Referrals have evolved from a simple in the moment approach to a strategic channel and strategy that are used by companies to dramatically increase revenue with an average 13% of customer referral leads and 31% of partner referral leads making a purchase. As a result of the development of referrals, many more consideration must be taken into account when designing a referral strategy that will lead to a revenue growing channel. When starting to design your referral strategy, before brainstorming any other referral program ideas, consider in-depth your referral sources.
While you probably already have an idea of one demographic who could or is driving referrals to your company, there might be some that you are missing.
“With 65 percent of b-to-b organizations including indirect channels and partners in their go-to-marketing strategy and an additional percentage looking to the channel for additional revenue growth, the channel is critical to the future success of a growing majority of b-to-b organizations across multiple industries,” said Kathy Contreras, senior research director for Channel Marketing Strategies at SiriusDecisions.
“The ability to leverage referral partners for that growth offers a great opportunity, especially as referral programs offer expansion beyond the typically targeted partners; this can offer many organizations a new or expanded route-to-market.”
Along with partner types like strategic, ISVs, integrators and many more, partners can be any influencer of your business including agencies and consultants that identify a need for your product or service in others. In order to not miss out generating revenue from any referral sources, gather your sales, marketing and channel teams and ask them a few basic questions.
Step 1: Referral ideas to identify new referral sources
To identify all referral sources that could generate new revenue, get input and referral ideas from the many different departments inside your company around these nine question:
1. What companies have a complimentary product that sells into your same targets?
- Referral strategy tip: This could be integration partners or just companies selling into your same group of buyers.
2. Who do your target buyers interact with professionally?
- Referral strategy tip: If you are selling to SMBs, there are many trusted advisers to consider such as their accountants and bankers.
3. What associations do your target buyers belong to or trust?
- Referral strategy tip: Local associations and chamber groups are often a key way that small businesses network.
4. Are there any purchases that typically happen in coordination with yours? If so, what are they?
- Referral strategy tip: When someone buys marketing automation, they may buy a webinar platform. Or when buying VOIP telephony they may buy a video conferencing platform.
5. Are there any consultant groups or agencies that are typically engaged in advising on a purchase decision in your area or a process that is complementary to your offering?
- Referral strategy tip: From niche consultants to goliaths, there may be players that are influencing your target buyers.
6. Are your target buyers part of a franchise model?
- Referral strategy tip: If so, the franchisors have direct access and significant influence worth pursuing.
7. Do you have existing resellers that are struggling with performance?
- Referral strategy tip: These resellers could be transition to referral partners.
8. Do you spend a lot of effort certifying new resellers only to have them underperform?
- Referral strategy tip: A referral program can be a qualifying step for a reseller. This ensures they produce quality leads before the time is spent to make them a reseller.
9. Do your customers have access to your target buyers in other companies?
- Referral strategy tip: Customers can be partners too.
To help guide you, try downloading and filling out this worksheet along with the necessary departments to get the most out of this exercise.
Step 2: Group your referral sources into programs
Following the identification of all your potential referral sources you will need to group them into programs. This will be based on whether or not your referral sources are individuals or companies where employees will be the referral sources. It is very important to think about the language and incentives that will drive each referral sources. If a referral sources needs a unique incentive or branding from the rest of your referral sources this might justify creating a separate program for those referral sources.
For instance, a customer might be incentivized by a flat bounty such as a gift card while a partner may expect a percentage of revenue paid through electronic transfer. By grouping referral sources by the messaging and incentives you ensure you create a program that will deliver the most ROI.
If you can’t take on more than one program at a time prioritize your programs by:
- Whether or not you have an existing relationship with the referral source
- How fast it would be to get the program to market
- The potential impact on revenue
Download the worksheet to help you with this step or download the complete Referral Guidebook with all 20 exercises to help you build a revenue generating referral channel.