Best in Class Customer Referral Program
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Referrals offer your business a low cost source of high quality highly qualified leads that are more likely to become a loyal customer that refers others in the future. That is, of course, if your referral program is effective. If your program isn’t effective, the rare referral is just an awkward waste of time for you, the referrer and the referee. What distinguishes a successful, highly profitable referral program from one that’s less effective? Well, in the next few pages, you will discover the keys to a successful B2B referral program. Referrals are important enough to your business that you will make your referral program one of your key growth strategies. That means you will invest in a plan that is backed with the appropriate resources.
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Best in Class Customer Referral Program
- 1. B2B Referral Program Best Practices For more information: Call 410-977-7355 or visit mcgrawmarketing.com 1
- 2. For more details, download the Best in Class Referral Programs White Paper at http://bit.ly/13B0SQa Or email pat@mcgrawmarketing.com For more information: Call 410-977-7355 or visit mcgrawmarketing.com 2
- 3. In first year, the referral program generated a 35% higher close rate than other lead generation oriented marketing programs, and overall program ROI of 400%. Source: Channel Management Solutions, Exploring the Benefits of Lead Referral Programs as a Profitable Marketing Tool (Donwloaded from http://www.channelmanagement.com/Content/ebook/CCI_ReferralPrograms_Ebook.pdf on For more information: Call 410-977-7355 or visit mcgrawmarketing.com 3
- 4. Know what you want… …and that’s your ‘Ideal Customer’! For more information: Call 410-977-7355 or visit mcgrawmarketing.com 4
- 5. For more information: Call 410-977-7355 or visit mcgrawmarketing.com 5
- 6. Employees Clients Key Influencers Strategic Partners For more information: Call 410-977-7355 or visit mcgrawmarketing.com 6
- 7. Owner Ideal Customer Formal Program Training Rewards and Incentives Reporting and Communication For more information: Call 410-977-7355 or visit mcgrawmarketing.com 7
- 8. Owner Ideal Customer Formal Program Training Rewards and Incentives Reporting and Communication For more information: Call 410-977-7355 or visit mcgrawmarketing.com 8
- 9. Owner Ideal Customer Formal Program Training Rewards and Incentives Reporting and Communication For more information: Call 410-977-7355 or visit mcgrawmarketing.com 9
- 10. Owner Ideal Customer Formal Program Training Rewards and Incentives Reporting and Communication For more information: Call 410-977-7355 or visit mcgrawmarketing.com 10
- 11. For more information: Call 410-977-7355 or visit mcgrawmarketing.com 11
- 12. For more details, download the Best in Class Referral Programs White Paper at http://bit.ly/13B0SQa Or email pat@mcgrawmarketing.com For more information: Call 410-977-7355 or visit mcgrawmarketing.com 12
- 13. 20+ years helping businesses improve sales and marketing performance www.linkedin.com/in/patmcgraw/ www.mcgrawmarketing.com 410-977-7355 For more information: Call 410-977-7355 or visit mcgrawmarketing.com 13
Notas do Editor
- This presentation is an overview of the content addressed in my free white paper, Best in Class Referral Programs – which you can download at the URL shown on this slide. Or, if you prefer, send me an email at pat at mcgraw marketing dot com and I will be happy to send you a copy.
- Referral programs, when properly designed and implemented, can provide a business with a significant number of new customers at much lower costs than more traditional demand generation campaigns. Your business can see a higher volume of highly qualified leads that convert at higher levels, and are more likely to become a loyal long-term customer that also refers others.What follows are some key tips and practical insights into the best practices of highly effective referral programs.
- You don’t want your referral program to waste your time, or the referrer’s time or the referee’s time, so you need to start with a very deep understanding of what you need in terms of a ‘high quality referral’.Look at Your Current Customer BaseWho are your current customers, and why do they buy from you? Look for common characteristics and interests. Which ones bring in the most business? It is very likely that other people like them could also benefit from your product/service. Develop a profile.Targeting businesses:With a focus on business clients, you want to focus on firmographics - which consists of the following data points:IndustryAnnual RevenueNumber of EmployeesGeographic LocationJob Title of Buyer Focus on the buyer persona – including the typical buyer’s needs, wants, perceptions, expectations as well as values, concerns, objectives, motivations, and buying processes. Check Out Your CompetitionWho are your competitors targeting? Who are their current customers? Where are they seeing the greatest growth? How are they able to attract and retain those customers? Or are they experiencing retention problems that offer you the opportunity to attract their clients?This insight helps you identify and prioritize your opportunities as well as develop unique, valuable messages and offers that differentiate you from the competition.Analyze Your Product/ServiceNow that you know who your audience is and what their needs are, check out your products/services in order to make sure they offer unique, valuable solutions to those needs. Then compare your offerings with the competition. Create a list of features and benefits for each product/service that emphasizes the unique value the audience will enjoy and that the competition can't match.Evaluate Your DecisionOnce you've decided on a target market, be sure to consider these questions:
- This is an On-going ProcessThings change so you need to make these practices a part of your daily/weekly/monthly operations. Keep gathering and analyzing the data so you can identify developing trends and changes. This allows you to prepare and be proactive rather than being caught off guard and having to react.
- Step 2. Know who can refer those that you wantWhen most people hear ‘referral program’ they think of their clients.Expand your perspective to include:· Employees· Your clients· Key Influencers · Strategic Partners
- Step 2a: Employee ProgramsThis can literally consist of any employee, not just sales personnel—if he or she has the right relationship with a potential buyer, such as a friend or neighbor, who might benefit from product.Assigning an ‘owner’ to the programAs with all referral programs, your employee referral program must have an owner that has the authority and responsibility to make the program a success.Ideally, the owner may want to build a support team with key leaders in various departments across the company in order to ensure that the program is a focus for all. This creates a culture across the company where managers know the importance of the referral program and allow it to become part of the employee’s responsibility and, ideally, performance metrics.The ultimate goal for your program is for it to be company-wide in terms of awareness, support and participation. So the owner with a leadership team across your business can consistently promote and support the referral program to all employees. Process for identifying your ‘ideal customer’As with referral programs for any audience, you need to start with a focus on who your ‘ideal customer’ is so that you can clearly convey this information to every one of your employees.This should also include a set of qualifying questions with desired responses that can be used by employees when speaking with a potential new customer.Develop a simple, effective process for employees to referQualifying potential new customers is important—but without a simple and effective process for your employees to make a formal referral that will be quickly and effectively managed, you will have a referral program that frustrates employees and potential new customers which will result in the death of your program.Develop a formal programHighly successful employee referral programs have specific goals and objectives, strategies and tactics. And they have the resources necessary to succeed.One of the more common mistakes is to assume that an employee referral program is “….just another responsibility of all employees and will happen because all employees realize this and will do so automatically,”To avoid this, successful programs have an on-going communications plan that keeps the program front and center in the minds of the employees. Messaging should reinforce the training, recognize performance and rewards so the employees remain focused and motivated.Training your employeesWith your plan in place, now it’s time to train your employees on how to qualify and escalate qualified referrals so the potential new customer can be responded to by your sales team.Rewards and IncentivesRemember to offer rewards and incentives that are compelling and properly aligned with the effort and value of the referral. And successful programs offer a mix of rewards to motivate desired actions ranging from participation to impact.If your program requires the employees to simply escalate qualified leads, your rewards and incentives will be much different than a program that requires the employees to actually ‘close the sale.’ You might want to consider a reward and incentive structure that offers immediate rewards as well as rewards and incentives for performance over time. For example, one qualified referral earns the employee a reward while the employee with the most referrals per week receives a reward of perceived higher value. Or, you might want to set up a structure that rewards employees for referrals as well as revenue generated.Reporting and CommunicationAs with all campaigns focused on achieving key business objectives, your program needs to have regular reporting that identifies the impact of the effort. Key metrics might include:· Number of referrals· Conversion of referrals to first time buyer· Average order size vs. non-referrals· Revenue generated from referrals· Retention rates of referrals· Referrals from referrals Once the reports have been generated, share the appropriate information with everyone so that all employees understand the impact they are having on the business.Ideally, let them know the impact of the results beyond revenue growth. For example, one company shared the impact on year end bonuses, equipment upgrades and new employee hiring—all of which had a significant impact on the employees.
- Step 2b: Client ProgramsProcess for identifying the right clients: Not all clients will be right for your referral program so you need to start off with a process for identifying ideal clients – and that means the right business as well as the right person(s) within that business to work with on the referral effort.For example, let’s say an accounting firm is interested in creating a more formal referral programs.The logical first step is to think of their clients at the business level. What companies have they been working with for a substantial period of time that have a strong awareness and a positive reputation in the market and has a large number of business clients that appear to match our requirements?But you need to go a step deeper.Because the program requires people to make it work, the accounting firm team should also look at their contacts within the client. Does the CFO offer them a strong option? What about the other members of the leadership team? And what about sales, marketing and service? When selecting the individuals to work with on the referral program, keep in mind that they should have a strong relationship with your business and have strong relationships with other decision makers at other businesses. The key take-away here is that you should not limit your focus to the one or two people you work with on a regular basis – think beyond them and look at other leaders within the firm that can help drive referrals.Key questions to consider:· How long have they been your client? · Are they one of your ‘ideal clients’ in terms of annual spend? Is their account current? Have they had problems with your products and services?· Does the business view your business as their primary, secondary or tertiary solution provider? · How many clients do you think they can help refer to you and why? · Who are the people within the client’s business that you should work with on this referral effort? Why?· Do you have a strong and positive relationship with those people? · Has the client referred quality leads to you in the past? Identify an “Owner”: For some businesses, the sales person responsible for the client is the logical choice for leading the referral program with the client. For others, it is someone that is strictly responsible for working with the client on the referral programDepending on the criteria you have established for identifying the right clients, and the size and scope of the opportunity itself, you might not want your sales person to get distracted by the referral program. Instead, you might want a dedicated person that can work with a wider variety of people within the client’s business so that there is greater focus on these two very different responsibilities.Either way, you need to have a member of your team dedicated to the success of the referral program with each of your clients. Training for “owner” so they can work with the client.A common mistake is for management to tell the account representative to “Go get some referrals from your clients!” There are many problems with this approach but one of the key issues is that you will end up with multiple referral programs rather than a single referral program for your business. And you want consistency in order to manage it and grow it.So successful referral programs include training for the “owners’ – the firm’s representative for the referral program with the client. And those programs provide these people with the following:· How to identify qualified referral program client partners· How to approach clients about the referral program· Who to work with on the client’s team· Goals, objectives and parameters of a highly effective referral program· How to develop a go-to-market plan with the client · Process training for introducing a referral to your businessThe client is, in essence, your representative in the market – so you want them to have a clear understanding of what they will be doing and how to do it effectively. All of these points are important because it focuses your team on identifying quality referral partner clients and provides those partner clients with a solid foundation of knowledge concerning what they need to do and how they need to do it in order for all parties to enjoy a successful, mutually beneficial experience.Developing materials for client to use.Brochures, information sheets, presentations, check-lists, emails, direct mail as well as premium items to be given away – depending on the details of your referral program, you need to provide your referral program clients with the materials they need to succeed. And the best way to create an effective referral program – and limit expenses – is for you to develop and provide these materials for specific reasons and uses. You want to present these materials to the client with clear instructions on how and when they can best be used. Failure to do this will lead to every client requesting their own unique materials and that will quickly create a drain on your own resources which means a lower likelihood of success for the program overall.Training for client.Now that the client has agreed to participate in the referral program, they need to be properly trained so that they know what to do, when to do and how to do it.Best in class referral programs will provide participating clients with training on the following:· Clear definition of the ideal referral · Checklist for identifying the ideal referral· Key messages to deliver to prospective referrals that includes features/benefits· Process for identifying and qualifying a high quality referral· Process training for introducing a referral to your businessDelivering this information to your referral program clients should be done in a formal training session, preferably off-site, in order to convey the importance of the training and to gain their undivided attention. Obviously this can present a challenge due to everyone’s busy schedules so you should consider this a great opportunity to strengthen your relationship with the client and turn this into an enjoyable team building opportunity. Pick an appropriate location that shows that this is important to your firm. Invest the time and effort into building the agenda and the sessions – make them irresistible to your client. And use the opportunity to provide your client with a “Thank you” with a nice event that is the start of a new phase of your relationship.Establish goals and objectives (internal)As with any business project, you need to be able to determine whether or not the project is succeeding or failing. So for each client, the owner of the relationship needs to have a clear set of measurable goals and objectives. Should you share these goals with the client? Based on experience, the truly effective referral program efforts have the client and firm working together on these metrics because both organizations want to know what success is. That said, most clients either won’t want to set measurable goals and objectives or they will want to ‘set the bar low’ – so the owner of the relationship needs to have an internal set of goals and objectives that they are responsible for achieving.Feedback loop – know the progress, the outcomes, how to improveBy agreeing to work with your client on a referral program for your business, you have altered the relationship and increased the importance of clear, accurate, two-way communication because you now have a referral AND client relationship to protect.Schedule regular meetings to discuss progress – not only in terms of identifying potential referrals but in terms of how past referrals are progressing through the lead management and conversion and retention processes. In other words, you need to keep your referral program clients up-to-date on your progress with their referrals! Incentives for account team and clientEveryone involved is putting forth a great deal of effort to make the referral program a success.So make sure your program shows these people a little love.Depending on how you organize your program, you might have an account manager and an ‘owner’ of the referral program relationship. And then you have the individuals at your referral program client as well as the client’s organization.First, the rewards should be appropriate and valuable to the recipient. Reward for the sales person includes something for generating the referral as well as the opportunity to sell to that referral.If your program has a Referral Program Manager, reward them for the performance of the plan.On the client side, reward the individuals that work with you and the organization as a whole. For example, ABC Software has created a referral program relationship with XYZ Company. ABC Software typically spends $20,000 to generate a new client and that new client spends, on average, $250,000 in the first 12 months.The ABC Software account manager qualified XYZ management for the referral program and brought in the referral program manager to formalize and manage the relationship. For that work, the account manager could receive:· Cash Bonus or SPIFF· Entry into contests based on the referral program· Special incentives like preferred parkingThe referral program manager receives appropriate incentives for developing and managing a successful referral program with that client.The individual’s at the client firm that are involved with identifying and referring qualified leads to ABC Software should be rewarded but there may be some rules that need to be considered because many businesses have policies and guidelines that impact your ability to offer the individual a reward. When you start to work with your clients, ask about these policies and work with the appropriate members of your client’s team to come to an agreement.Finally, you might want to consider rewarding the organization. For example, sponsor the client’s annual Holiday Party or cater a lunch or sponsor a college scholarship for employees and their families.In some businesses, the individual couldn’t receive gifts valued at more than $50 per year from a single vendor. However, after speaking with the leadership team about the referral program, other rewards were identified and approved. For example, the vendor offered a variety of training options and conferences that helped the client enhance performance and productivity. The rewards negotiated in this situation included fee waivers for training and conference.And then the intangible rewards included recognition at the events – reserved seating a VIP tables that High perceived value, low cost.There is a natural tendency for many human beings to focus on cash rewards. Best in class programs focus on rewards that are high in perceived value, but low in actual cost.For example, while discussing the referral program with an interested client, we learned that they really valued online training programs because it helped them retain and develop their staff as well as eliminate the costs associated with traveling to off-site training. Since there was no real cost to adding one more person to an online training program, we waived the fee for a significant number of online training sessions.
- Step 2c: Strategic Partners Strategic partners are businesses that target the same audience as your business but offer products and services that either compliment your business’ offerings. Examples of strategic partners include law firms and accounting firms joining together to pursue business clients. Another example would be engineering and architectural firms with builders and property management firms. And yet another example is hardware and software companies bundling their products.Process for identifying the right strategic partners.Best in class referral programs with strategic partners have a specific list of requirements that must be met for a business to be considered for a referral program.· Reputation: Does the prospective partner have a strong, positive reputation in the market? · Awareness: Does the prospective partner have wide-spread awareness levels in their industry? In the same geographic markets as your operate? With the audiences your target?· Shared vision and goals for growth: Does the prospective partner share your vision and commitment to growth or do they have a history of “stopping and starting” growth initiatives? Are they committed to growth through customer acquisition or do they grow through other means such as acquiring other businesses?· Resources and ability to perform: Does the prospective partner have the resources (human, financial) necessary to perform the requirements of the referral partner program? Do their staff members have the skills, resources, ability to bring the program to a successful level?· Compatibility: Is the prospective partner trustworthy and fun to work with or are they too difficult to work with and prone to cause more trouble than they are worth?· Potential: Does the prospective partner offer you fast, simple access to resources that will drive success or will they require some work in order to get them up to the demands of an effective referral partner program?· Historical Performance in Referral Programs: Have they participated in other similar programs? How have those programs performed? Are they currently participating in similar programs? Do these programs cause concern? How are they performing? · Training for team so they can work with the partners.You need to have clear guidelines for the “Do’s and Don’ts” of the relationship so that your team understands what they can and can’t do.And you need to have a clear, simple process in place for escalating those issues that fall outside your guidelines.For example, this might be a partnership but it is between two distinct businesses so there will be some topics that can be discussed and others that cannot be discussed. Also, your team needs to understand how they should communicate the go-to-market strategies and programs within your firm so that there is insight into what is going on in the market. This will improve your chances to leverage the partner strategies and programs rather than be caught by surprise. For example, Company A and B enter into a referral program relationship and their go-to-market strategy includes co-sponsored events at conferences. That has an impact on how these companies, individually participate in those conferences so that resources are maximized, messages and offers are coordinated and the potential for success enhanced. Developing joint go to market strategies and programs – events, bundling products/servicesBest in class referral programs with strategic partners are developed by both organizations and should address goals, objectives, strategies and tactics as well as specific go-to-market strategies and programs with budgets and revenue forecasts that lay out the action plans for all activities.Strategies and tactics could include co-sponsoring events, creating new and bundling offerings down to calling on prospective buyers together.Feedback loop – know the progress, the outcomes, how to improveAs with all business programs, you should schedule regular meetings to discuss progress and to evaluate performance so that modifications can be made to the plan in order to improve overall performance. Incentives and RewardsWith these types of programs, the incentives and rewards will follow each firms standard compensation rules for employees because the each firm will be generating revenue for their own offerings. In those instances where new offerings are created, appropriate rewards and incentives would be developed for achieving the revenue projections for those offerings.Exit StrategyAll referral programs should have an exit strategy included in the original agreement in order to clearly define how the program will dissolve. It is critical to have this agreed upon upfront so there is a clear, agreed upon process for closing down the program.
- Step 2d: Key InfluencersKey influencers are professional associations, publishers, suppliers and industry analysts that are well connected and have a strong reputation for honesty, integrity and helping others find effective solutions. These are the people that qualified buyers turn to for advice and referrals because they are trusted and well-connected.Process for identifying the right key influencers.· Reputation: Does the prospective key influencer have a strong, positive reputation in the market? · Awareness: Does the prospective influencer have wide-spread awareness levels in their industry? In the same geographic markets as your operate? With the audiences your target?· Reach: Does the prospective influencer offer you the ability to reach all or a large percentage of your audience? · Shared vision and goals for growth: Does the prospective influencer share your vision and commitment to growth or do they have a history of “stopping and starting” growth initiatives? Are they committed to growth through customer acquisition or do they grow through other means such as acquiring other businesses?· Resources and ability to perform: Does the prospective influencer have the resources (human, financial) necessary to perform the requirements of the program? Do their staff members have the skills, resources, ability to bring the program to a successful level?· Compatibility: Is the prospective influencer trustworthy and fun to work with or are they too difficult to work with and prone to cause more trouble than they are worth? · Potential: Does the prospective influencer offer you fast, simple access to resources that will drive success or will they require some work in order to get them up to the demands of an effective referral partner program?· Historical Performance in Referral Programs: Have they participated in other similar programs? How have those programs performed? Are they currently participating in similar programs? Do these programs cause concern? How are they performing? Developing joint go to market strategies and programs.Best in class referral programs with influencers are developed by both organizations and should address goals, objectives, strategies and tactics as well as specific go-to-market strategies and programs with budgets and revenue forecasts that lay out the action plans for all activities.Activities could include online and in-person events, white papers and advertorials.Feedback loop – know the progress, the outcomes, how to improveAs with all business programs, you should schedule regular meetings to discuss progress and to evaluate performance so that modifications can be made to the plan in order to improve overall performance. Incentives and RewardsWith these types of programs, the incentives and rewards will follow each firms standard compensation rules for employees because the each firm will be generating revenue for their own offerings. In those instances where new offerings are created, appropriate rewards and incentives would be developed for achieving the revenue projections for those offerings.Exit StrategyAll partnerships should have an exit strategy included in the original agreement in order to clearly define how the partnership will dissolve. It is critical to have this agreed upon upfront so there is a clear, agreed upon process for closing down the partnership – because you want to ensure your shared audience is not inconvenienced.
- Step 3. Some sources will work, others will not. Focus on success.As with all campaigns, some will work better than others. The same will prove true for your referral program—so be prepared to shift your focus to those efforts that produce and away from those that don’t.And remember that this is about the plan, not the source. You need to protect your relationship with your sources for a variety of reasons which makes your referral program relationship secondary.Focusing on the performance of the plan, rather than the individual, will allow you to go from the start of the effort through several rounds of test, measure, analyze, modify and repeat. After a few rounds, use that on-going communication to have an honest chat with the source. Tell them that you appreciate their effort and that because the plan is working as hoped you want to thank them and rethink things. Take a break...and use that time to focus your attention on those sources that are hitting if not surpassing their plan’s goals.