Every business owner faces a similar challenge.
Besides delivering the work, hiring staff and managing clients’ expectations, they bear the responsibility of bringing in new business.
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While there is a range of lead generation strategies available, I would like to bring your attention to one potent form of marketing that has stood the test of time.
It is called referral marketing, delivered through your network. There have been countless of studies explaining why referral marketing is a smart method to grow your business:
- 84% of participants rated word of mouth as the most trusted form of advertising (Nielson Trust Study).
- 71% of online shoppers read reviews of existing customers before buying (Forrester Research)
- Closing ratio for non-qualified leads is 10% versus a 60% close ratio with referred leads (Tom Hopkins, Author of Sales Prospecting for Dummies)
Why does it work?
If you think about it, referral marketing has an exponential effect. Let’s say you are working with ten clients. Each client provides you with enough referrals to gain four new clients within a year. This results in 40 new clients that then lead to 160 new second-level clients and 640 third-level clients.
The same cannot be said for acquiring leads through an advertising campaign. Once you stop pumping money into the system, the leads will run dry.
Pitch yourself and eliminate credibility gaps
Before opening their wallets, prospects need to know who they are placing their trust in. They ask themselves ‘Can I trust this business to help me achieve my goals?’
Faced with uncertainty, they turn to Google to find out if contacting you is worth their time. Will they end up with a great first impression and be excited to meet you? Or will they be turned off, ditch your profile and consult your competitor? Here are some platforms that you should focus on in order to ensure you’re getting the most out of a referral program.
1. LinkedIn profile
How you appear on LinkedIn directly impacts the amount of referrals you receive.
Fifty per cent of B2B buyers say they won’t work with sales professionals with incomplete social profiles. Hence showcasing a shabby profile is the equivalent of carelessly leaving money on the table.
Of all social media networks, LinkedIn stands out for building professional connections. Viewed by Google as an authority site, it appears as one of the top results when your name is searched upon.
Therefore, it is vital that you craft your profile properly. It should contain compelling elements including as a LinkedIn headshot, biography and positioning tagline.
The next asset you should include in your referral strategy is your website.
Creating digital assets such as a website and LinkedIn profile allows prospects to ‘bounce’ from one platform to another. This activity forms a deeper impression compared to only having one platform to reference.
The website can also act to recruit potential referral partners. By creating a ‘Referral’ page, you are targeting existing customers who already have had the first-hand experience of working with you.
Crew, a platform for connecting hand-picked freelancers and project managers, has one page dedicated for referrals . It outlines the monetary benefits of referring, as well as the steps taken to ensure transparency.
3. Display social proof
Include social proof through testimonials, skills endorsements and case studies. When prospects can perceive that you have helped others like them, they are more likely to convert.
Warm up your prospect through education
According to The Challenger Sale by Matthew Dixon and Brent Adamson, great salespeople do not just build friendly relationships with prospects. They teach prospects about their challenges and pain point, followed by positioning themselves as the solution provider.
To put it simply, the customer journey comprises of three stages:
- Awareness: What are my challenges and pain points?
- Consideration: What type of solutions should I seek?
- Decision: Which vendor do I like and trust?
Hence, you need to produce content that addresses each stage of the customer journey while building up familiarity with them.
1. Be active in forums
One of the best ways to position yourself as an industry leader is by answering questions when people are asking for help. This allows you to demonstrate your expert knowledge without bragging about it.
With platforms such as Facebook groups, LinkedIn groups, Quora, and forums, you can understand exactly how your prospects are describing their problems. Yes, straight from the horse’s mouth!
Just beware not to spam promotional links and always add value to each post. Most groups would have a list of guidelines, so you would need to be mindful before promoting your business.
2. Share content publicly
Ninety-two per cent of B2B buyers will listen to sellers who are known as industry thought leaders. That makes perfect sense. Why would you want to do business with someone who is less than an expert?
To build your expert status, it is best you post articles on a regular basis. Not only does it help keep you top of mind by appearing in the newsfeed, but you are forced to read the content and become an expert.
3. Share content privately
Another method that requires more effort is sharing articles with prospects who are interested in certain topics. It is a quick but thoughtful gesture that can make a big difference.
How to grow and nurture a referral network
1. Be upfront with new customers
When dealing with a new customer, you can set expectations by saying “If I do an incredible job for your project, would you be happy to refer me on to your connections?’ This sets the stage up where asking for a referral after the project completed comes as no surprise.
2. Use a CRM system to track interactions
Ideally, you would have a CRM system that enables you to track conversations and tag your network. If you are using LinkedIn, you can go under the ‘Connections’ tabs. From there you can tag connection according to industry or type of opportunities.
Using this tagging system, you will be able to keep in contact with your connections on a periodic basis, such as once every three months.
3. Adopt the ‘win-win-win’ mindset
Regardless of whether it’s business or personal, the best relationships have an equal level of value exchange. You can’t just expect referrals to flow continuously in without exerting any effort.
To reciprocate, you should start by learning about the services your referral partners provide and the dream clients they are seeking. From there, you can casually introduce their services when conversing with a new connection.
You can’t afford to miss out on referrals
All businesses need sales to survive. The question is how you acquire these leads, and at what cost. With proof of lower customer acquisition costs, you can’t afford to ignore the upside of referral marketing.
Bin Teo is a digital strategist at Social Star.