Referral marketing programs offer a high volume of excellent, low cost leads from partners, customers and other referral sources.
Referral marketing is the process of leveraging different referral sources such as partners, customers and influencers, to refer target buyers they have a relationship with to your product or service. With referral marketing software, companies can obtain personalized lead generation at scale through both direct and indirect channels.
Referral sources . . .
refer people who are a fit for your offering . . .
substantially growing your business
A referral source can be anyone who interacts and has a relationship with your target buyer, including partners in your ecosystem, influencers of your target buyer and existing customers. The referral sources chart demonstrates some of the many different referral sources a company can utilize to drive revenue.
Within the referral channel, companies typically run multiple referral programs where each program is specialized for the needs of the referral source with appropriate messaging, content and incentives to motivate referrals.
These referral programs fall into three categories:
Try matching your referral sources to the relative program type. To better understand your potential referral sources try using Exercise 1 in, The Referral Guidebook.
Lisa Nakano, Service Director of Customer Engagement Strategies at SiriusDecisions, is an expert in how changing industry trends are impacting demand generation. Listen as Lisa points to how companies are using customer referral marketing as their number one source of demand generation.
Lisa’s recent article: Customer Experience Governance – Three Models
“The ability to leverage referral partners for growth offers a great opportunity, especially as referral programs offer expansion beyond the typically targeted partners; this can offer many organizations a new or expanded route-to-market,” (The Referral Guidebook).
The indirect go-to-market model has changed
With the transition from an on-premise to a cloud-based model, the switch from a primarily IT buyer and the increase in new types of partners, the channel has fundamentally changed. As a result, there has been a 30% decline in the number of traditional channel partners from 2008 (according to Jay McBain, Principal analyst at Forrest). Referrals can help compensate for this by:
The buyer’s journey is more complex
Buyers use more touchpoints when researching a purchase than they ever have in the past. At the same time, traditional channels like email, PPC, and sales prospecting have decreased in effectiveness. Campaigns that would have resonated with a prospect in the past no longer do. As a result it has become less about interrupting the buyer and more about being introduced to the buyer. Within the buyer’s journey, referrals are one of the most effective types of lead generation. Referral marketing software scales this necessary component of the buyer’s journey to:
In the reports, The State of Business Partner Referral Programs and The State of Business Customer Referral Program, the data from companies running referral partner programs and customer referral marketing programs on the Amplifinity platform were analyzed.
Of the referrals made, 31% of partner referral leads and 13% of customer referral leads made a purchase. When compared to industry conversion rates done by Salesforce’s Implisit, a referral channel delivers a much higher value compared to ad hoc referrals, marketing and partner leads. With sales involvement, the conversion rate of referral partner leads shot up to 41% while the conversion of customer referral leads increased to 30%.
The data showed clearly that referral programs that are enhanced with sales enablement drive more revenue compared to ones that aren’t.
Download the reports to see more benchmarks.
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