Do you have a customer referral program in place at your organization? If you don’t, that’s normal: Only about one-third of companies do.
But what if I told you that 56% of sales reps deem referrals to be “very important” to their success? Would you think about putting a formal referral program in place?
Generating new customers is the most important part of any business’ sales strategy. While some companies and their sales reps have no problem getting new customers through the funnel, others struggle to create the relationships necessary to attract new customers and develop new business.
What’s the difference between these two types of companies? According to new research from Influitive and Heinz Marketing, B2B sales reps and companies that invest in customer referral programs are thriving.
The study -- which surveyed more than 600 B2B professionals -- found that referral programs result in more leads, a lower cost of marketing, better sales forecasts, and more.
Here are the three most interesting findings for sales reps.
Referrals close faster.
All prospects are not created equal. If given the choice, salespeople would prefer to work prospects slated to close quickly.
So what type of prospects close the fastest? According to the research, 69% of B2B sales reps report that a referral closes faster than a non-referred new prospect. The study also points out that 70% of reps whose companies have referral programs in place are on pace to meet or exceed their 2015 revenue goals.
Referrals have a higher lifetime value.
Finding a way to maximize customer lifetime value is critical to the success of a business.
If you’re struggling with LTV, consider doubling down on referrals. Referred customers have a 59% higher lifetime value than non-referred customers, according to the research. In addition, Heinz Marketing and Influitive note that 67% of companies with a referral program classify their sales pipeline as “effective.”
Referral programs provide more leads.
Reps will always agree on one thing: They need more leads. More leads means more opportunities, which generates more revenue.
According to this study, referrals hold the key to generating more leads. Thirty-five percent of the sales reps surveyed said their leads increased due to referral programs. Furthermore, nearly 65% of respondents with a referral program called it critical to their and their company’s success.
How to Get More Referrals
The data makes it clear that referrals are extremely valuable to sales reps and their companies. But one big question remains: How can salespeople get more referrals?
In the research report, Heinz Marketing and Influitive provided a few steps to get the ball rolling:
- Start an online community. Engage your customers online, and create a community where they can swap best practices and advocate for your company.
- Don’t be afraid to ask for referrals. The research suggests that timing your request for referrals correctly is more important than how often you request them. For example, if you notice that customers are particularly delighted at a certain point in the process, that’s the ideal time to ask for a referral.
- Set up a formal referral program. With the right tools and infrastructure in place, companies are 3x more likely to accelerate the conversion of referrals, according to the data.
Referrals boast a higher customer lifetime value and close faster than non-referred prospects. If your company doesn’t have a formal referral program in place, use this data to build a business case for one.