Referral marketing is a valuable but underutilized tactic for businesses. This post offers three tips to building a successful referral marketing program.

How to Harness the Power of a Referral Marketing Business

With a formalized referral marketing program, you’ll close higher-value customers more quickly. Learn why it works, and the 3 keys to a successful program.
Article Outline

In this digital age, marketing supports the attract, capture, and nurture stages of the customer lifecycle, ideally with a clean handoff to sales close to the purchase point. After the sale, the customer success team generally watches over the account. Given that the customer is interacting with three completely different internal company groups, it’s easy for messaging to get out of sync and be inconsistent.

That’s one reason that marketing is increasingly getting involved in the customer experience. According to a study conducted by The Economist Intelligence Unit, 86% of marketers believe they will become responsible for the entire customer journey by 2020. This means marketers will be more involved in extending the length and value of a customer contract – and also in leveraging current customers to make new-business referrals.

What can referral marketing do for your company?

The short answer: more revenue.

“A direct referral lead is over 36x more valuable than a lead generated by a cold call, 10x more valuable than a trade show lead, and 4x more valuable than a web lead,” says Ken Krogue, Co-founder and President of

And, a 2015 report from Heinz Marketing and Influitive tells us that 69% of B2B sales reps report that a referral closes faster than a non-referred new prospect.

Check out a few more statistics that demonstrate how explosively effective referrals can be in your sales cycle:

  • 31% of marketers surveyed by Gigaom in 2014 said that referral marketing is the most effective strategy for acquisition and conversion
  • The same study indicated that only 39% of marketers use referral marketing regularly, but 43% of those who do use it acquire more than 35% of their new customers with it
  • Referred customers have 16% higher customer lifetime value

Referral marketing is so effective because it’s highly targeted toward qualified buyers, and it’s built on trust. Modern B2B buyers are incredibly educated about their potential purchases, and often careful not to make a purchase without peer validation. A referral is often what’s needed to get your company into serious consideration, leapfrogging the “attract” stage and setting you up to be a known quantity – instantly.

Why marketing, not customer success, should own referrals

So now that we’ve established that referral programs are well worth the effort, why should marketing be in control of the referral program instead of, say, customer success? Well, according to Heinz Marketing, B2B companies are three times more likely to reach their revenue goals when the marketing department has primary responsibility for a formalized referral program. The key is that the program is formalized into a marketing program (rather a series of one-offs) with a plan, strategy and tactics, metrics, and content. That puts it squarely in marketing’s camp.

When “expand” depends on branding

According to Lee W. Frederiksen, Ph.D., in a guest blog post on Heinz Marketing:

“80% of buyers have received referrals from colleagues who have no prior experience or relationship with the service provider. They break out into two categories:

  • Expertise-based referrals. These referrals are the result of industry awareness of your specialized abilities, technology, or staff. When expertise is needed that falls into your arena, you come to mind.
  • Reputation-based referrals. These are similar to expertise-based referrals, but they’re not built around a specialty, so much as an overall positive awareness of your firm’s place in your industry and your commitment to quality.”

While these probably don’t have the same impact as a true customer referral, they do have more impact than many other events, and they’re both brand-driven, so they’re also dependent on marketing.

Marketing is in the best position to be a steward throughout the entire brand-demand-expand customer lifecycle, including post-sale when customers have the potential to turn into your biggest advocates.

If you don’t have a referral marketing program in place yet, the good news is that if you’ve worked to create happy, loyal customers, you’re well on your way to creating a great referral program. In fact, according to an Advisor Impact study, 83% of satisfied customers are more than willing to refer your company to friends, colleagues and industry peers.

Three key components of a successful referral program:

1. You consistently treat your customers well – with or without their referral

The customers who will go to bat for you are the ones you’ve taken care of for the entirety of your relationship. If your marketing and support communications stopped the moment they signed their contract, it’s more than likely that they aren’t going to be willing to pass out referrals. Good will is a two-way street. It’s just plain good business practice to make your customers feel known, valued, and well supported. This kind of communications helps keep customers loyal when your competitors come calling. It reduces churn and encourages upsell; and pays off again when your customers become advocates for your brand and your products.

Three easy ways to help your customers feel good about their purchase:

  • Automate the onboarding process so your customers have access to a plethora of tools, resources, and additional help (if necessary).
  • Evaluate the health of your customers by scoring each account according to their usage and results. This will help you identify and prioritize when it’s time to get in touch to provide solutions, troubleshooting, or training. Get ahead of problems, so you can solve them before they sour the customer relationship.
  • Give public shout-outs to customers who are killing it. They may be using your product, but it’s their hard work that’s driving their success. Acknowledge those who are doing well; they’ll remember it when it comes time to asking for a referral.

2. You make it easy & clear how your customers can refer you

If 83% of satisfied customers are more than willing to refer your company, but only 29% actually do – where’s the disconnect? This could be attributed to many things, but the most obvious is that companies are not asking for that referral, and if they are, they’re not making it easy.

If you want your new advocate to go out of their way to endorse your product or service, the least you could do is give them a simple, clear, easy way to make their referral. Share a well-designed landing page with the customers you are confident would be willing to advocate for you.

Three elements of a successful referral marketing program landing page:

  • Clean, simple layout that clearly defines your program and what you are asking them to do.
  • An offer for a reward, should the referral they make come to fruition.
  • Links to a well-tailored selection of your BEST content for customers to share with those they are referring.

3. You make it worth their while to refer you

While some customers may be so passionate about your product or service that they want to shout it from the rooftops, the majority of customers will need a little bit of motivation to refer your organization. It is, after all, asking your customers to spend precious time, and stick their neck for your benefit. Successful referral programs almost always offer a reward to those willing to give referrals, most often contingent on whether the referral successfully converts into a paying customer.

Offering a cash reward for a B2B referral is tacky, and it can look like you’re paying your customers for positive reviews, which would be unethical. You want to reward organic referrals, not pay people to construct them. It’s also important to remember that there will likely be multiple people at an organization involved in a customer referral, so you want to reward the organization, not the individual. Offers like iPads, gift cards, or golf clubs are great rewards – but they can only be owned by one person.

Four ideas for rewards that are both appropriate, and enticing:

  • An annual subscription to a relevant publication
  • A discount for your product or service, or an extra layer of something
  • A cash donation to charity of their choice
  • A gift of food (cookies, perhaps) that can be enjoyed by everyone in the company

Marketing today isn’t just about getting customers in the door, it’s also about increasing customer lifetime value, and turning customers into advocates. The value that marketing is able to offer the business is expanding, as the marketer’s role itself grow to encompass all the lifecycle stages, from branding to demand generation, to retention, expansion, and advocacy.

Top-performing marketing leaders understand the need to allocate their time and resources across the entire spectrum of marketing, acknowledging that an effective marketing strategy goes well beyond just driving demand for sales. Download Act-On’s eBook, Rethink Marketing [Automation], to learn how to effectively build brand equity, drive demand, and expand customer relationships.

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