Top 5 must-dos for a successful referral program

Organizations looking to develop a referral program have a lot to consider.  Everything from finding the appropriate technology to determining the best date for launch to figuring out their reward structure, it all takes deliberate thought to make sure the right decisions are made. Of all the moving parts to consider, following these top five must-dos will ensure your program is a success:

1)  Devote the time, money and resources needed to set the program up right the first time.

Companies sometimes think launching their referral programs as pilot studies and then growing them into more robust programs later is the way to go.  Typically this is because they either don’t have the IT resources available to create important integrations, or they don’t have complete buy-in from corporate. This is a mistake. Referral programs need to be designed and implemented from the get-go to be full-fledge functional and efficient tools for the audiences they serve.  Approaching a referral program with “one toe in the water” will net potentially inconclusive and often mediocre results.  If the referral program is going to be an integral part of the enterprise, then find a way to incorporate all the parts of the enterprise necessary to ensure program adoption and success right from the start.

2) Understand IN PRACTICE how leads are currently making it into the sales funnel.

A potential customer came in with an existing referral program that needed improving.  Their executives explained how the sales process worked: sales reps were currently using a home-grown referral database to enter leads and then managing those leads using their CRM.  But the home-grown referral database was unsophisticated and the data proved hard to track referral marketing success; they needed a more streamlined approach whereby the sales reps could simply enter leads into the referral program and have them sync to the CRM, updating automatically as the sale progressed.  After much hard work, the customer launched a cool new referral platform that met their requirements.  The result? Their sales leads decreased by half.  Why? Because the business did not understand how their sales team actually used their CRM.  As it turned out, reps had never utilized the home-grown referral database at all; instead, they were entering the leads directly into the CRM. By developing a new process to “streamline” things, they had inadvertently introduced a whole new step in the sales process.  This is not an uncommon discovery for companies when they start to dig into the details of how their sales processes work.  Before considering a referral program, companies need to truly understand how their sales team interacts with the tools they are provided when it comes to current customers and potential leads.  There are ways to successfully integrate referral programs into CRM systems that can streamline the work being done and increase ROI without introducing a change in the organizational culture or sales process.

3) Make the call-to-action for customers crystal clear.

Drop-offs in referral program participation often occur in two spots:  the registration point for customers, and the call-to-action point for leads.  Why?  Because customers may be drawn to look at what the referral program is offering, but at the point they need to make a decision to join, if the message is vague or cumbersome, they are less likely to complete their registration.  Similarly, leads may click through the emails or social posts from their friends, but if they can’t tell what they get for providing their personal information, the drop-off rate will increase.

A company with a successful referral program used the following headline in their recruitment emails to customers: “Get a $20 card and 1000 reward points when you get your friends to buy our product.”  In the body of the email, there were three steps to achieving the reward.  That’s it.

The message is simple: 1) Tell your customers what you want them to do. 2) Tell them how to do it. 3) Tell them what they will get for doing it.

4) Promote the referral program everywhere customers go, and promote it constantly.

Research on referral program success rates shows that broad promotion of a company’s referral program is a significant step in getting customers to refer multiple times.  On average, twenty percent of customers will register for the referral program.  A significant proportion of those who register for the program will only make one successful referral during the lifetime of the program.  Customers who have a positive experience with the referral program are twice as likely to successfully refer again, and one-fifth of any company’s customers who register for their referral program will refer successfully multiple times.  One of the key values customers who refer successfully over and over bring to a company’s sales process is their knowledge of others who are in the market for a particular product. However, timing is critical. If a current customer gets a referral program invitation email from a company but has no referral in mind, the email will be ignored.  However, weeks later, the same customer may identify a referral and will need to be able to easily find a link to the company’s referral program, preferably on the website or through the online account pages.

On average, the number of days between successful referrals for customers who will refer more than once is sixty-three.  Companies must advertise their referral program everywhere their customers go, and promote it constantly through as many channels as possible.  Without frequent and continued promotion, referral program success is left completely to chance.

5) Follow FTC compliance and IRS tax laws.

Companies with referral programs need to be aware of the various laws and regulations around solicitations (CAN SPAM), promotions, and rewarding.  In an earlier blog post I talk about CAN SPAM, but there are two other regulatory considerations companies need to keep in mind:

First, the Federal Trade Commission recently passed a law under its 16 CFR Part 255, “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”   The regulation states if a person makes a post on any social network (such as Facebook, Twitter, Instagram, Pinterest, or LinkedIn) and stands to gain a profit from the endorsement or testimonial, he or she must at a minimum include a statement such as, “This is a paid endorsement,” or “#paidad.”  Your referral program Terms and Conditions should include this language so you can be certain your program is compliant with the most current statutes and you are protected against legal action.

Second, depending on the amount of the referral reward and the rigor it takes to achieve it, companies need to consider how much money any one customer could potentially earn in a calendar year.  The reason for this is simply the IRS. If a customer receives over $599.00 per year in rewards, to be compliant with US tax laws the company who paid those rewards must collect a W-9 from that person and submit a 1099 to the IRS on the customer’s behalf.  There are referral program vendors that will track 1099 information and disseminate the paperwork as needed to be certain you stay compliant with US tax laws. Be sure to ask if these are features of their platform when talking with a potential referral program vendor.

Questions? Email me at Kmcmurphy@amplifinity.com

Photo Credit: Freedigitalphotos.net

What is brand advocacy?

 

7 characteristics of engineers that great marketers should have

Originally published in CMO.com

I often get double-takes when I reveal to other CMOs that I was a biomedical engineer in my previous life. After almost a decade as an engineer, I grew restless. I went back to school to earn my MBA and discovered there was a lot more to marketing than what influencers had told me.  I reinvented my career and worked my way through almost every part of marketing: product management, product marketing, campaign management, social strategy, branding and communications and now am a CMO at a growing SaaS company.

It’s been a long time since I was a practicing engineer so they get over the shock quickly. But I surprise them even more when I let them know that I am still an engineer in many ways.

Ten years ago my two careers may not have meshed as well as they do today. What’s changed? Back then, marketing was more an art.  Today, it is predominantly science. The experts who make the biggest impact for their organizations are the ones who may not be formally trained as an engineer like me, but who possess and use key skills that are needed by both engineers and marketers.

Here are the 7 characteristics of engineers that make for amazing marketers

1. Engineers love to problem solve!

That’s why we became engineers!  We wanted to solve problems!  Build products that do amazing things!  We are passionate about that and it is the #1 skill set I look for when hiring a marketer.  There are no cut and dry job descriptions anymore in marketing.  Marketers need to be able to find a problem or area for improvement and go find a way to make it better.

2. Engineers have been taught the right approach to problem solving.

Engineering education is about learning an approach to solving a problem and the tools needed.  In actual practice, you then go back to the process, the guiding materials and come up with a solution to the problem. We’re not taught memorization, but rather method.  That is because there isn’t always a “right” answer in engineering. This is exactly how marketing needs to approach problems.  There is no one right way to do things.  There are infinite possibilities so it takes a person who can approach a new problem with a method to work through it and have the confidence to see where it takes you without knowing your final destination.

3. Engineers love data!

As an engineer I once worked on a data set in Excel for 3 weeks.  I was relentless in my pursuit of finding answers.  This skill has served me well in what is now likely the most data-driven career path available.  Data scientists work in marketing, how crazy is that? If you are good at math, statistics and are a killer “Googler” because you understand Boolean logic, then marketing is definitely for you.

4. Engineers are bi-lingual.

This one is for all of the companies out there with complex products.  You have high-tech talent in your product and sales organizations. Engineers turned marketer speak the language of business and tech.  Your engineering degree will not only get you instant respect with product and sales, it will allow you to turn marketing into terms they understand – making you a key player in marketing alignment with product and sales.

5. Engineers love trying out new technology!

Did you know there are almost 1,900 marketing technology vendors who are constantly pushing the boundaries of what marketing can do? Scott Brinker’s Chief Marketing Technologist Blog shows all of these vendors in a marketing technology landscape chart that is positively overwhelming! Marketing has the daunting (but fun) task of vetting these technologies and how they will work for our organization.  There is no end in sight to marketing being exposed to new tech!

6. Engineers are pragmatic.

This isn’t the Mad Men era of marketing.  The sexiest, coolest idea is not always the best.  Engineers are fundamentally pragmatic about decision making.  We look at things from all angles.  We make pros/cons lists, we mitigate our risks, we create exit plans.  These are all phenomenal skills for today’s marketer to have.  Because there are still CEOs out there that get swept away by a “cool idea”, we need marketers who can take those cool ideas, break them down and make them high performing!

7. Engineers like building things.

So much of marketing’s digital transformation is about building new processes and integrating technology to build a model that works for your organization. There is a never-ending project list for great marketers to make amazing things happen with technology.  I’ve seen ridiculous amounts of innovation in my career and can’t wait to see what new technology or process will come about next!

I’m not saying every engineer should make the transition to marketing.  Do what you are passionate about. But here are key takeaways for readers:

  • For marketers today, think about these skills and if you don’t have them, think about ways to develop them. If your company has online training, take a course in problem solving or decision making.  I guarantee it will help your career.
  • For marketing leaders looking at job candidates, make sure you consider these skills and characteristics in hiring. Someone with these skills can demonstrably help drive change and growth.
  • And certainly, if you are an engineer and are thinking about a career change, I definitely recommend taking a look at marketing!

The advocacy market explained

I’ve been to three analyst conferences already this year and each one is creating buzz around the term “advocacy”.  Unfortunately, they all talk about it differently.  Some on the social media side simply use advocacy as a synonym for word of mouth marketing.  Others label it brand advocacy or customer advocacy. To marketers like myself, it is all a bit confusing.  I wondered what type of solutions are considered advocacy solutions and who is buying them?

After doing some research in the space and having many discussions with analysts, I realized that there are two major buckets of advocacy: advocacy to drive brand awareness and advocacy to drive demand generation.  These are two totally different initiatives and two totally different buyers.

Once you understand that separation, it is clear that there are also differences in the types of solutions that enterprises need versus those targeted at SMB.  The result is 4 segments of the advocacy market.

Advocacy explained

 

 

There is a great new white paper called “The Advocacy Market Explained” that details each of these segments as well as the buyers.  The best part is that at the end it helps you to analyze where you should get started to begin taking advantage of advocacy in your organization. I highly encourage you to read and start thinking about how to leverage advocacy to meet your objectives.

Want to further the discussion? Tweet me at @TrishaWinter

What is brand advocacy?

Truths and myths of brand advocacy

No marketer, brand manager, marketing automation professional or even an advocacy marketing exec would look you in the eye and tell you that they’ve got a no-fail brand advocacy marketing strategy. The development of brand advocacy marketing is still in its infancy, though there is a set of variables generally agreed upon as necessary for success. If marketing was foolproof, Coca Cola would never have spent millions to market New Coke back in the 80s. Walgreens would have immediately rejected the offer to carry Barack Obama Chia Pets on its shelves.

That doesn’t mean that brand advocacy is a precarious use of your time and budget. Far from it. In fact, brand advocacy programs are generating huge ROI and delivering measurable results that far exceed results from traditional marketing initiatives. More importantly, the data that results from running a skillfully developed and implemented advocacy program can shape future marketing efforts in a targeted way that wasn’t possible until now.

referralsSo what do we know about brand advocacy?

Brand Advocacy: True or False?

1) A brand should know who their brand advocates are, and to what degree they will advocate on a brand’s behalf before running a brand advocacy program.

False.

Surveys and scores based on a set of variable criteria determined prior to implementing a brand advocacy program are not the best indicators of program success.

Even formulas developed with scientific precision that purportedly reveal who among a brand’s customers will more than likely advocate on its behalf? There are quite simply too many deviations and factors to consider that make such formulaic approaches highly effective at the onset of a program.

The truth is, a brand will miss out on major opportunities to activate hundreds, even thousands of customers who happened to tell you that on a scale of 1-5, they’d recommend your brand only “sometimes.”

Further, it is often the initially uninspired customer who will turn around and become your most passionate advocate when properly motivated or nurtured.

2) Incentives are an effective and profitable way for a brand to nurture its brand advocates and encourage future advocacy.

True.

Whether you’re a lab rat or a consumer, rewards drive fairly predictable behaviors. The truth? If they like, love or are loyal to a brand, consumers will advocate on its behalf, and will appreciate the brand’s token of gratitude when they take time out of their busy schedule to do it.

Have you ever recommended your hair stylist to a friend and, in return, received a reward for a free trim for yourself and your friend next time you both set up an appointment? Did you feel it was a gratuitous reward for what you’d have done regardless of the free haircut? Probably not.

Ever been asked to refer a friend to the same bank you left a few months ago because of its horrible customer service? Did you refer your friends anyways, just for the $100 reward the bank was offering? Your enemies maybe, but probably not your friends. No reward can motivate most customers to refer a friend to a brand that the customer doesn’t actually like.

3) When running a referral program for the first time, if a customer does not respond to your initial request for a referral, the customer should be eliminated from the second wave of the program.

False.

People are busy. And when they’re really busy, they probably won’t respond to your brand’s referral request. But, as life typically goes, those same busy people eventually become less busy at some point. Sometimes the very people who seemingly snub you the first go-round, become passionate and proactive advocates the next go-round. Happens all the time.

The truth is, if your customers or employees or partners really like what you do, they will happily help out your brand. You’ve just got to ask them at the right time and place – and sometimes it takes asking more than once.

AMP blog, brand advocacyOriginally published on Wired.com Innovation Insights January 16, 2014

 

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