Questions to Ask When Drafting a Referral Marketing Message

As we’ve mentioned a few times, communication is a big part of a referral channel’s success. It keeps referral sources engaged and when done correctly, keeps your referral program top-of-mind with sources being educated on fresh new offers or deals.

But “correctly” is the key word here. If you bombard your referral sources with message after message that doesn’t actually say anything, eventually, they’ll stop paying attention even when the message is important.

Here are some questions you can ask yourself to make sure that your referral marketing message is solid.

Who is your audience?

This question is, on its surface, very basic: who are you sending this message to? Is it going to referral partners, customers? Both or neither? Knowing who you want to target means that you’ll know, at a base level, how to approach the message.

But it also goes deeper. Do you have an in-depth understanding of your partner or customer base? Do you know who they are and how they operate? If not, you should. Understanding your audience intimately is the first step toward crafting a message that they’ll actually want to read.

Knowing your audience means that you know how, when, and why to contact them.

What do you need to say?

Why are you sending this message? Is it because there’s a new deal you want customers to be aware of? An incentive or contest for referral partners? A new product that you want them to start pitching?

Whatever it is, condense your message into a single sentence. And from there, build it out. Stay focused and concise, and don’t take too long to get to the point — the longer the message is, the more likely it will be that the recipients won’t read all of it. And many will skim, anyway, so put your most important part in the first sentence.

Your customers and partners have limited time — so don’t waste it.

How can you make this message stand out?

Is your open rate down? If so, it could be because all of your messages sound the same.

This goes into the last point of knowing what you need to say, but it goes further than that. For example, if you’re revealing a new incentive or contest, why? What’s the occasion? How can you make the email reflect that occasion that makes it stand out from the incentives and contests you’ve done in the past?

Don’t let your emails blend into one another in your audience’s mind. Make sure that you make this one unique — but, of course, don’t sacrifice readability or conciseness to achieve this.

Has anyone else read this message?

If you can, we definitely suggest sending someone on your team a “test” before sending out the message to its recipients. Not only will they be able to catch simple things like grammar and spelling mistakes, but they’ll also be able to let you know if you take too long to get to the point, or if something is too confusing.

By following all of these steps, you can create a powerful referral marketing message that your recipients will actually read and respond to.

Referral Strategy: Create an onboarding process for your referral sources

After identifying your referral sourcesdeveloping a recruitment strategycreating a sales enablement plandeveloping a plan to enable referral sources, and constructing a referral incentive strategy, you can start to fashion a referral strategy that enables you to create an effective onboarding process for your referral sources.

To build an onboarding plan, you need to first determine what information should be collected at registration for different referral source and the training they need to succeed.

5 ways to determine your referral strategy for your registration process

Throughout the life of your referral program, you will need to collect different information from referral sources at different times. To figure out what information you need to collect at registration based on your referral program structure, answer these five questions.

  1. Are you using the referral program as your partner database?

If yes: Collect all required fields at registration, like email, address, and phone number.

If no: Connect your registration and program to your CRM/PRM with SSO and prefill this information.

  1. Are you paying your referral sources via electronic funds transfer?

If yes: Collect the appropriate bank information.

If no: Validate the address or email is correct for a check or electronic gift card.

  1. Do you want to approve referral sources before they join the program?

If yes: Collect the key information you are judging their approval on. This could be a check on access to your target buyer, a sample of existing clients, or the ability to commit to an SLA.

If no: No additional information is needed.

  1. Is a salesperson (direct or channel) involved in the relationship with the referral source?

If yes: Provide a way to select their salesperson during registration so that performance can be tracked and reported by salesperson.

If no: No additional information is needed.

  1. Do you expect that the majority of referral sources will earn the taxable limit of $600 during the calendar year?

If yes: Collect the tax information at registration. If the referral source is inside the U.S. this would be through a W-9. If the referral source is outside the U.S. this would be through a W-8.

If no: Establish a process where if they reach the taxable limit, the appropriate tax information is triggered for collection before further payments are made.

Once these decisions are made you can construct your registration form to collect this information.

To help guide you, download this worksheet, along with the five questions worksheet.

How to build a training plan for your referral program

Another important part of onboarding referral sources is training them. Depending on what type of referral source you’re enabling, this training may be as easy as providing content on your target buyer or as in-depth as laying out the different value propositions each type of buyer will respond to and how to identify them. Depending on your referral source’s knowledge of your business, you may want to just put the information in your referral program portal so they can access it whenever they might need a refresher.

When considering the different training you should provide, think about it in relation to who the trainer will be or if it would be self-taught, the delivery mechanism for the training, if there is a specific date(s) it should occur or if it is ongoing, and if the training is a requirement or optional.

Here are a few types of training you can consider offering:

  • Target buyer and buying personas
  • Referable product(s) and value props
  • How to make a 1-to-1 referral ask
  • What happens after you submit a referral – process and communication
  • How to earn incentives – criteria and payment

To help construct your training process, download the exercise or download the entirety of, The Referral Guidebook, to create an all-inclusive referral strategy.

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Referral strategy: Developing a sales engagement plan

Once you have identified your referral sources and developed a motivating recruitment strategy, you’ll need to start thinking about how to align your referral strategy with sales. The sales team has the potential to have a monumental impact on your referral strategy if they have the right tools. In fact, two recent referral benchmark studies found that sales enablement increased the conversion rate of partner referral lead to purchase from 31% to 41%, while the conversion rate for customer referral leads increased from 13% to 30%.

But how do you go about achieving this?

The first action you need to take is deciding whether your direct or indirect sales team needs to be enabled so you can then create a step-by-step plan for them to drive referrals. Remember, sales can play a massive role in recruiting referral sources and collecting referrals so this is a necessary step to increasing your revenue from referrals.

Should you involve direct or indirect sales in your referral strategy?

When trying to decide on whether to enable your direct or indirect sales team to drive referrals, think back to when you identified your referral sources and divided them into different individual programs.

Your different referral programs can fit into three different program structures. Determining what structure fits each program will help you decide what type of sales team you should enable as part of your referral strategy. Here are the three program structures to build your program around.

Direct to Individuals

Here an individual such as a customer, influencer, small agent, small business or employee would refer business directly to you.

Use case: A business services company targeting SMBs knew that small businesses referred locally. They created a program to enable customers to make referrals of other businesses and another program to allow small business accountants to refer their clientele. Direct sales manage these relationships on a local/territory level.

When you are trying to enable this type of program ask yourself this question:

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To and Through a Strategic Alliance

Here you create a program for a consultancy, system integrator, software vendor, bank, service provider, agency, association or another type of strategic partner, that is co-branded and co-managed by you and your strategic alliance to enables their employees to refer business to you.

Use case: A merchant payment systems provider had strategic alliances with large commercial banks so they created a dedicated referral program for each bank. Bank employees were in a position to recommend the merchant system to their SMB merchant customers. To ensure success, the programs needed to be branded and integrated into the bank’s systems. Marketing manages these relationships.

When you are trying to enable this type of program ask yourself this question:

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To and Through a Partner Network

Here a company has a platform that supports different programs for each managed partner such as consultancies, agents, system integrators, software vendors, software providers or agencies, where the managed partner can enable their employees to make referrals.

Use case: A B2B software provider had managed relationships with other software vendors and digital agencies who sold into their same customer base. They created a referral program that offers incentives to the corporate entity as well as the referring employees. These incentives varied from company to company based on their arrangement. Channel sales and marketing together manage these relationships.

When you are trying to enable this type of program ask yourself this question:

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To help guide you, try downloading and filling out the full worksheet.

Now that you have figured out what sales team you need to enable, you’ll need to develop your referral strategy in more depth to engage them.

A 10-step checklist for building your sales engagement plan

Using this 10-step checklist, you can get your sales team the tools and structure they need to be successful in making referrals part of the go-to-market strategy.

  1. Meet with your head of sales to determine the level of involvement.
  • Your deliverable – Commitment from sales leaders for driving recruitment and referrals.
  1. Work with sales leadership to set activity goals.
  • Your deliverable – Create objectives by the salesperson. Have them be accountable for a specific number of referral sources and referrals per month/quarter/year.
  1. Work with sales leadership to determine any changes to the sales incentive structure.
  • Your deliverable – Make any changes to sales compensation based on if they meet recruitment and referral goals.
  1. Work with sales operations to enable sales with tools to drive recruitment.
  • Your deliverable – Add the ability to invite CRM contacts with pre-filled registration.
  1. Work with sales operations to enable sales with tools to collect referrals.
  • Your deliverable – Add the ability to input verbal referrals in the CRM and to “own” referral sources for reporting.
  1. Work with sales operations to provide referral status transparency.
  • Your deliverable – Add the ability to see who made the referral on each lead record and to click into the referral history of that partner.
  1. If you’re using a direct sales team: Work with sales operations on lead routing rules.
  • Your deliverable – Change lead routing so that any referral lead that comes from a source that a salesperson “owns” gets routed to that salesperson.
  1. Work with sales operations to get sales leadership reporting.
  • Your deliverable – Create dashboards in your CRM that track recruitment, referral leads, referral opportunities and successful referrals by salesperson/territory/etc.
  1. Run a pilot rollout with one sales group.
  • Your deliverable – Get feedback to improve the process as well as data and testimonials to show the success of the program.
  1. Rollout the referral program to your full sales team with training and an internal campaign.
  • Your deliverable – Train the sales team who is actively recruiting and collecting referrals.

Or fill it out right on this page for your own knowledge.

After looking through your checklist, if you need help enabling sales with any of these functions, see how a sales enabled referral program can help.

Lastly, to see how referral sales enablement fits into your overall referral strategy, download, The Referral Guidebook to get all 20 exercises to build your referral strategy into a revenue generating channel.

 

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Referral strategy: Ideas to recruit and motivate referral sources

Once you have identified your referral sources, you’ll need to construct a referral strategy for recruiting and motivating your sources. If you have an existing relationship with your referral sources (like customers or existing partners) then sales can help recruit. If there is no relationship with the referral sources, a formal marketing campaign may be in order to attract referral sources to your program.

However, even if you create the most thorough recruitment campaign, it won’t be very successful if it isn’t motivating.

To ensure your program is motivating, start by creating a strong value proposition.

6 questions to create a strong referral program value proposition

Successful referral programs have a win-win for the company and its referral sources. To lock onto the most motivating value proposition, consider these six questions about your referral sources.

  1. Does recommending your product/service put them in a good light?
  2. Does it help to be perceived as a trusted advisor?
  3. Does your product/service add complementary value to their offering?
  4. Does your product/service make their offering stickier by increasing usage or value?
  5. Does a customer having your product/service help them make more money through value-add services or offerings?
  6. Will the referral source be motivated by a financial incentive?

To assist you in turning the answers to these question into a value proposition, download the worksheet. Additionally, take a look at recommendations on Developing a Compelling Channel Partner Business Proposition from SiriusDecisions analyst Stephanie Sissler.

In regards to question six, we know that most (if not all) referral sources expect a financial incentive. We then must ask ourselves – what level of incentive motivates a specific referral source, and will provide a high ROI?

Your strategy for calculating referral incentives

To start calculating a motivating incentive for a referral source, you’ll need to calculate the cost per acquisition (CPA) of your inbound marketing efforts using the following formula.

Take a year of your total marketing spend and add it together with the total cost of marketing resources during that year. Then divide this by the total number of new customers generated by marketing that year. This is your CPA. Use this number as the maximum threshold for your incentive to maintain a high ROI.

In the SiriusDecisions whitepaper, Keys to Engaging Referral Partners, they find that typical referral fees fall between 5% and 25% of first year revenue.

To see what fits your company, take the average first year of revenue from a customer and multiply it by 5%, 10%, 15%, 20% and 25% to see what the incentive amount would be. If any of them are greater than your current CPA you can remove it from the mix. Ideally, the incentive will be significantly lower than your CPA.

The other option is using a flat bounty. Try using the calculated incentive amount from the above equation for direction.

To help guide you, try downloading and filling out this worksheet.

Or fill it out right on this page for your own knowledge.

When you are done calculating your incentive, you can test your program ROI using the free referral ROI calculator.

Lastly, to see how reward structure fits into your overall referral strategy, download The Referral Guidebook to get all 20 exercises to build your referral strategy into a revenue generating channel.

 

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Referral Strategy: How to keep referral sources engaged

So you’ve identified your referral sourcesdeveloped a recruitment strategycreated a sales enablement plandeveloped a plan to enable referral sourcesconstructed a referral incentive strategy, and decided on your onboarding process, now it’s time to create a referral strategy to keep referral sources engaged after onboarding, and the referrals pouring in.

When trying to ensure that referral production stays high, you need a communication and promotional plan for current referral sources that keep them engaged whether they are in the middle of waiting on a successful referral or haven’t referred lately.

To start, let’s look at the three types of communication you need to establish the events that can trigger these communications.

3 communication types to keep referral sources engaged

There are three different types of communication you should establish with your referral sources:

  1. Automated communication on program status
  2. Nurture communication by program activity
  3. Regular program communications

These each keep referral sources engaged in different ways and their implementation are based on different criteria. By breaking down how each type of communication can be implemented you will be able to decide on what communications you want to send, plan and execute.

1. Automate communication on program status

Once a referral source has made a referral, you don’t want them to become disengaged from the program because of the lack of transparency or have continuous calls coming in to check on the status of a referral.  By setting up automated communication to referral sources, triggered by referral status changes, you can ensure that referral sources stay engaged while waiting for a referral to become successful.

To determine what automated communication you should implement in your program, let’s list out the different referral stages these communications can occur:

  • Referral is accepted – Send an email that confirms the lead was accepted and wasn’t already in the system.
  • Referral is qualified – This email informs the referral source that the referral was qualified or accepted by sales.
  • Referral becomes an opportunity – Send this email to inform the referral source that the referral lead has been converted to an opportunity.
  • Referral proceeds to the next opportunity stage – There is a lot that goes on with the referral during the opportunity stage and there can be many mini stages within it. This email informs of any stage change in the opportunity and any role they should play. For instance, if you would like your referral source to reach out when the proposal is delivered to see if the referral has any questions, you can indicate that in this email correspondence.
  • Referral is closed (lost) – This email is triggered if the opportunity is lost.
  • Referral is closed (won) – Send this to inform the referral source that their referral made a purchase.
  • Referral reward is earned -This informs the referral source on the amount of the reward earned and any information on how it will be paid.

When deciding on what automated communication you want to setup, be sure to think about the triggers that are specific to your business process.

2. Nurture communication by program activity

The success of referral sources can be optimized by creating nurturing programs that help develop them and encourage activity. Here are a few automated nurture tracks you can create based on certain activities or lack of activity:

  • If a referral source has a high number of referrals, but little or no success – Retrain on the target buyer and value proposition to ensure they are referring the right companies/people with the right message. Also, this reinforces the value of a 1-to-1 referral introduction.
  • If a referral source has low referral activity – Reinforce product value prop and target buyer. Remind them where to find referrals and how to ask for them.
  • If a referral source logged in within last X days but didn’t make a referral – Provide information on how to make a referral, what happens to a referral once it’s submitted and reinforce product value prop and target buyer.
  • If a referral source has a high number of successful referrals – Create a kudos campaign to recognize their efforts and encourage them to keep referring.

Once you figure out your different nurture campaigns, determine the frequency of each based off your referral strategy.

3. Regular program communications

Segmented communications target the special needs of those groups, but regular value-added communication will keep referrals top-of-mind for everyone in your program. Use the ideas below to build a newsletter template to send a monthly (or frequency of your choosing) communication. Possible information to include in a regular newsletter (circle content you want to include):

  • Target buyer/persona spotlight with corresponding value prop
  • Leaderboard of top members by referral success
  • Tips on asking for referrals
  • Success story – highlight a story on how someone generated a successful referral
  • Testimonial – quotes on how great the program is and how easy it is to earn rewards
  • Links to get more info
  • How to earn incentives – criteria and payment

To help construct your referral strategy nurture process and take the next step to create a promotional campaign, download the exercise or download the entirety of, The Referral Guidebook, to create an all-inclusive referral strategy.

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Referral strategy: The 7 factors of a profitable referral incentive strategy

Upon identifying your referral sources, developing a recruitment strategy, creating a sales enablement plan and developing a plan to enable referral sources, it’s time to build a referral strategy around your incentives to drive more high-quality referrals.

This portion of your referral strategy is very important. Adding an incentive to your referral strategy isn’t just a box to check before moving onto the next step. There are a variety of different mechanisms that are involved in creating a referral incentive. Different referral sources might require different amounts and structures, and have different motivations. Here’s how to determine the right referral incentive strategy for your referral program.

4 factors that determine your referral incentive structure

In order to drive repeat referrals, you need to set up a referral incentive structure that is motivating to each specific group of referral sources. There are four considerations that go into this part of your referral strategy.

1. The calculation – To create an incentive amount that is both motivating to referral sources and provides the best ROI, ask yourself this question: Do you want to reward at purchase or at an earlier stage?

If the answer is at purchase, determine the best way to calculate the reward for your program. If you need help with that, look back at the second blog in the series to see how to calculate incentives based on your current CPA.

However, if you would want to have your incentive fulfilled at an earlier stage, try rewarding on a flat bounty. To do this, determine the amount and stage to be triggered.

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2. Timing and multi-stage – To make sure your referral structure keeps referral sources engaged and motivated, and ensure that the referrals they provided are quality, ask yourself this question: Do you want to add a retention period before paying the incentive in full?

If the answer is yes, consider splitting the incentive into multiple stages such as at purchase and after a retention period to keep engagement high.

If the answer is no, take a look at your sales cycle. If it is a long sales cycle, consider rewarding at multiple stages to keep engagement up. However, if your sales cycle is short you can just have your incentive be fulfilled at a single stage.

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3. Multi-level – To decide how to structure your incentives to motivate repeat referrals and create higher-performing referral sources, ask yourself this question: Do you want to create multiple reward levels?

If the answer is yes, you then have to decide if you want to base the reward on the number of successful referral or on the number of rewards (only used if using multi-stage rewards).

However, if the answer is no you can simply keep a non-variable reward.referral incentive, referral strategy, partner reward, referral partner, referral partner reward, incentive calculation

4. Accrual – To understand how to handle accrual based incentives, ask yourself this question: Do you have transaction fees for EFT and/or expect a high frequency of successful referrals from your sources?

If the answer is yes, determine the frequency of the incentive payouts.

If the answer is no, payout the reward at the time the referral becomes successful.

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Answering these questions can help you create a more targeted and effective referral strategy for your incentives. But once these decisions are made you still aren’t done. Now it’s time to think about incentivizing the other people involved in the referral process and the inclusion of added incentives.

3 times you should include extra incentives in your referral strategy

While having a regular referral strategy in place for your incentives is necessary, going the extra mile can help keep you top of mind for referral sources. For instance, during a slow time of the year, referral sources can be prompted with a special bonus. And you can’t forget about the other people involved in making a referral successful. To drive added referral activity there are people outside your referral sources that can be incentivized. Here‘s how to determine if you should include any of these three extra incentives in your referral strategy.

1. Prospect reward – Also known as double-sided rewards, these rewards can reduce some of the perceived risk referral sources have when making a referral. This is because it allows a referral source to offer the referral a great deal. To determine if this is right for you, ask yourself this question: Do you have the ability to offer referrals a discounted price?

If the answer is yes, determine the appropriate discount.

If the answer is no, see if there is anything else you can offer for a certain action a referral takes, like a gift card for taking a meeting with sales. If that still isn’t possible just stick with your single-sided reward.

2. Campaign bonus – When trying to drive point-in-time activity, an extra incentive such as a raffle prize or an increase in the incentive can help to re-engage referral sources and facilitate greater activity. To determine if this is right for you, ask yourself this question: Is there times during the year you’d like to stimulate an increase in referral leads?

If the answer is yes, figure out whether you want to incentivize referral lead collection or successful referrals.

If it is referral leads you will need to look to see if you have the budget to reward on each lead. However, if you don’t you can implement a raffle instead.

Even if you don’t have a specific time period in which you want more referrals, consider picking two months during the year to run a promotion.

3. Sales incentive – It has been shown that sales involvement in a referral program increases the conversion rate from referral lead to purchase by 10 percentage points for partner referrals and 17 percentage points for customer referrals. To drive consistent activity from sales or other employees, an incentive can be created to motivate them. To determine if or what type of sales incentive is right for you, ask yourself this question: Are you incentivizing a direct or channel sales team?

If you’re incentivizing your channel sales team, consider if they should be incentivized to recruit referral partners and collect referrals as part of their commission. If that is something you want, try organically incentivizing with leaderboard transparency. On the other hand, if you don’t want that, look into creating monthly goals with prizes to the top individual achievers and top sales team.

If you plan on incentivizing your direct sales team, consider if you want to incentivize recruitment or referral collection. If recruitment is where it is at for you, try quarterly goals and prizes or a swag bonus for each new recruit. However, if you are going to incentivize based on referral collection, figure out monthly goals with prizes for the highest performing salespeople.

To get more targeted with your referral strategy for your incentives, download and fill out these interactive worksheets. Or, download all of, The Referral Guidebook, to build a revenue-generating referral channel specific to your business.

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