REFERRAL finding your TECHNOLOGY MATCH HOW TO CHOOSE THE REFERRAL SOFTWARE THAT MEETS YOUR NEEDS AND GENERATES THE REFERRALS YOU DESERVE. INFLUITIVE.COM
Table of contents What types of referrals are right for you?...3 What kind of referral program do you desire?...4 What kind of (referral technology) commitment are you ready for?... 6 It s time to make your move... 8 Love does cost a thing... 9 Ride off into the sunset with your referrals... 9 2
WHAT TYPES OF REFERRALS ARE RIGHT FOR YOU? Proof that referrals conquer all... In love, and in business, the best relationships start with a common connection or shared interest AKA a referral. Referral benchmarking research by Heinz Marketing and Influitive found that referrals convert better, close faster and have a higher lifetime value than other types of leads. But generating high-quality referrals isn t a one-size-fits-all strategy. This ebook will help you discover what kind of referral program your company is ready to commit to, and help you choose the tools and technology to make it come to life. Before we start talking about referral programs, however, answer this: when you re single, do you get to know people before you get serious with them, or do you bring them to meet your parents on the first date? It all depends on which kind of connection you re looking for. 86% of companies with formalized referral programs experienced growth over the last two years (vs.75% of those without one) Companies that have referral tools in place are 3X more likely to accelerate referral generation and conversion Now, apply this question to your business relationships: What type of leads do you want? Do you want deeper, life-long connections based on a set of specific qualities (i.e., referrals that are more likely to turn into Sales Qualified Leads (SQLs) or Marketing Qualified Leads (MQLs), or would it be more beneficial to be introduced to as many people as possible to see who s a match? Your answer will determine what kind of referral program you should be building. When do referrals happen in the customer lifecycle? You also need to think about when and how your customers who will be your greatest source of referrals want to refer their friends to you. Are they the type to gather all the facts before they endorse a product or service, or are they willing to make an introduction right away? Referrals can happen any time in the customer lifecycle. Are you willing to compromise or are you stuck in your ways? For the best results, the referral tool you choose should be flexible enough to cater to both groups: slowly nurturing your more hesitant customers toward referring while giving those social butterflies the ability to refer whenever they re in the mood. So, what are you looking for in a referral program? A sense of intimacy and connection with customers, or a quick fix to build your confidence and get yourself out there? 70% of companies with formalized referral programs are on pace to meet or exceed their 2015 revenue goals Source: What You Should Know About Referrals (But Probably Don t) research report by Heinz Marketing and Influitive Mackenzie Keelan, Advocacy Marketing Hub Assistant at SAS Think about what kind of referrals your company is looking for. If you sell to consumers, then you will take any referrals that come your way. If your customers are large enterprise firms, you will need more sophisticated software that can aid in qualifying the referrals. 3
WHAT KIND OF REFERRAL PROGRAM DO YOU DESIRE? Before you can look for the right technology, you need to figure out what your referral program needs are based on a few factors. 1. Your ideal type of referral No, not tall, dark and handsome. Some referral tools allow your customers to share links and tracking codes to invite friends to sign up. However, these referrals are passive and don t end up in the hands of your sales team. You re left waiting to find out if their friend will get in touch with you (or not). Amy Johnson Senior Principal Marketing Specialist at Symantec Be very clear on the scope of what you want and the outcome that is expected. It should not only benefit the company, but you should have a way to have it benefit the person making the referral as well. If you want something more meaningful than unqualified leads, you need your customers to submit their friend s contact information so your sales team can reach out directly. This type of endorsement is more personal and can be considered equivalent to a MQL. It gives you the opportunity to drive sales action not just web traffic that may (or may not) convert into leads. Ask yourself: do you want secret admirers or real connections? 2. Your courtship style Remember how we said some of your customers will want to know you really well before they refer, while others will do it based on their initial impression of your brand? While neither is necessarily better than the other, each kind needs special nurturing to create a mutually-beneficial relationship. Michael Beahm, Senior Marketing Manager at Blackbaud Collaborate with internal and external stakeholders to understand how the referral software would solve the need to refer new business, process the referral and reward individuals for their referral. Shy folks need to be educated on the kind of referrals you re looking for and how you ll approach their friends before they hand over any information. Make your referral process transparent so they ll feel comfortable making an introduction. Extroverts who refer others to you at the start of your relationship could become some of your best (and most frequent) referrers. The key is giving them special recognition and rewards afterwards so you can get to know each other better. Ask yourself: do you want to court customers early on so they refer quality matches? Or make them feel special after they give a referral so they keep introducing you to new people? 4
3. What you have to offer You ll attract more referrals if you thank and reward your customers for setting you up with their friends. Referral rewards usually include generic perks, like product discounts or gift cards. However, the thrill of monetary rewards will fade over time for those who submit high-quality referrals. They ll prefer things money can t buy, like: VIP treatment at your next event Special access to your executives Private beta testing opportunities Points they can use to choose their own rewards Who owns referrals? While sales should be heavily involved in the referral process, marketing should be the ultimate matchmaker. Referral benchmarking research by Heinz Marketing and Influitive found that referral programs lead by marketing are 3X more likely to achieve their EOY revenue goals. This is because marketing teams have the insights and resources to create a seamless referral experience from the way a referral is requested to how customers are rewarded. Ask yourself: how much are you willing to give for the types of referrals you desire? 4. How you ll pop the question There are two ways to request referrals that won t burn out your customers with constant requests: Timely referral requests when customers express happiness with your brand like when they write a positive online review, give you a high NPS score or experience success with your product. What s an advocate marketing program? An advocate marketing program is an exclusive online portal where your top customers can interact with your brand, and are presented with opportunities to be recognized for advocating for your brand. To learn more, read this blog. Consistent, subtle referral reminders (like a link to your referral submission page) in your email signatures, weekly newsletter, customer login page, or in your customer community or advocate marketing program. Ask yourself: do you want to make your intentions clear from the start, or feel out your customers first? 5. Who s taking the lead Sales and marketing must come together to set up the processes and prospect outreach that will happen after a referral is given. They ll need to: Create a clear workflow and prioritization process for referrals Make a simple submission method for customers Establish a method for tracking referrals and providing updates to customers Develop an outreach plan for communicating with referred prospects Ask yourself: how does your company plan to court your customers and prospects? 5
WHAT KIND OF (REFERRAL TECHNOLOGY) COMMITMENT ARE YOU READY FOR? Now that you ve thought about your referral needs, it s time to imagine what your ideal program looks like and the technology you ll need to make it happen. Any kind! WHAT KIND OF LEADS DO YOU WANT? MQLs/SQLs Nilesh Surana Marketing Manager at Aryaka Networks Get in your customers shoes and ask yourself if they would like to participate in such a program. If the answer is yes, then you need to ask what will keep your customers engaged in the long run. ARE YOU SURE? Yep! I don t know WHO WILL LEAD YOUR REFERRAL PROGRAM? Okay, quality leads Marketing Sales DO YOU WANT A FULLY AUTOMATED REFERRAL PROCESS? No, it should vary depending on the individual and rep Individual outreach (personal calls/ emails) HOW WILL YOU ASK FOR REFERRALS? Yes, we ll have a clear process for every referral Automated campaigns and requests Individual outreach and on-going campaigns WILL YOU UPDATE CUSTOMERS ON THE STATUS OF THEIR REFERRALS? Yes! Just kind of want referrals DO YOU WANT TO BUILD BETTER RELATIONSHIPS WITH YOUR REFERRERS? I ll leave it to my reps You bet! WILL YOU REWARD CUSTOMERS WHEN THEIR REFERRAL SIGNS A DEAL? Yes! Gift card or discount HOW WILL YOU REWARD CUSTOMERS FOR REFERRALS? Is thanking them enough? Tailored rewards or points STAGE 1 STAGE 2 STAGE 3 STAGE 4 6
Stage 1: Informal & manual process - An ad-hoc referral request method (The Heartbreaker ) This lack of a strategy/technology relies on manually capturing and tracking referrals. There is no clear process for requesting referrals, closing the feedback loop or rewarding customers. Collecting high-quality referrals is also difficult due to a lack of transparency and customer nurturing before and after the referral request is made. Stage 2: Landing page system - A simple home for referral collection (The Schoolyard Crush ) A simple web form allows for easy customer referral submission and internal tracking. The referral data collected from the form is often transferred to a Customer Relationship Management (CRM) platform so it is accessible to sales/marketing. Reward fulfillment is likely a manual process. Christine Durakis, Product Marketing Manager at Booz Allen Hamilton Go with a solution that can cut through the noise. We live in a society with fivesecond attention spans. Why should your customer give you a referral, and why should they do it now? Having a solution that allows you to incentivize your customers will drive urgency and action. This lack of scalable engagement before and after customers are sent to the referral submission page may cause low-quality submissions. Stage 3: Automated referrals & rewards - An organized referral system (The Mr./Mrs. Right Now ) A fully-automated landing page and rewards system (that integrates with your CRM) allows for efficient referral collection and tracking, automated customer updates (usually via email) on the status of their referrals and standardized reward fulfillment. While the internal referral management process is effective, this system lacks a way to personally engage customers at every stage of the referral process making it tough to consistently receive high-quality referrals. Stage 4: Advocate nurturing & referral automation - An effective and engaging customer referral program (The One ) The referral nurturing, submission, feedback and rewards processes are fully-automated and integrated with an advocate marketing program. A points-based rewards system allows advocates to choose personalized rewards. This increased engagement throughout the entire referral process results in a continuous stream of new referrals. 7
IT S TIME TO MAKE YOUR MOVE Now, that you ve worked up the courage to ask your customers to set you up, you need to choose the tools that will help you do it right. Here s a checklist of the key features and benefits you should look for when selecting your ideal referral software: CRM integration Amy Winner, Director of Community Marketing at Socrata Think long and hard about how it will fit in with your existing systems, and how those systems will scale going forward. Think about the long term implications (and that long term may be past when your initial contract expires). A simple, customizable way to submit referrals online (landing page) A method for delivering customer updates as referral progresses through buying process Customer nurturing before and after a referral is submitted An automated rewards system Customer service and support 8
LOVE DOES COST A THING You re almost ready to start courting your referred prospects! However, you ll need to know how much they re worth so you don t treat them like a cheap date. When evaluating referral solutions, there are three cost elements to consider: 1. Cost of Software - Referral software solutions can cost hundreds or thousands of dollars a month depending on the size of your organization. 2. Cost of Rewards - As a general benchmark, offer customers a reward valued at 10% of your average deal size. Multiply this amount by the number of referrals you hope to receive, and their average conversion rate. (A 2014 B2B sales benchmark study by Implisit found customer referrals convert at an average rate of 3.63%.) 3. Cost of Administration - If you re investing in software, you ll see immediate gains in efficiency (compared to spreadsheets and tracking sales people down). As a rule of thumb, on-going administration of your program should probably take 30% (or less) of a full-time employee s time. Your program ROI should also take into account your average sale price (ASP) and current cost per lead (CPL). One wellplaced referral could cover the entire cost of your program, depending on your average selling price. Plus, increasing the referrals you receive should also reduce your average cost per lead. RIDE OFF INTO THE SUNSET WITH YOUR REFERRALS... Whether you want to hone in on hot, qualified leads or cast a wide net and hope for the best, one thing is certain: the right technology can help you court more potential customers but not by itself. The best programs need a strategy and the right tools to create matches made in referral heaven. There s much more that goes into creating a referral program that appeals to all of your customers and prospects. To learn more about building your dream program, visit Influitive s blog, or read The Little Black Book of B2B Referrals. Calculating the the cost and return of your referral program Formula: New revenue (Referrals @ ASP x Average conversion rate) - Investment (Software + employee + rewards - CPL reduction) = Referral program ROI Example: AcmeCo has invested $24k in software over 12 months, and they plan to use 10% of a $70k employee to run the program. Their ASP is $50,000 per year. They have 500 customers and expect 10% to provide one referral a year (50 referrals). They predict their referrals convert at a rate of 3.5% and will result in a CPL reduction of $25,000. For each referral submitted, they will reward the referrer $500, and another $5,000 if the deal closes. $87,500 in new revenue (50 referrals @ $50K ASP x 3.5%) - $48,500 investment ($24K software + $7K employee cost + $42,500 rewards* - $25K reduction in CPL) = $39,000 $48,500 investment = 80.4% return on investment *Cost of Reward Calculated as 1% of ASP per lead generated and 10% of ASP per referral converted 9
Influitive Referrals Empowers you to build effortless referral programs for your customers, partners, employees and advocates. With just a few clicks, you can set up a branded referral program that: Collects the referral information that s important to you Provides a feedback loop and rewards to referrers Integrates into your existing CRM and Marketing Automation systems Works with or without an AdvocateHub Visit influitive.com to learn more