The 3 Key Components of a Winning Referral Program That Successful Companies Use
Research shows that CEOs from high-growth companies rank customer referrals as a top strategy for marketing and sales. Here’s how to build a referral program based on talent, training and technology.
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Referrals are a lot more important to your customer management strategy than you may think. In fact, research shows that CEOs rate customer management as one of the top five decisions they are facing.
Consider this: In a study of 1,352 CEOs from small and midsize businesses (SMBs), Vistage Research found that high-growth businesses -- defined as companies with double-digit growth -- ranked customer referrals as one of their top three most-successful strategies in marketing and sales. In addition, 20 percent of these CEOs selected referrals as their number-one marketing strategy.
So why aren't more SMBs enjoying this growth boost from referrals? Quite simply, it's because they lack a formal referral program. Many companies approach referrals passively, expecting that their customers will recommend them as long as they're happy with a product or service. The problem is, this unconscious strategy leads to unpredictable or inconsistent referrals.
To better understand the inner workings of a strong referral program, I recently reached out to three experts in this area: John Goodman, vice chairman of Customer Care Measurement & Consulting; Ben Landers, president and CEO of Blue Corona; and Colleen Stanley, president and founder of SalesLeadership, Inc. What they shared -- and what our research confirms -- is that a winning referral program has three key components:
- Talent -- Individuals and teams are focused on building meaningful human connections.
- Training -- Skills and processes are developed to support a formal referral program.
- Technology -- Digital tools and platforms are integrated to optimize and scale referral activities.
Let's take a closer look at each of these.
Consciously building relationships with people -- whether they're existing customers, prospective customers, influencers, referrers or those who are referred -- forms the foundation of a successful referral program. To that end, your employees should:
- Show gratitude to referrers by gifting them with something special and personal (e.g., tickets to a baseball game)
- Deliver white-glove service to prospective clients that are referred to your company (e.g., provide a dedicated phone line with direct access to a senior leader)
- Be upfront about potential customer problems and offer suggestions for avoiding or solving them
- Exceed customers' expectations by delivering above and beyond what you're actually selling
- Dedicate time and effort to building meaningful relationships with clients over the long term
A company can't deliver on a referral program unless its people are equipped with the right skills, processes and tools. Train your teams to:
- Proactively solicit complaints--whether by implementing a Voice of the Customer system or creating regular focus groups in which customers share problems--and then address all problems
- Inform potential referrers of your ideal client, both in terms of demographics and psychographics, so they don't make assumptions
- Develop skills that directly connected to KPIs for your referral programs
- Have the courtesy to ask permission before introducing clients or partners to one another
Technology has the power to strengthen and scale your referral activities, but it shouldn't be used as a crutch for building relationships. Use it in conjunction with talent and training, and remember these best practices:
- Use CRM to organize referral activities, keep employees accountable and support time management, but don't use it as a replacement for building relationships
- Keep track of KPIs, customer satisfaction rating, customer complaints and your Net Promoter Score so you can understand which of your referral activities are working and which aren't
- Increase your online presence, whether by creating an influencer campaign, encouraging customers to share recommendations on digital community forums, or simply posting success stories on your website
- Invest in an automation platform to access campaign templates and analytics, capture new leads and sales, create alignment with social activities, and help you organize your network of referring customers, affiliates, influencers and partners