B2B Referral Marketing: Driving Leads vs Closing the Sale

Referral Marketing Concept. Multicolor on Dark Brickwall.I’ve been thinking about referral marketing recently due to my own experience giving referrals to friends and family for Blue Apron, the meal kit delivery service. Clearly Blue Apron is using referral marketing to drive lead generation. But does this type of B2C referral marketing translate to B2B marketing?

The classic referral marketing program

Blue Apron’s is the classic referral marketing program where the customer is encouraged to get others to try the service via various incentives. Initially the incentive was being able to give free meals worth $60 to my friends and family. More recently the incentive was upped to include savings for me if the person continued the service. But anyone connected to me on Facebook knows I’m a raving fan of the service, with or without the incentives, frequently posting pictures of the awesome meals we make. So this got me thinking about how this type of program translates to the B2B world.

Referred leads are better leads

Of course for any referral program to work the company must be retaining customers and keeping them happy. So why bother at all with referral marketing? The most recent Hubspot survey report, the State of Inbound 2017, respondents rated referrals as the highest quality leads. The report concluded this was likely because respondents thought these leads are more likely to convert, but the report also acknowledged the challenge most organizations face scaling referral programs to get more leads into the sales funnel. Similarly, according to the Journal of Marketing, a referred customer has a 16% higher lifetime value than customers acquired through other methods. Intuitively this makes sense because we trust our professional peers who may recommend a company’s product or service via word of mouth, social media, or online review. The thing I wrestle with is how a B2B marketing team can make this a formal program for lead generation.

A lead generation referral program?

B2B companies need to think about whether their product/service and industry lends itself to a referral program for lead generation. Firstly, can your customer accept the incentive you are offering? Many companies have rules about accepting gifts. And if you are offering an incentive doesn’t that reduce the trust factor somewhat? Secondly, be realistic. Is your product/service the kind of thing someone will be willing to refer others to? They may not want their competitors to know they use your products/services, or maybe it’s just not something that generates enough engagement to be top of mind or worth bothering with.

For the referral program to generate leads at scale, realize you’re encouraging a customer to take time to proactively talk to others like themselves, post to social media, or provide an online review. Without direct personal interaction, I think this is a huge obstacle for many B2B companies.

Sure there are online professional forums and industry meetings where peers share referrals. But I don’t think this fits very well into a formal referral lead generation program, especially for many of the industrial, manufacturing, and facility services companies I work with.

A referral program that shortens the sales cycle

So how can B2B marketing teams create formal referral programs that help sales? Instead of focusing on referrals for lead generation (shouldn’t this happen organically if your customers are happy?), I think the payoff for B2B companies is using referrals to shorten the sales cycle. B2B marketers should work with the sales team to create a list of reference clients. These are clients who are very happy with your product/service and willing to take calls or exchange emails with prospects upon request.

Marketing can formalize the reference program by:

  • Defining the types of client references by vertical, type of product/service, company size, value drivers, etc. so that the sales team can easily match prospects to the best fit reference when the time is right.
  • Providing the sales team with a system for capturing references. CRM systems such as Salesforce support capturing this information, making updates/changes, and providing access to the entire sales team.
  • Educating and working with the sales team to identify the best reference contacts and developing a process for capturing and using the information in the system (see above).
  • Utilizing the reference list to create testimonials, case studies, and client quotes for Testimonialssmthe website, content, blog posts, videos, etc.

In this way, marketing can provide prospects with referral customer “word of mouth” within their content marketing to speed up the buyer’s journey, and sales can quickly find and use a reference contact to more quickly close a sale. In my experience, most business customers are flattered to be asked and very willing to provide a referral. But it requires a personal ask and a system to ensure they aren’t being asked to give a referral too often.

How has your B2B marketing team used referral marketing? Do you have a formalized referral marketing program?

P.S. If you’d like to try Blue Apron for free just send me your email address!

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