“These products are really good; I would definitely recommend you to buy them!”
“I had a great experience with this brand, you should try it too!”
These simple statements can be the most potent marketing tool for any business.
The new-age consumers have a very different approach toward their purchasing. They are mostly comprised of younger generations such as millennials or Gen Z buyers, who prefer to make conscious and informed decisions. Businesses must provide them with a solid reason for opting for their products. While traditional marketing methods will help in this process, they will not be sufficient. Luckily for businesses, their own consumers can help them out in this situation, through the simple process of referrals!
Referrals are an easy and effective way for companies to gain more business, and hence they are of extreme importance for companies. This is evidenced by the fact that the buyer’s journey for almost 87% of B2B consumers begins from a referral.
Referrals are a crucial avenue of business growth, and they can be leveraged to boost sales. But what exactly is a referral? And how can a business ensure that they receive sales referrals? This blog will shed some light on the same!
A sales CRM like Kylas is another tool that can be leveraged by a company to boost its growth. It has a robust feature set that can optimize the end-to-end operations of any organization, right from lead management to pipeline management.
What Are Sales Referrals?
In order to understand the concept of sales referrals, it is essential to understand how they work and the effect that they have on a business.
Let us imagine two consumers who are looking to purchase some office equipment. One consumer hears the pitch of a salesman and goes through all the advertising material for the equipment. He might hesitate while making his purchase or delay the purchase till he can find more credible testaments for it.
The other customer hears recommendations for the equipment from his friend, and he is instantly convinced to make the purchase. This behavior remains consistent for 84% of consumers who rely more on personal recommendations rather than the marketing and advertising content of any brand. Such is the power of referrals.
Sales referral is the process by which the customers of a brand refer others to make a purchase from it. This organic method has become the top acquisition channel for up to 55% of organizations. These high success rates of sales referrals are linked to several factors:
- We are inclined to fully trust the opinions of our friends/relatives or acquaintances
- It reduces the element of risk associated with any new purchase
- A feeling of security is created in the minds of new consumers once they hear the positive experience of their acquaintances with a particular brand
Sales referrals have the effect of changing the perception of a product in the minds of consumers. Since it has been tried and tested by someone that the consumers know and trust, they react more positively towards it. This change in perception is just one among the numerous benefits that sales referrals can have for a business. Read on to know about the other ways in which this process can benefit businesses.
Why Do Businesses Need Sales Referrals?
A lot of businesses are still unaware of the immense power of sales referrals. They do not believe that referrals can be as useful as their other marketing & sales channels. However, these businesses are missing out on a very vital source of business growth!
Here are some of the reasons why businesses need sales referrals:
1. Boost Sales
Attaining a high sales velocity is the ultimate end goal for any business. One of the primary and most significant benefits of sales referrals is that it drives more business toward companies. As per statistics, up to 65% of new business for companies comes from referrals.
The reasons for the success of the sales referral method have already been elaborated on above. These factors work in close association with one another to generate a larger number of leads for a business than what would have been possible with only the marketing tactics of the business. Due to the sheer volume of incoming leads, a lot more sales can be achieved by a business.
2. Create Brand Awareness
It is necessary for businesses to build a brand for themselves in order to succeed in today’s competitive market. However, is it equally necessary for this brand to be made known to the general public? A brand may have the best products, but it will not be able to grow till more and more people know of it.
Brand awareness is created through sales referrals since the brand is advocated for by people who have personally experienced its services.
3. Build a Loyal Customer Base
Sales referrals help you connect with your target audience and those who are in genuine need of your product. If nurtured well, these referral consumers can turn into a loyal customer base for your business. In turn, loyal customers can help create a steady stream of revenue.
Customer Lifetime Value is an accurate measure of the revenue that consumers can bring in for a business during the lifetime of their association with it. With referred consumers, the CLV is almost 16% higher than that of non-referred consumers.
4. Cost-Effective Marketing Technique
Sales referrals are a great way for businesses to generate high-quality leads at low costs. A study showed that for almost 54% of marketers, referrals had the lowest cost-per-lead when compared to other channels.
Marketing techniques such as digital ads, promotional campaigns, etc. demand the investment of a lot of resources. As opposed to this, sales referrals only require a satisfied consumer to talk to others about your business.
After knowing the benefits of sales referrals for a business, the natural question that arises is how they can be obtained. While the mechanism of sales referrals is easy to understand, it is not as easy to actually receive referrals. It requires planning and strategizing, and we are here to guide you through the process.
A Framework to Get High-Quality Sales Referrals
Like every other marketing technique that one would use, sales referrals too must be tackled in a very systematic manner. Hereinafter enumerated are certain methods and practices that comprise a framework to get high-quality sales referrals like a boss!
1. Establish the Story of your Brand
People will be automatically inclined to spread the word about your brand once there is a story associated with it. A backstory makes your brand feel relatable for consumers and will give them more reason to talk about it. Furthermore, sales referrals about a brand with a backstory are also received better by people. They feel personally invested in your business and will be more likely to make a purchase from you, and further refer your brand to others.
Your brand story can be based on how it was conceptualized, the problems that it intends to tackle, some unique aspects of its services, etc. You can incorporate your story in your marketing and sales efforts to familiarize your customers with it.
2. Make your Products Stand Out
In today’s competitive market, simply having good products is not enough. Consumers use and hear about a lot of good-quality products. If your product does not bring something new to the table, it is unlikely that a lot of people will talk about it or be interested in hearing about it.
Your products must stand out from those of your competitors in order to generate more sales referrals for them. This can be done by making your consumers see the value associated with purchasing your product, and how it will benefit them. With such an approach, your consumers will be more than willing to refer your product to their acquaintances in the hope that it will add value for them too.
3. Improve Customer Service
While making a purchase, 64% of buyers choose customer experience over price. Hence, providing a good customer experience is vital for the success of sales referrals.
Your business must have a customer-centric approach, to help you form a reliable consumer base that will make repeated purchases from you. Your consumers will hence have strong feelings of loyalty toward your brand and will be likely to give you referrals. Some small, yet impactful ways in which you can improve your customer service is by understanding their pain points, taking efforts to resolve them, maintaining relevant interactions with them, etc.
4. Request Referrals
Often, the simplest path is the one that we tend to ignore. Similarly, with sales referrals, it is often the simple act of asking for referrals that will yield more results as compared to other tactics.
Studies have shown that up to 83% of customers are willing to give referrals but only 29% of them actually give referrals. This gap occurs because most businesses fail to reach out to their clients for referrals. Unless you specifically request it, your clients might not always take the initiative to refer you.
However, while asking for referrals, you should keep in mind that you make the referral process as simple as possible. You can create web forms, send your employees to personally take referrals, etc. to ensure that your customers are not inconvenienced while referring you.
5. Choose the Right Time to Ask for Referrals
To make the most of your sales referral strategy, it is essential to time it well. Let us understand the importance of choosing the right time to ask for referrals through an example.
Business 1 does not plan the timing well and asks for referrals at a time when their services have not been at the optimum level. At such a time, either it will not receive sales referrals at all, or will receive low-quality ones.
In contrast, Business 2 studies its sales data and analyzes its customer satisfaction levels. It uses this to make informed decisions about the ideal time to reach out to consumers for referrals. At a time when your customers have received good service, or your product has added value for them, they will give referrals in larger numbers, and of higher quality.
It is hence crucial that you leverage your data to identify the most suitable time to request sales referrals.
6. Offer Incentives on Sales Referrals
A give-and-take equation will always produce better results than a situation where only one party is benefiting from the other. When your customers refer you, they are doing something that greatly benefits you. By incentivizing sales referrals, you too can offer them something in return.
You can opt for any kind of incentive, be it cash rewards, or discount coupons & vouchers. Such incentives will go a long way towards showing your customers that you appreciate the helpful and meaningful sales referrals received from them. It will also improve the quality of referrals since consumers will want to go the extra mile for you due to the rewards that they have gotten from you.
This framework does not require you to make any drastic changes in your business. Instead, it shows a way how major success in sales referrals can be obtained even by simple operational changes. By adopting it, you can secure timely and useful sales referrals for your business.
Sales referrals have emerged as an efficient and effective way for businesses to boost their growth. All marketing and sales efforts can be enhanced by referrals. More and more businesses are now relying upon them and are seeking ways to get more referrals. You can achieve this by implementing the techniques provided herein and also expanding your customer base to generate more sales and revenue.
Another way for businesses to generate more sales and revenue is by the adoption of a CRM like Kylas. It streamlines the end-to-end operations of your business, thereby making your teams’ work highly efficient and productive.