The ROI of Referrals

Does your company do some sort of digital advertising? It’s like magic, right?

Ad targeting has become so specific that you can search out and show up in front of your ideal customer in any corner of the globe.

But what happens when you stop putting money into your lead generation machine?

Or, what happens if and when these lead generation platforms start to add restrictions, like Facebook has recently? What’s your plan if that stream of business dries up?

The Power of Referrals

No matter how successful your lead generation strategy is, your referral strategy is more important.

Here are 5 reasons why your referrals are better than your paid leads (Source Extole)

–       Business to business companies with referrals have a  70%  higher conversion rate, and they report a  69%  faster close time on sales.

–       Customers who are referred to your brand are up to 5x more likely to use your referral program than customers who weren’t.

–       Customers acquired through  referral s hare a 37% higher retention rate.

–       Referred customers have an 18% lower churn than customers acquired by other means.

–       You can expect at least 16% more in profits from referred customers.

While the scale of these stats may be surprising to some, most business owners are aware of the power of referrals. So why have they started to rely so heavily on lead generation ads? Mostly because it feels easier. Setting up a faceless ad campaign and letting it run is a lot less scary than asking for referrals which seems a whole lot more personal.

Change your mindset

Giving is actually an innate human need within all of us, it is a part of our DNA as a collectivistic culture. We feel a great sense of accomplishment when we have the opportunity to care and benefit someone else. So how can we ease the stress and ensure the referrals start flowing in?

One way could be to see a therapist and resolve our anxiety issues… But a much quicker way, and one that’s far easier to scale across teams is to build a referral funnel with multiple touch points, that consistently presents customers with opportunities to endorse your skills – no additional thought or outreach needed.

So, here are 5 ways you can begin setting up your referral super-funnel today:

1.    The Multi-Channel Approach:

Create a spider diagram mapping out all of the ways your customers connect with your brand and add one referral message to each channel. In the same way people need to interact with our company 7 to 10 times before purchasing, they also need a couple of nudges to give that referral.

2.    Learn how to ask more creatively

Referrals do not begin and end with a LinkedIn or Google Review. Create opportunities for people to tag your company on social media. If you have a product-based business, make sure you include instructions in your ‘Welcome to the product’ note telling people to take a picture and to tag the picture with a special hashtag that will get them a future discount. If you have a service-based business – make sure to take pictures of strategic milestones (like passing a certain number of followers/sales/donations) and share them with your clients to create ‘shout-outs’ that tag you. Referrals that you get through social media can go viral very quickly!

3. Create a referral reward program:

No matter how selfless as person is, there is a greater chance of them referring you more frequently when there is something greater than just good will up for grabs. How will you reward people that refer you? Will you give them a percentage of the deal, a gift, access to a loyalty club? Let people know that you have an attractive referral program, and you’ll have people lining up to refer you.

4. Share your wins:

It can be challenging for people to refer service-based businesses or high-ticket items if they don’t know how to articulate the value. So, make it easy for them. Regularly share your wins and client success stories, backed up by stats in all your communication streams.

 5. Track your referrals

Keep a record of your referrals and analyze them as a team on a monthly and bi-annual basis. Know where most of your referrals are coming from and which ones are converting into the most profitable/long lasting clients.

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