As B2B companies become more customer focused, unique opportunities are arising from the deep bonds developed between buyers and sellers. Tactics such as referral marketing have become more prevalent as buyer expectations change and B2B businesses look to their customer advocates to bolster new conversations.
Industry experts note that this comes from the ongoing trend of B2B buyers looking for more direct relationships with vendors they can trust as cited by their peers. Research from Demand Gen Report shows that 92% of B2B buyers give most credence to peer reviews and user-generated feedback. With this knowledge, businesses must look to their customers as a new revenue channel, not only in expansion via cross-sell and upsell, but also in terms of referred customers.
“A different way to incent, motivate and drive loyalty with [customers] is to get a referral program going, or an influencer program, or a number of different kinds of programs that attribute their ability to drive leads or drive business for you,” said Jay McBain, Principal Analyst for Global Channels at Forrester Research.
“We're seeing companies start to understand their need for channel strategies. We’re also seeing companies that have mature channel strategies and are adjusting them to include referral opportunities,” said Josh Swenson, VP of Product and Customer Strategy at Amplifinity, a referral software provider. “Overall, I definitely think [these practices] are gaining mindshare among professionals.”
Progressive companies such as Resultados Digitais are seeing early success with referral marketing initiatives within their organization, positioning themselves to create deeper relationships with customers by building a strong community around their brand.
“As buyers place less trust in vendors, the importance of figuring out how [prospective customers] can learn from their peers — and get informed on what's going to work for them from a more credible and authentic source — is only going to increase,” said Chris Newton, SVP of Marketing and Sales at Influitive, an advocacy and engagement software company. “So, while the idea of using referrals and relying on referrals is nothing new, I do think it's something that is going to be even more powerful and important for vendors going forward.”
Resultados Digitais Sees Half Of All Internal Referrals Turn Into Won Business
Resultados Digitais, a Brazilian-based marketing and sales software provider, has seen notable success after building a community designed to boost customer loyalty and increase opportunities for referrals from similar companies.
The company began building its “RD Connect” community in April 2018 and has seen it grow from 500 pilot customers to 1,500 customers and 150 agency partners. Zachary Fox, Director of Product and Customer Marketing at Resultados Digitais, said that the program began after the company saw a huge burst of growth in 2016 and looked to take a more customer-centric approach to its marketing initiatives.
“The company didn’t have a customer marketing strategy when I started,” Fox said. “My boss had this idea when he brought me [onboard] that we were going to build out this program to create better connections with our customers.”
Fox noted that referrals were part of the company’s future goals for the new program. The team first had to define what value RD Connect would bring to its customers, including incentives for engagement such as AdWords credits. They then piloted the program with a small group of customers to ensure that this channel would drive valuable engagement. The company uses Influitive for its customer advocacy program, which provides a location that is easily accessible and measurable from a brand standpoint.
After seeing notable success with the pilot, Resultados Digitais expanded the program and began experimenting with newer asks, such as referrals and requests to leave product reviews on third-party websites.
The company tested ways to gain referrals from its newly formed community. One way was with a “Referral Month,” which Fox said was broken up into three parts:
- Engagement within the platform: Creating unique incentives and rewards for referrals given to RD Connect members throughout the month;
- Engagement outside the platform: Fox and his team created outbound campaigns for customers that weren’t part of the RD Connect community, but had a moderately high net-promoter score; and
- Internal engagement: Incentivizing Resultados’ employees to refer potential customers.
“It's really interesting because we basically have this program up and running, and with some communication internally, we’re generating monthly sales on a regular basis,” Fox said.
According to Fox, referrals driven by the program cost roughly one-third of what the company spends on leads via paid media. Fox also said that the other added benefit of this program is the ability to lean heavily on it for referrals when needed, such as when the quarter is about to close or if there is a notable dip in lead volume.
“We have the advantage of choosing when we want to push the referral,” Fox said. “For example, we did very little in May because we did some [programs] in February and March. So, we had to push very hard. Now, closing the quarter, we can push harder to help our sales reps.”
Ultimately, the company is closing — on average — half of the internal employee referrals that are made, providing the marketing team with positive ROI as a result of this customer advocacy program. It is now used by 1,500 customers and 150 agency partners.
“Over the course of January and April, we have proven ROI of the entire advocacy marketing platform with the sales that came from referrals driven by the program itself,” Fox concluded.
Finding A Balance Between Volume And Value
Experts agreed that, like most channels and tactics at a marketer’s disposal, referral initiatives should not be a constant inundation for customers. That is why referral programs tend to be baked into other larger initiatives, such as customer advocacy or influencer programs.
“I see a referral marketing program as a subset of a larger customer advocacy program,” Newton said. “And a customer advocacy program is in the same way a subset of a larger customer engagement or customer community program. So, you want to engage your customers for many more reasons than advocacy, as there are more forms of advocacy than just referrals.”
Finding a balance in messaging for referral initiatives, including the right incentives and expectations, is not only beneficial to the customer, but also the vendor. Experts suggest that a quarterly cadence of referral asks is an optimal starting point for generating a healthy number of high-quality, customer referrals.
“I would question the quality of those [referrals] if you drive a high volume,” Newton said. “Typically, the overall average quality of those referrals is going to go down if they come in high volume.”
Experts added that the quality of these leads comes from the already established relationship of the customer or the partner.
“Who do we rely on most? You have a peer, a colleague, a trusted relationship,” said Scott Brazina, CMO of Impact, a partnership automation company. “I believe those avenues for advice and insight on products are at different levels of trust.”
Experts agreed that, to avoid limiting the potential of deeper customer relationships and advocacy, B2B companies should view referral initiatives as a value added to making that connection with new brand advocates.
“This is like a ‘Back to the Future’ moment for most businesses,” Newton concluded. “Referrals are one of the oldest and most-loved forms of marketing. Ultimately, referral-only programs are more likely to give me shorter relationships in duration, and you'll probably get a big surge in volume of low-quality referrals. I think a natural approach is to remind [customers] periodically that you'd love to get referrals and they can come up with high-quality leads.”