5 key factors in a successful referral program (hint: closed-loop!)

Here at Amplifinity, we’ve been helping great brands run and grow referral programs for over seven years. I’ve been here since the beginning, and I’ve learned many things. As Manager of Client Services, I can tell you there are five factors that really make a big difference in running a successful referral program.

 

1. Maximize Awareness

In order for any referral program to be successful, it must have lots of referrals! Getting a large number of referral prospects into the pipeline and engaged with your sales team is critical to your program’s success. The most effective way to ensure that your referral pipeline is full is to have a referral marketing plan that utilizes all available communication channels with your customers and partners – your referral advocates. Referral marketing plans are always-on, integrated strategies that should be central to your company’s sales and marketing efforts.

2. Make it a seamless experience

A key factor that determines the success of your program – and whether or not your advocates make multiple and repeat referrals – is your advocates’ perception of how easy it is to refer to you.

The easiest referral for an advocate to make is one where they see opportunity in knowing or finding out that someone whom they know is in the market for your products or services. When this opportunity presents itself, the advocate needs to be able to quickly and easily communicate the referral and give a clear path to purchase, either online or off-line.

The referral program website must be both comprehensive and easy to use and understand. In addition to giving your advocates many options to refer, it must also define the referral process for them, give a status for each of their referrals, and help answer common questions they may have with an FAQ section. The website should also have both a desktop and a mobile version; the mobile version will be easy for the advocate to access when they are out and presented with the opportunity to refer.

3. Keep your advocates and prospects in the loop!

Keeping your advocates informed by communicating the status of each referral is key to keeping them happy. If an advocate does not receive regular updates about their referrals, they’ll wonder “What happened?” and “Where’s my reward?”

Proactive communication regarding each referral is not only helpful in keeping your advocates informed and happy, it also provides you with an opportunity to nurture your advocates, remind them about the program’s benefits, and ask them for additional referrals. If an advocate knows where their referral is in the sales process, they may even be happy to follow up with them and nurture them towards a successful purchase.

Each time a referral moves through a step in the sales process, an email notification should be sent to them to let them know. When a referral becomes a lead, when they purchase, and when the referral reward is paid out all represent key opportunities to nurture each advocate and improve their performance. Receiving an email notification that says that a referral has purchased and a reward is on the way has a huge positive impact on the advocate’s brand equity, especially in regards to a closed-looped, referral program. Why not capitalize on it by asking for another referral? This will help your advocates with one referral to achieve two, two to achieve three, and so on.

4. Help people to refer off-line as well as online 

Earlier in this post, we talked about advocates needing to be able to to quickly and easily communicate a referral, especially when the opportunity presents itself. Each referral program should give advocates the opportunity to refer both online and offline in a variety of ways. Referrals will most often choose the easiest path in front of them to make a purchase, so it is of paramount importance that the referral program supports their choice to aid in a seamless, closed-loop experience. Some common and important referral methods to leverage include:

  •  Printed referral cards, which can be mailed to an advocate or printed at home.
  •  Verbal referrals, where an advocate gives their referral program number or account number to their referral, who will then give it to a salesperson when making a purchase.
  •  Email referrals, which leverage branded referral program content, and are available in the referral program website.
  • Social media referrals, which also leverage branded referral program content, and are shared by the advocate from the referral program website to their social media accounts (Facebook, Twitter, LinkedIn, etc).

5. Recognize the power of referrals

Referrals have the power to create an enormous amount of brand equity in prospects that are interested in your products and services. This leads to higher spend on the initial purchase, higher lifetime value for each customer, and greater engagement with your brand. This should be a central focus in sales and marketing strategy and planning, from the CMO’s office to each individual salesperson. The referral program should be a central part of a salesperson’s training, where they should be taught to recruit advocates who will naturally recruit people whom they feel are a good fit and help make warm introductions. Those prospects will naturally have a higher amount of brand equity in your business when they are introduced to one of your salespeople.

This is the case both for prospects who are unfamiliar with your business, as well as those that may have shown interest in the past. In addition to creating new leads, a referral will sometimes re-activate an old lead, or sway a purchase decision on an existing opportunity. A good referral program will recognize this, and credit advocates for these referrals when they happen. Referral program policies should be written with the flexibility to recognize such referrals, prioritize them as the source of the purchase, and credit them when they have a been a factor.

Photo Credit: Magdeleine

 

What is brand advocacy?

 

The stormy challenges of an in-house referral program

Developing software in-house is always a risky business, and this is as true for referral programs as it is for other types of software systems. Marketing lead-gen teams must fight through stormy weather when having to design requirements from scratch while simultaneously navigating the turbulent waters of IT concerns and project priorities.

At Amplifinity, we’re proud to say that some of our most successful referral programs are for customers that had endured the storm of their home-grown systems before turning to us. These are both B2B and B2C brands that were unable to scale their programs sufficiently to meet their referral goals.

With their in-house programs, these brands had high operational costs and frustrated their advocates with poor communication. While these programs achieved some level of referral success, they did not achieve the level of solid lead generation and closed sales that was anticipated.

Here is a typical example from our most successful telecom customer::

This customer had a home-grown reward fulfillment process that took 30 to 45 days to issue a bill credit to their customers. In addition, their referral program did not generate any status communications to the advocates, so advocates had no clue whether or not their referrals were even processed. This resulted in large volumes of calls to the call centers to inquire about the status of referrals and referral credits. And, because there were no automated status updates to inform advocates about referral progress, the advocates lost interest and made few additional referrals. With these program weaknesses, this customer was more than ready to graduate to an automated referral platform when we reached out to them.

In this post, I’ll focus on three challenges of in-house programs: scale, advocate experience, and operational costs. Implicit in the text is the understanding that a solid SaaS referral platform addresses the challenges with the right mix of enterprise hardening and rich feature sets. In future posts, I’ll focus more on the best referral practices and program features that make for the most successful referral experience.

Scale

By “scale”, I mean the ability to support millions of referral events without depending upon IT to keep the software running, without requiring manual intervention to complete any of the referral processes, and with sufficient tooling to support program changes without involving IT.

We’ve seen in-house referral systems that successfully empower advocates to make referrals, but then require manual intervention to complete the referral process. They don’t effectively close the referral loop so that advocates get rewarded in a timely manner, they may calculate rewards with a spreadsheet, or they may require manual steps to fulfill the rewards.These manual steps are manageable at the outset of the program, but when referral volume climbs to hundreds or thousands of successful referrals per month, manual processes cannot keep up. Operational costs go up and advocate experience goes down, as in the telecom example above.

Advocate Experience

The number one factor driving successful referral programs is a fully-engaged advocate base. Once a customer, employee, or partner accepts your invite to become an advocate, your referral program has to do everything in its power to deliver a positive advocate experience.  Happy advocates make more referrals. Unhappy advocates abandon the program.

In-house programs often struggle to keep their advocates happy. We hear stories like:

“My friend told me he bought your product, but I never got rewarded.”

This happens when the referral loop doesn’t close, either because of inadequate system design or because of dependence upon a manual process. That hurts!  It drives calls to your call center and discourages the advocate from making more referrals.

With in-house referral programs that successfully close the loop, which is great news, there remains a missed opportunity to stimulate the advocate to make more referrals, which is an active, and automated, nurturing program. Every time a prospect takes action, whether responding to an advocate’s email or completing a purchase, the brand has an opportunity to reach out to the advocate, thank her for her referral activity, and ask for more referrals. In-house programs generally don’t have this capability and lose out on a key method for amplifying the success of the program.

A closed-loop assures a positive advocate experience. An effective nurturing program turns that experience, and the referral results, to great!

Operational Costs

Above, I mentioned how manual processes and an unclosed referral loop increase operational costs. Interestingly, these are not IT costs, but the cost of extra work on the business side to keep things moving.

On the IT side, the largest operational cost for in-house systems comes from the management of the referral program content. This includes the web pages that advocates and prospects use, the referral tools, and the emails that go to prospects and advocates. What we’ve seen in home-grown systems is that it is expensive to maintain this content, and that maintenance generally depends upon IT involvement.

Successful referral programs are built on platforms that remove IT dependency from the equation once the initial integration to the back-end systems are completed. This require tools that allow marketing teams to manage their own content and to configure their reward rules. We have found this self-management capability to be very popular with our customer base.

Summary

It takes time and money to build and maintain an effective referral program. Organizations that choose to go it alone find that they are putting Referral Program Calm Watersmoney and time into an unproven, incomplete referral platform, which more times than not results in lackluster referral results. This blog has focused on the turbulence of in-house referral programs as compared to using referral software. In subsequent blogs, I will address specific capabilities that the most successful enterprise referral platforms use to calm those stormy in-house waters.

 

Questions? Email me at lbloom@amplifinity.com