capture the referral, and the source?
    • How will we acknowledge the referral?
    • How will we effect the incentive / thank you once the sale is made?
  3. Set measurement and review process
    • What referral flow did you expect (numbers) and what did you get?
    • What Lag and Leakage did you expect and what did you get?
    • When will you review and refine (suggest quarterly)