Word-of-mouth marketing is one of the most powerful channels for bringing new customers to your business. In fact, according to Edelman Trust Barometer, 84% of B2B businesses initiate the buying process with a referral. And data from Marketo Institute shows that a B2B referral rewards program is the best acquisition channel for conversion rates at almost 4x the average.
So, it should come as no surprise that many B2B marketers are following in the footsteps of companies like Uber who have successfully grown their businesses using referrals. While companies from any industry can harness the power of word-of-mouth marketing, these types of programs pose unique challenges for B2B businesses.
Due to the complex sales processes and expensive nature of some B2B products, you need to put time and careful consideration into developing your company’s referral rewards program strategy, structure, and internal processes.
Below are seven questions that you should ask yourself, your marketing team, and key players on your sales team as you develop a B2B referral rewards program in order to anticipate issues and avoid pitfalls:
Customers will only refer your product if they have had an extremely positive experience with both your product and your company. Referral marketing is best suited for products with strong customer benefits and successful support.
Before you consider developing a formal customer referral program, you need to assess the customer satisfaction levels for your product. Are your customers enthusiastic about your product enough to recommend it to others? To determine this, you may want to conduct a Net Promoter Score (NPS) study. NPS measures your customers’ willingness to recommend your product to other buyers. If a NPS study is not feasible, assess your customer retention and subscription renewal rates.
The most effective way to get your referral program off the ground is by targeting your best customers. Here are there things to look for when identifying these key participants:
Now that you have defined your referral program’s target audience, you need to decide how you will ask them to join. For the most part, it’s better to start with a small, targeted push by sending invitations to those who are most likely to become referrers. You can do this through a targeted email campaign or by asking sales to send personal invitations.
Once your program starts to take off, you can then begin to promote referrals and loyalty incentives more extensively through your website, blogs, newsletters, social media, and direct mail. You can also extend the referral program to your partners if you have an active channel program.
Qualifying referred leads is a more complicated process for B2B companies. You need to confirm that your sales team hasn’t already identified the referral as a prospect. Depending on your sales process, this can be automated partially or completely using a marketing automation system and CRM.
You also need to verify that the referred business has the budget, authority, and timeline to make a purchase. You can ask for this information upfront as part of lead capture process or your sales team may prefer to ascertain this information by speaking directly to the referred lead. This is where sales and marketing alignment is vital to define and agree upon how you will qualify and accept referred leads.
One of the biggest pitfalls businesses encounter with a B2B referral program is that qualified, purchase-ready referred leads may get lost in the process. Not only is this a lost sales opportunity, but it may discourage customers from making referrals in the future. If you want your program to be successful, it’s essential that you work with sales to establish a system for tagging referred leads and directing their information to the right person who will follow up promptly.
You may want to create separate CRM views or marketing alerts to make sure that the sales team follows up on referred leads quickly. Consider creating a written service-level agreement (SLA) with sales to establish how and when sales representatives will follow up with leads.
Even if customers love your product, they’ll still need a little motivation to introduce your brand to others. This is especially true given the cost of most B2B products and services. As a result, many B2B referral programs use rewards or incentives to motivate and thank the referrers.
Here are some factors to consider when choosing an incentive structure:
With all of the moving parts involved in a B2B referral program, it will save you time, money, and resources if you find ways to automate some of the tracking and administrating aspects of your program.
Consider the following questions in order to help define how your marketing automation platform and CRM can support your referral program:
Word-of-mouth marketing is a worthy investment for any company with useful products and a significant customer base. Even though B2B referral programs can pose unique challenges, your business can build a successful program by identifying and anticipating these challenges from the start.
Work with your sales team to identify your best customers and develop a referral lead-to-revenue process. Then, map out the program’s incentive structure, the promotion strategy, and any automation needs. Now that you know what questions to ask yourself when developing the program, you can be on your way to making your referral program a marketing pillar of growth.
This post appeared first on the Marketo Marketing Blog.