How to transition from customer engagement to customer partnership

When customer engagement strategies are implemented right, they continue to support the success of customers and allow a company to keep building relationships within an account. These engaged customer have a better chance at upsell and cross-sell, increasing their lifetime value. But every account has a ceiling, where it has reached its full potential for cross-sell and upsell, or maybe never had the potential to begin with. However, this doesn’t mean that the monetization of customer experience ends. A customer’s lifetime value still has a substantial ability to grow by transitioning from methods used to influence customer experience to methods that can build a partnership between a company and its customers.

Customer partnership is when a company’s customers shares in the desire to grow and better the business, products or services. Here the company acknowledges the immense influence their customers have over the business and their role in its continued success. This leads a company to then enable customers to impact their revenue growth even further. Below are 5 steps to start enabling this.

5 steps to integrating customer partnership into your business practices

Remember the phrase, “You jump, I jump Jack.”? It comes from Titanic, but relates to customer partnership. It goes along with the idea that if your customers succeed you succeed, and vice-versa. Enforcing this message with customers is key to a customer partnership. This should have been conveyed starting all the way back in the sales process, but no matter when it starts make sure it is perceived as sincere by following it up with action. By making sure you support your customers’ success you start to build a foundation for partnership. Here is how.

1. Offer training to customers on new products and features.

Every business is constantly innovating. That means that customer need to be supported. Through customer engagement you might be sending email updates or having an account executive reach out to inform their customer on new opportunities within a new feature or product. But this doesn’t offer true support. It is often then left up to the customer to take the initiative to learn and apply this new product or feature.

As part of taking on and applying the idea of customers’ success being your success, try offering free training. This might be harder for bigger businesses who have a great deal of customers, especially if those customers that have whole teams or departments that would need to be trained, but there are ways around that.

  • Offer training to managers and then have them train their teams
  • Create videos to scale customer partnership. This could get as granular as creating videos for each department if they are using different functions of the feature of product. Then be open to calls and questions on the training.

2. Ask customers what other products or services they would like to see developed

Customer should be using your product or service regularly. Because of this they often have ideas about what would make it better and what other features, products, integrations and services would help their success. By asking them to have input in product development you make them feel like they are a part of the business, not just a buyer. Here customers can start to feel like they are in a partnership with the business and start to share in the desire to better the company.

But no matter what these suggestions are, make sure that customers know their ideas were heard. For instance, when a customer gives you an idea try telling them that you are going to pass this along to your manager. Follow up shortly after with positive feedback. Some responses could be:

  • “That was a great idea. It turns out we are actually developing something quite similar that should be available soon.”
  • “We’ve been discussing developing something like that and it should be in development in the near future. I’m sure your input will help push it forward.”
  • “My manager thought that was a very interesting idea. It is definitely something that will be under discussion for future development. Thank you for thinking of it.”

3. Provide them an easy way to help build the business

Once you have established a foundation for partnership with your customers you can start creating other ways for them to be a part of the company and generate greater revenue. By creating an automated referral program customer can easily help grow the business and revenue. By previously using customer engagement strategies and foundational customer partnership methods you have already proven the value of your product or services to your customers. This means that there is a high likelihood that referrals are already happening naturally. It is just a matter of scaling that process for revenue growth and creating a program that drives a greater number of referrals.

Try using referral software that gives customers the ability to refer using multiple channels that are trackable, including:

  • Social media
  • Email
  • Lead form
  • Verbal referral
  • Shareable URL
  • Printable cards

Through a referral portal customers would also get full visibility into their referrals’ progress and status in real-time to stay engaged with the referral program. To understand the effectiveness of referral software, customer referral data was analyzed in the report, The State of Business Customer Referral Programs. It found on average, customer partnership with referral software provided over 3X (13% conversion rate) higher lead to deal conversion rate when compared to a study done on customer referrals made ad hoc by Salesforce’s Implicit.

4. Have them assist sales in the qualification of referral leads

The power of referrals comes from the relationship that has already formed between the customer and their referral. This means that customers have intimate knowledge of the referrals wants and needs. After a referral is made, sales can reach out to the customer and partner with them to qualify the referral lead. That way a salesperson knows the needs of the referral from first contact and can address them correctly.

Referral software that enables the breaking of lead routing rules also helps to enable the partnership between sales and the customer. This way the customer’s referral gets passed to their salesperson as a way to extend the relationship and trust between that customer and salesperson to include the referral.

This type of sales assistance was showed to increase deals generated from customer referral partnerships by 17 percentage points (30% conversion rate) when compared to the overall conversion rate.

5. Reward customers for bringing in new customers

There is no doubt that customer partnership requires work on the side of the customer to continue to generate leads, qualify them and offer any continual nurturing to the referral. To help reciprocate this effort, a company need to provide added value to the customer. There are many types of referral rewards that do this:

  • Gift cards
  • Bill credits
  • Checks
  • Merchandise

Based on the data from, The State of Business Customer Referral Programs, the majority of customer referral programs (52%) chose to use gift cards to compensate their customer referral partners. These are easy to automate and scale which removes any manual hassle associated with incentives.

To understand the value you should be rewarding put yourself in your customer’s place. On an hourly basis, how much is there time worth? The average reward provided to customers using referral software was $111, but it went up to $2,500. The cost of the product or service being referred should also be taken into account.

The structure of a reward is another consideration. By using a more advanced reward structure like escalating rewards, which increases the reward amount with each successful referral, you can continue to drive referrals and communicate the value of a customers continued partnership.

To see more data on customer referral partnerships download the report, The State of Business Customer Referral Programs.

How to measure against new customer referral program benchmarks

Impactful, strategy-changing customer engagement and referral program data just hit the market this past week. This data comes from the release of the new report, The State of Business Customer Referral Programs, and the webinar, Customers: Your most important source of demand, with Lisa Nakano, Service Director Customer Engagement Strategies at SiriusDecisions. In the webinar Lisa discussed how customers need to be leveraged to impact demand via advocacy and referrals.

Based on that claim, it is interesting to investigate how customer referral programs are performing this crucial task and the success rate of referrals by companies running customer referral programs. This includes:

What is the average customer referral activity a company can expect?

In the recent study done by Amplifinity based on millions of referrals made by business customers on the Amplifinity platform during the course of a year, it was determined that on average only 36% of customers are actively referring throughout the year.  On average this was 2,106 customers making referrals out of the average enrolled in the referral program, 5,850.

customer engagement, referrals, customer referrals

While the 36% may seem low, it is important to understand that this data is over the course of year, not the lifetime of the customer. That means that this percentage can also be attributed to how long customers have been enrolled in a program. Bottom line, there are a lot of willing customer advocates that need to be reengaged with to keep them active.

How high-quality are the leads that come from customer advocates?

Many times companies assume the easier the referral method, the more a customer advocate will engage within a referral program and the more new customers will be generated. This assumption isn’t necessarily true. Here is how the different types of referral methods rank in popularity.

Most Commonly Used Referral Methods

As the chart illustrated, social media is the most used referral method even though it is was discovered that only 50% of referral programs offer it in the study. However, a referral from social media converted from lead to new customer less than 1% of the time. While referring in social media can be easy, this study showed that for business customers, a broad social blast doesn’t work for referrals. This is most likely because these aren’t one-to-one direct referrals from a trusted source. Therefore, while this type of referral is good to build awareness, it loses its power to generate demand.

The importance of that one-to-one interaction is further expanded on by Lisa Nakano when analyzing ADP’s demand generation tactics.  In the webinar, Customers: Your most important source of demand, Lisa explains how many companies today have challenges with demand generation, because no matter how many times they email prospects or create targeted nurture campaigns their prospects only trusted what their peers tell them. To combat this Lisa told listeners ADP’s solution, “They [ADP] turned to Amplifinity as their partner and used referral marketing to bring in the positive word-of-mouth and activity to feed demand.”

Looking at the opposite spectrum from social media, the verbal referral method was only used 13% of the time but was the top source of conversion with 32% of referral leads converting to new customers. It also had a higher inclusion rate in customer referral programs, coming in at 54.4%.

Trisha Winter, CMO of Amplifinity predicts the continual rise of inclusion and use of verbal referrals, “Even though verbal referrals is fourth in overall use, this is a fast growing referral method thanks to new referral program technology introduced in 2016 that allows referrals to be captured from sales and customer success via Salesforce CRM. We predict verbal referrals will climb in adoption and usage in 2017.”

A large reason for verbal referrals having such a high conversion rate besides it being a one-to-one referral is that this method includes sales which increase conversions significantly. But more on that later.

What impacts referral program conversion rates?

The success of referrals has come a long way. Previous to the study done by Amplifinity, a B-to-B referral industry standard conversion rate of 3.63% was established by Salesforces’ Implisit. But the management and automation of a customer referral program has brought industry conversion rates to a whole new level. On average, customer referrals made on the Amplifinity referral platform had a 13% conversion rate.

This is over 3x the referral industry standard determined by the Implisit study. This drastic increase in the success of referrals can be attributed to establishing referrals as a channel for demand generation as opposed to an ad hoc campaign.  By automating programs to collect referrals at scale, companies are able to remove breakage and operational hassle so marketers can refocus their efforts on the promotion and optimization of the program.

Lisa Nakano commented on ADP’s referral conversion rate, saying “They [ADP] had some very nice results with this once they started understanding what they needed to do to activate their advocacy community. Referrals became their number one source of new demand. The conversion was amazing in terms of how quickly folks worked their way through the funnel and the percentage that converted.”

How does enabling referral selling change the referral conversion rate?

The Amplifinity report showed that enabling referral selling produced even better results. On average, a referral program that enabled sales to actively recruit new customers to the program, generate referrals from customers, qualify referrals through customers, and receive a facilitated introduction from customers more than doubled the average conversion rate. In fact, referral selling increased the average conversion rate by 17 percentage points, with a 30% average conversion rate.

This helps explain why verbal referrals were the highest converting method as it is a referral method enabled by sales.

The increase in conversions that referral selling delivers is a result of it being a further extension of the one-to-one referral. By enabling referral selling and breaking lead routing rules the trust that exists between the customer and their referral, and the customer and their salesperson can also be used to connect the customer advocate’s referral to their trusted salesperson. This way, any referral from the customer advocate will be automatically sent to that customer’s salesperson.

As an example of how the power referral sales enablement can contribute to demand generation, Trisha Winter pointed to ADP, saying, “ADP has stated they have higher customer satisfaction/NPS scores for customers who are advocates with them making referrals. Because they break lead routing rules, this naturally incentivizes sales to work on that relationship with that customer and have really great engagement.”

For more information on referral selling and another take on the Amplifinity data, read the article The Best Way to Ask Your Customers for Referrals, by Mike Garrison, an expert in training sales on how to increase ROI through referral selling,

How rewarding are referral incentives to customers?

There has always been much debate over incentivizing referrals. For the most part, everyone now understands that the effort a customer puts into making the referral and following up on the referral, whether that is by helping sales qualify them or making an introduction, needs to be compensated like any type of work. The question now is, what reward amount should be offered to customers that is enough to incentivize them but isn’t prohibitive to the ROI?

Looking at the data, reward payments for the customer programs ranged from $20 – $2,500. The data was analyzed based on actual reward payments since many programs have varying reward amounts by product purchased or offer a percentage of revenue.

Overall, the most popular and most successful reward was between $41 – $100. But you shouldn’t take this to mean that a reward amount of $41 will drive referral success. In fact, the vast majority of these rewards were $100. While the overall average reward amount for customer referral programs came in at $111.

While this data might mean to some that they can provide a lower reward amount and still get results, that isn’t quite the case. Rewards must be provided to customer advocates not only as compensation for the amount of work they put into the referral but also based on the cost they are asking their referrals to spend. As the cost for a referral to buy goes up, there is more often greater success with a revenue sharing system, like Lisa Nakano talks about ADP in the webinar. While the data may show the success rate as lower for rewards above $100, that can be attributed to the natural decrease in the conversion rate of any higher priced service or product.

For another take on this new referral reward data read, Successful Referral Programs Offer Escalating Incentives to Drive Customer Engagement, by Loyalty360.

Download the full report to see more data on business customer referral programs including:

  • All the referral methods from frequency of inclusion to conversion
  • The success of higher reward amounts
  • How many referrals you can expect from each customer over a year
  • The success rate of the top 1% of advocates
  • And more

referral program, customer referral program, referral software

New Data Report on the State of Customer Referrals Hits the Market

A first of its kind report, this new annual customer referral program data report sets industry benchmarks for everything from referral behavior to referral methods to rewards and conversion rates with and without sales involvement.

referral software, customer referrals, referral conversion, referral program software

Amplifinity, a leader in referral program software, today announced the publication of a new data report on customer referral programs, The State of Business Customer Referral Programs – Annual Report.

The State of Business Customer Referral Programs – Annual Report is the first report of its kind to provide detailed insight into the success of customer referral programs. The data is aggregated from business customer referral programs run on the Amplifinity platform. A sister report on partner referral programs will be released in the coming weeks.

This first annual report sets an industry benchmark for customer referral behavior, how customers are making referrals and the corresponding conversion rates. Reward types, amount, and success were also analyzed as well as the impact of sales involvement in driving referral activity.

An interesting data point for the market is the average referral conversion rate from lead to deal of 13%. This is over 3X the industry referral average and 20x over the conversion of marketing leads which is 0.63% according to a study done by Salesforce’s Implisit.

But this didn’t shock Trisha Winter, CMO of Amplifinity, “I’m not surprised that customer referrals taking place on the Amplifinity platform resulted in a higher conversion rate than industry averages. Companies that have figured out that referrals are the best way to cut through the noise and reach target buyers come to Amplifinity to enable customers and partners to drive referrals as a channel versus an ad hoc campaign.”

Lisa Nakano, Service Director for Customer Engagement Strategies at SiriusDecisions commented, “Customer engagement is no longer just about fixing broken experiences or sending surveys. When leaders begin to think about customers as their most important resource and source of competitive advantage, they realize that old approaches won’t get them where they need to go. A more modern approach is to move customers beyond just saying they are likely to recommend you to acting on that sentiment via actual referral behavior.”

Lisa Nakano and Trisha Winter will discuss the data on a live webinar June 22nd at 10:00am ET.

Another promising data point was the impact of referral selling on the success of referrals, as it showed an increase from the overall average referral conversion rate of customer programs run on the Amplifinity platform to a 30% success rate.

“It was great to see the data confirming what the referral market has been alluding to for years, that the success of referrals is very dependent on the referral being one-to-one versus one-to-many,” says Winter. “Sales is in a key position to ask for those one-to-one referrals through methods like verbal referrals. This explains why verbal referral was the most successful referral method. This concept also can be linked to why social media was the most used referral method but the least successful according to the data.”

As the first annual report, Winter believes it will be used widely to help companies improve their referral approach. “I’m glad that Amplifinity can provide this benchmarking data. It will be interesting to see how other companies running referral programs align and respond to it.”

To get more insight, download the full analysis, The State of Business Customer Referral Programs – Annual Report.

referral program, customer referral program, referral software

Originally publish on PR Web.

How incentivizing referral programs improves customer and partner engagement

Should you incentivize a referral program?

As referral programs have grown in adoption and become a more widely implemented B2B marketing strategy there has been much discussion over the best practices of getting advocates to refer. More specifically, whether it is a best practice to incentivize referrals.

The argument against incentivizing referral programs stems from conjecture that a brand is essentially buying a customers’ or partners’ opinion by incentivizing a B2B referral program because it isn’t a natural extension of a B2B relationship. The rationale behind this being that B2B customers or partners should feel strongly enough to want to refer without a referral incentive. And while I agree that B2Bs and the subscription service industry needs to build an authentic relationship with their customers and partners, I believe that critics of referral rewards are missing the point.

Notions of referral incentive naysayers disproved

To try and understand why referral incentive naysayers disagree with rewarding advocates lets breakdown some of the most common arguments against incentivizing referral programs.

1. Motivating referrals with a monetary reward may make the referral appear less trustworthy.

Referrals are the most trustworthy form of lead generation available. But like most people, advocates are busy and referring takes time out of their day. No matter how loyal advocates are to a brand an advocate expects to be rewarded for their loyalty. If a business is under the impression that a customer or partner is obligated to be loyal to their brand then they need to re-evaluate their understanding of customer and partner expectations. Incentivizing referral programs doesn’t take away from the relationship an advocate has with their referral but it does give them more reason to nurture that referral to make a purchase. And the fact that a brand rewards the loyalty of their customers can often times make them more appealing to a referral because they know they will be well taken care of when they become a customer. The sales force comparison company Software Advice conducted an online survey with B2B companies and found that, “39% of respondents say monetary or material incentives such as discounts, free swag or gift cards greatly increase their chances of referring a brand.”

2. Programs providing incentives tend not to be very sustainable.

While this once might have been true, with the development of referral incentive programs the hassle of reward management has been removed. By implementing an automated and scalable incentive referral program, referrals are automatically tracked and attributed to the advocate and the reward fulfilled. But as a referral naysayer might point out, “What about the grueling task of staying tax compliant?” With quality referral software now enabling automated tax compliance and W-8/W-9 collection, businesses don’t have to worry about keeping their program tax compliant. Instead they can re-direct their focus to growing the referral program.

3. Unlike organic referrals, incentivized referrals aren’t free, causing many to question the cost-effectiveness.

I partially agree with this statement, organic referrals are unlike incentivized referral in the sense that a referral incentive program can create a consistent channel for personalized lead generation while organic referrals are ad hoc. Gartner Research has even found that referral marketing is a channel that offers a high volume of excellent, low-cost leads. And unlike other lead generation channels, a quality referral program is hardly cost prohibitive. Comparing two WordSteam studies, one from 2012 and one from 2016, the average conversion rate of paid search ads has decreased by almost 50% in the last four years while display has fallen by 68%. In that same time period the average conversion rate of referrals has shot up to 35% (Amplifinity). And when taking the reward into consideration the amount of a reward will always be less than the cost to acquire a customer using any other marketing method.

4. Many times the reward is given regardless of how long the new referred customers stay with the company. This incentive structure creates the potential for fraud in which advocates get rewarded for referring low-quality customers.

It is true that homegrown referral programs have had trouble dealing with fraud, but quality referral software eliminated the possibility of reward fraud and abuse. Through the use of referral software, rewards are typically never triggered until a referral has become a customer. Another anti-fraud mechanism is retention periods; which can be built into the reward fulfillment process.

Maximize referral results with special incentive structures

Escalating rewards – Escalating rewards create a structure that communicates the increasing value of referring multiple times. As an advocate’s number of successful referrals increases so does the value of the incentive offered. For instance, ADP’s customer referral program gives customer advocates $100 off their bill for each for the first three successful referral and on the fourth they receive free payroll for a year. This increases the number of referrals made and the referral program ROI.

Multi-stage rewards –For brands that have subscription products, they may want to have a retention period before they pay out a reward to ensure the new customer stays. If so, advocates can get frustrated waiting for their referral incentive to be fulfilled. And with retention periods comes the danger of advocates becoming disengaged while they wait for their reward. To combat this, multi-stage rewards spreads out the fulfillment of an incentive to keep advocates engaged.

For instance, if a referral program offers a $100 referral incentive but has a three month retention period, multi-stage rewarding can have the advocates receive $25 upon their referral signing up for the subscription and $75 after three months. And since the advocate feels appreciated for their referral they will be much more inclined to refer again within those three months which increases referral ROI.

Double-sided rewards – Double-sided rewards incentivize both the advocate and the person they are referring. Sometimes advocates feel hesitant to impose an ask on their network. Double-sided rewards show that a business understands the hesitation advocates are feeling by giving them a discount or incentive to pass on. This way the advocate doesn’t feel like they might be annoying or burdening a referral by reaching out to them. Instead they are excited to share a great deal.

Revenue sharing – Revenue sharing is common in partner programs. Revenue sharing ensures that partners are incentivized by the size of the deal by giving them a percentage of the revenue from the successful referral. This way a business can directly acknowledge the contribution a partner made and instill greater loyalty. Revenue sharing also gives the partner a stake in the success of the referral and motivates them to take an active role in the sales process.

Reward choice – Even when an enticing referral incentive is created, it doesn’t mean that it excites or motivates all customers or partners. Reward choice gives advocates the opportunity to choose the reward they receive. With this reward structure, once a referral becomes successful an advocate is directed to a page where they can choose the referral incentive that aligns with their sense of value and their lifestyle. This way a business can remove speculation about the value their referral incentive delivers and instead know that they’re providing a valuable referral motivator.

Incentivizing referral programs improves your ROI

When developing a referral incentive a company can show customers and partners that they appreciate their loyalty and by doing so improve their experience. A referral incentive has multiple benefits in driving growth via referrals, but also strengthening the relationship and loyalty from these important customers and partners. Harvard Business Review published a study sharing that referred customers spend more (16% higher LTV) and stay longer (18% less likely to churn). And according to Fred Reichheld, author of the Loyalty Effect, a 5% increase in customer retention can lead to a 25-100% increase in profit for your company.

Discover  incentiving referral programs increase your ROI. Try the ROI calculator now!

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Originally published on CustomerThink