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Referral marketing works for B2B companies, learn how?
We already know that referral programs can be effective in the B2C world. But what does this look like in the B2B industry?.
Referral marketing is any kind of word-of-mouth marketing strategy that incentivizes your customers to refer your business to others. Referral programs can either be set up by the company or they can be organic, meaning a customer of yours initiates the process without you asking them.
Nowadays, the most successful referral marketing campaigns are built on trust and advocates sharing their stories with others in their network. B2B is no different; it’s just a bit more formalized.
In the B2B arena, purchasing decisions are based on more than just impulsive judgment. Since they represent a larger investment in both time and money, decision-makers take longer to make their decisions – sometimes months or years after the first contact.
This is why it’s important to understand how B2B referral programs work. But how do you build a successful one? How do you set it up in a way that best suits the needs of your B2B business?
In this article, we will focus on how to structure your referral marketing program so it works best for a B2B audience and how those tactics differ from traditional referral marketing strategies.
5 Benefits of B2B referral programs
Increased Brand Awareness
Referral marketing is a powerful way to promote your brand to B2B audiences. However, it is critical that these efforts increase brand awareness instead of pushing already interested parties to buy. The more people that talk about it or share information about you ultimately leads to more conversions, so make sure the message is positive and focused on areas of untapped potential.
Building brand awareness has many benefits, but here are the most important ones:
- Increase trust with your customer base
- Builds brand equity
- Grows market share
- Makes it easier to scale up
- Collect audience data for future marketing
Increased Conversion Rates
Referral marketing is the best way to foster relationships, spread word-of-mouth, and enrich your customer's experience. Generating referrals is more than just asking for a recommendation. User-generated content (UGC) in the form of referral drives traffic from your brand advocates’ networks, and studies show that referral marketing improves conversion rates by up to 70%.
Referral marketing has by far the highest acquisition rate of any channel. Some of the largest scale high adoption rate products grew through word-of-mouth marketing. Do the names Gmail, Dropbox or Tesla ring a bell?
Increased Customer Lifetime Value (LTV)
Customer lifetime value is the sum of all net revenue generated from a customer.
Referral programs can improve LTV by strengthening engagement with the platform, product, or brand. Being backed by a person's reputation and thus social proof makes referral marketing techniques exceedingly powerful for promoting a business online.
Building virality through word-of-mouth has become an attractive approach to growing your customer base among startups. Referral marketing is a popular method used by businesses like Morning Brew, which have over 2 million newsletter subscribers and attribute over 30% to referral marketing.
Lower Customer Acquisition Costs (CAC)
Customer Acquisition Cost (CAC) is simply the actual cost of gaining a new customer. Acquiring new customers can be expensive. Of course, this cost varies depending on the types of media you use to reach them. Referral marketing is a high-value, low-cost way to expand your customer base by getting current customers to promote your business.
Referral leads and signups are much more likely to convert to paying users than non-referred.
Lower Your Churn Rate
Churn rate, the percentage of customers leaving service or company over time, can be balanced by implementing a referral program to your SaaS business. Referral programs used as lead generation tools increase customer acquisition. Not only does this soften the blow-off climbing churn rates, but referrals have also been shown to strengthen the connection between the brand and its existing customers.
Referred customers have a 37% higher retention rate than non-referred customers, which means that you can lower your churn rate while generating new high-quality leads.
B2B referral program examples
Rewards can come in many shapes and sizes, based on the needs of each program. B2B referral companies offer all different kinds of rewards for referring new customers, from complimentary products to cashback incentives. When it comes to choosing what reward will work best for your company, keep in mind the incentive needs to either improve the life of the customer in some way or provide a financial advantage.
Fintech company, Bench Accounting uses proprietary software to automate bookkeeping and provide financial data to small business owners.
As the slogan states: "You run your business; we'll do your bookkeeping"
Bench offers its B2B audience freedom from some of the financial stresses of running a small business.
Bench offers a free month of accounting (claiming a $500 value) to friends of existing customers. Because the brand is seen as having a peer's stamp of approval, referral prospects are willing to put their books in the hands of Bench.
Choosing the Right Rewards is Key to B2B Referrals
Offer rewards that align with the values of your audience. To generate more leads you're going to offer rewards that your audience will be interested in and that means you're going to have to get to know them.
The bench really hit the mark, and obviously did their homework on their customers.
Small business owners are the focus demographic for Bench; this group of people reports the same pain points, cash flow, time, and management. Bench was designed to solve these existing issues.
So how does offering a gift card and a free month of services persuade clients to send their friends?
Simple: For a small (maybe new) business owner who is cash strapped, the convenience and flexibility of this reward will provide instant gratification.
Gift cards can also be better than cash rebates because they feel more like a reward than a payout for providing their service provider with a service ie: referral, or so-to-speak.
AirTable offers a real-time view of your business that can be easily shared. AirTable is an all-in-one solution that provides the infrastructure for teams to collaborate more efficiently, start to finish.
Referrals play a big role in B2B marketing. For Airtable, when you refer your friend to join the program they get 100 credits for their new account so they can get started right away. If you engage in referral marketing for upgrades, you will get an extra 25 credits every time they upgrade. This is a proven way to amass credit points over time without any effort on your part.
SurveyMonkey is a SaaS company that makes it easy to survey respondents, analyze responses and then report on the results. They use referral software to run a fully automated referral program for their B2B enterprise customers.
For those of you who don't know what referral marketing looks like in B2B, there is a dedicated signup page that can be found on SurveyMonkey's Apply site.
SurveyMonkey offers a $500 referral reward for every organization that signs up.
DigitalOcean is a cloud computing service provider that helps businesses with their IT needs and operates as an all-in-one workforce management tool. Digital ocean offers a double-sided reward to entice new interest.
Refer a friend and get a $25 credit with DigitalOcean when the person you referred purchases services for $25 or more you then receive $100 and an additional 60-day credit when they add a payment method to their account.
DigitalOcean has a dedicated page on its website for the referral program making it easy for anyone to start claiming their rewards:
This is DigitalOcean’s how-it-works section that explains their referral program:
Now copy your link, or share via Twitter:
When the referred person clicks the referral link they are redirected to this page:
Referral marketing is a powerful, cost-effective business strategy that allows you to tap into people who are already invested in your product. If you want to generate signups, increase conversions and limit churn rates without breaking a sweat, launching your own referral program is the worry-free solution.
Referral marketing is an important way to grow your business. Not only does it help you acquire new customers, but it can also be used as a retention tactic.
There is simply no excuse not to have created one already if you want to increase revenue in your B2B business with minimal maintenance. The only reason you're not growing your business through customer referrals is because you haven't launched your first campaign yet.
- Referrals provide quick and easy entry to your product or service.
- Referral programs work well to increase conversions and cut down on customer churn.
- Referral marketing increases customer lifetime value by encouraging engagement and loyalty to your brand.
- One of the most effective ways to market your business is by setting up a referral marketing campaign.
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