Referral Marketing ... Your Most Valuable Leads!

The chances are good you consider the word “referral” as a synonym for “lead”. A referral is actually much more valuable than a lead as it shortens your sales cycle, reduces your sales cost, increases the average size of your sale and ultimately attracts more loyal customers or clients. How can this be? Let’s review a few statistics:

• 83% of satisfied customers or clients are willing to refer their provider to friends, colleagues and industry peers yet, on average, only 29% do without prompting.
  
• Peer-recommended leads are two and a half times more likely to result in a sale than leads generated by any other marketing channel.
  
• A referred customer or client has a 16% higher lifetime value.
  
• If a customer or client is willing to give you a referral, it’s seldom just one; on average they pass on three and a half recommendations.
  

Because a referral is a lead passed to you through an existing relationship. It’s more than contact information. The signature of a solid referral is that someone is willing to put their reputation on the line for the warm introduction or hot lead they’re providing. Referrals come in many forms, but the most valuable are those passed to you from happy customers, partners, investors and employees.

The above facts are not well known. This is why so many companies don’t have a good system in place to consistently generate qualified referral leads from their fans. While you can grow a business without a referral program in place, it is a bit like bread without yeast … your organization won’t rise to same heights as companies that have made referrals a critical component of their sales, marketing and customer success strategies. The term “bluebird” indicates the opportunity came to you “out of the blue”. If you’re just keeping your fingers crossed and hoping one of your customers or clients will recommend you, then you can do much more!

The Formal Pursuit of Referrals

A effective referral marketing program must focus on:

• Who to ask?
  
• When to ask?
  
• How to ask?
  
• Should your offer some type of “referral reward” program?
  

Other sections of this site deal repetitively with automated systems to handle various task. Referral marketing success is more about creating good procedures and putting them in place.

If you have the sudden urge to Email every last one of your customers or clients asking them to refer you to their complete contact list, just take a deep breath and hold on. That’s not the best way to go about it. They are used to asking you for favors, not the other way around, and requesting a referral is a big one. You’ll have to do a bit of preparation to build toward an ask like this.

If you elect to put a formal referral reward program in place, you may want an automated system to track and manage this. Otherwise, it is much more about addressing the first three questions on the list above. I welcome the opportunity of assisting you with your referral marketing efforts!