Are you driving revenue through referrals? If not, you should be.
Entrepreneur magazine reports that according to a study conducted by The New York Times, 65% of new business comes from referrals.
People love your products and services, and customers love working with you, but are they telling their friends, family, and colleagues about the value you provide? Digital marketing and direct mail lack the personal touch a referral provides. Learn why it’s important to drive revenue through referrals by engaging non-sales channels.
If you aren’t sure, it might be time to consider a referral program. Referral programs engage non-sales channels to leverage your connections and relationships to help you drive new sales and revenue.
Word-of-mouth marketing is one of the biggest drivers of revenue growth. From up-selling new products to introducing new lines of products or services to even recruiting top talent, happy customers and employee loyalty drive brand advocacy. Even your vendors can be great advocates, so make sure you’re following the rules of vendor management.
Word of mouth is the primary factor behind 20-50% of all purchasing decisions, according to the experts at McKinsey & Company.
Referral programs allow you to:
- Increase sales with existing resources
- Bundle products and services
- Lower customer acquisition costs
- Increase customer penetration and retention rates
- Sell new products or new lines of business
Designing an effective referral program that drives sales.
Create an ROI model to support your program:
The questions below will help you create an ROI model that will calculate the revenue lift that is possible through your referral program.
- How many people in your organization are eligible to make a referral?
- What is the realistic rate in which your employees can make referrals?
- What is the percentage close rate of these referrals?
- On average, what is each new and closed referral worth?
The answers will give you your estimated referral program revenue. Here is a sample formula:
Communicate. Track. Reward.
- Make sure management is on board and engaged. This level of buy-in is important for you to gain support and resources.
- Develop or partner with a platform that allows for easy submission and tracking of the program. Referral platforms will allow you to track sales and give you the necessary reporting needed to follow up and manage reward redemption to the referrer.
- Reward for sold referrals. Many platforms are connected to reward redemption portals. They offer a wide range of reward options for customer and employee referrals and are extremely easy to implement. The process is seamless and incentives are funded from your new referral incremental revenue. VIKTOR offers a propriety reward platform, called SPARK. You can learn more here.
- Use smaller promotions and incentives to keep referrals HOT. Short-term contests and creative campaigns will make a difference in how your sales channels, employees, and customers engage in referrals. Make sure you develop frequent communication to keep your program “top of mind.”
- Remember, people are four times more likely to buy when referred by a friend, according to a Nielson study Start your referral program today!