As B2B marketers seek alternatives to traditional demand generation efforts such as email marketing, many are launching referral marketing programs to bring new prospects into the pipeline and keep their existing customers in the fold. Referrals are also gaining prominence as customer experiences exert a greater influence on the B2B buying process.
According to SiriusDecisions’ research, 75% of CXOs’ research is done through personal interactions and viral communication networks, where people share their experiences with vendors. “Companies are finally recognizing how critical the customer experience is to the buying process,” said Megan Heuer, VP and Group Director for SiriusDecisions.
Formalized referral marketing programs are yielding tangible results for some marketers, including:
More referral leads in the pipeline: With an automated referral marketing process provided by Influitive, Blackbaud, a provider of software and services to philanthropic organizations, has seen its revenue from referred customers grow to a projected $500,000 in 2015, from $13,000 in 2013. “Rather than just simply asking satisfied customers to be a reference for us, it has evolved into a two-way street where the advocates are getting something in return, and that has inspired more referrals,” said Michael Beahm, Customer Advocate Marketing Manager at Blackbaud.
Higher quality leads: “Not only is the cost of acquisition lower for referred customers; customers that come to us through referrals are ‘stickier,’” said Mark B. Brier, Director of Upsell and Referral Marketing for RingCentral, a telecom services provider and Amplifinity user. “Because they were referred by a trusted advisor, friend, IT consultant or other source, we find that they are higher-quality leads that become long-term customers.”
A more structured process for advocates: “It is important to have a referral marketing system that enables advocates to share their experiences with your product on their own timeframe via the channels that are most important to them when communicating with their network,” said Jeff Palmer, Digital Marketing Manager of Jive, a cloud communications platform provider and Amplifinity user.
A formalized and automated process can help turn customers into advocates, observers noted. “The key is to continue to nurture the customer relationship with regular interaction,” said Truman Tang, Senior Customer and Advocate Marketing Manager for Influitive. “You’d be surprised how willing people are to help you if you ask, but they don’t just want to hear from you when you want something.”
Referral marketing technology can also provide B2B marketers with better insight into their strongest customers, observers noted. “A referral program becomes a great way to find out who your best supporters are,” said Lloyd Bloom, Solutions Consultant for Amplifinity. “Then your cream of the crop are the ones who make referrals that become successful,” he said. “Gathering that data about your customers becomes very insightful."
Referrals Ramp Up Demand Gen Performance
Some industry observers note that the shift toward referral marketing has occurred because other demand generation tactics have waned.
Referrals help to produce more “warm” leads for the sales team, according to Mary Shea, Principal Analyst with Forrester Research. “From the sellers' perspective, cold calling is dead — so to speak. Many of the more traditional demand generation techniques have been exhausted, so these referral automation platforms enable sellers to engage with potential customers the way they want to engage.”
Nearly half (43%) of marketers who regularly use referral programs have used it to acquire 35% or more of their new customers, according to Gigaom Research’s Digital Marketers Survey. This is double the percentage of new customer acquisitions through email. Clearly, brands that invest in referral marketing can potentially gain a competitive advantage.
Inspiring Advocacy On Social Media
Social media plays an integral role as the channel for referrals. Since many B2B buyers consult product review sites such as G2 Crowd and Capterra, advocacy and referral marketing programs encourage advocates to get involved by posting about their customer experiences. “Getting our advocates active on these sites and social media in general has been a big bonus for us,” said Blackbaud’s Beahm.
Blackbaud has also actively worked with its customers to encourage referrals, Beahm noted. “Instead of just asking people to refer people in their network, we’re helping our customers identify potential advocates. We might notice that one of our customers is interacting with someone in his network. We might then ask that customer: ‘do you think that this person is a good fit for our product?’”
Beahm said the next phase is to have advocates get involved in online discussions about its upcoming event. “Advocacy marketing is a big game-changer for in-person events. We can start having them use the hashtag and tweeting prior to the event to generate buzz, and then there are a host of things we can get the advocates involved in at the event. You can’t just collect advocates like baseball cards. You have to keep them involved and excited about your brand.”