Referral Marketing: understand why this should be one of your sales priorities!


Every sales manager likes to receive leads that arrive via customer or business partner recommendation.

It is not by chance, these potential customers usually arrive very close to closing a deal and, on top of that, with an initial knowledge about your product or service.

Even so, a significant part of the companies do not work with Referral Marketing, so that this happens with volume and recurrence. Is your case?

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In this article, we’re going to talk about referral sales and how your commercial operation can gain agility and achieve better results with them!

What is Referral Marketing or Referral Marketing?

Referral Marketing is nothing more than structuring strategies and initiatives to transform customers, business partners or other promoters of your brand into a true acquisition channel.

Also known as Referral Marketing, it puts into practice actions that encourage referral. In this way, referrals are not just a casual source of lead entry into the funnel, but also a recurring channel capable of bringing in volume of new customers periodically.

And how does this work in practice?

Companies like Umber and Netflix, for example, have done this very well to grow their user base through financial incentives – race credits or discounts for every effective referral.

But the best example of successful Referral Marketing, without a doubt, was Dropbox. This tool for storing files in the cloud won almost 4 million users between 2008 and 2010 only with referrals from customers, reaching a growth of 60% per month.

How did this happen? Each recommended user earned more storage space on the referred account! Something quite attractive, isn’t it?

What is the value of a referral to your business?

Dropbox numbers already serve as a nice incentive to start adopting Referral Marketing in a business. But its main benefits are worth detailing.

See below:

Leads with high qualification potential

We mentioned at the beginning of this text a point that is very true! Leads that arrive via recommendation have a higher qualification rate.

This is not by chance, the fact is that, during the nomination process, the potential customer is already qualified, either by identifying the profile of the person who nominates, or because of the doubts he currently resolves.

This means that your commercial team’s work is shortened in the initial phase of the operation, resulting in resource optimization!

Shorter trading time

Referral Marketing, therefore, tends to reduce the time to negotiate a sale, shortening the sales cycle.

This way, the result comes faster and the commercial executive can dedicate his time to more contacts within the same period of time.

Lower customer acquisition cost

Finally, it is important to mention the customer acquisition cost (CAC), which is also lower for sales via recommendations.

Even if you offer financial benefits within your referrals campaign (we’ll talk about this later), the investment is still usually less than that made in lead generation campaigns , whether online or offline.

How to ask for referrals from customers without harming the relationship?

If the results via Referral Marketing can be so positive, why are still many companies not focusing on this strategy?

To illustrate, a study by Referral Candy shows that while 83% of consumers are willing to recommend companies they trust, only 29% of them take any formal action to encourage this to happen.

From what we’ve seen from the market, most companies don’t set up a referral program for fear of causing a conflict of interest with a current customer and damaging such a carefully constructed relationship.

But isn’t it possible to combine Customer Success and Referral marketing in this strategy? Yes it does! In fact, this is the secret to success in setting up a Referral Marketing campaign.

Customers who are satisfied with your company, your product or your service may not only feel comfortable participating in a referral program, but also feel valued for it. And, in the end, you have a new way to retain customers!

However, for this to actually happen, it is necessary to really structure a marketing campaign aimed at this end, which includes a good strategic sales planning and which considers that not every customer is ready to make a referral.

We’ll talk about how to do this below!

Step by step to assemble a Referral Marketing campaign

To start taking advantage of Referral Marketing in your Sales operations, there is a step-by-step guide that can be very easy to implement. All you need to do is have very well-documented information about your current customers and a good view of your market.

See below!

1. Define your goal

As with any commercial campaign, your Referral Marketing strategy needs to have a very clear objective. Try going beyond “increasing sales” or “increasing lead volume”.

Especially in an initial moment, it is worth building Referral Marketing actions aimed at a very specific objective.

You can focus, for example, on increasing sales of a particular product in your portfolio, or on activating recommendations from a specific customer profile.

And don’t forget: create an initiative that fits nicely into your strategic sales plan to ensure the overall picture isn’t jeopardized.

2. Map your promoters

It should be noted that referral campaigns do not work with any customer profile in your current portfolio.

There are those who are in the initial stages of using the product or service, those who have had a negative experience in recent months or those who simply have a neutral opinion about their company.

To securely map those customers who are most likely to make a recommendation, it is necessary to combine the information present in the CRM with that obtained through satisfaction surveys, such as the NPS (Net Promoter Score).

NPS is particularly useful in Referral Marketing as it classifies your customer base according to three profiles: detractors, neutrals and promoters. And it’s the promoters that your campaign should focus on!

3. Choose a reward

With a very clear objective and mapped out your company’s promoters, it’s time to choose a reward that serves as an incentive for both the nomination and the closing of the deal.

That is, you will need to think of a benefit for the nominee and another for the nominee.

It is important to say that this reward does not necessarily have to be financial. Even offering discounts of 5% to 10% has become so commonplace in the market that it hardly becomes a differentiator.

So try to deeply understand your personas and your ideal customer profile (ICP) to pick something that really makes sense. Remember Dropbox? What most customers wanted was storage space, a more than attractive counterpart!

4. Assemble a mechanic

A good campaign also has clear mechanics. The so-called “rules of the game”.

It is necessary to put on paper all the conditions involved in the campaign to avoid any kind of problem during the nomination process. The mechanics also serve, internally, to define responsible areas and actions that will guarantee the success of the entire strategy.

5. Evaluate results

There is always room for improvement in a Marketing campaign, including when we talk about referrals. For this reason, it is essential to measure the entire strategy and understand the possible bottlenecks for the results.

In this way, you can adjust actions over time, identify new ways to engage your promoters, evaluate CAC in relation to other acquisition channels, among others.

Do this continuously, even if the initial results already seem to be formidable!

Ready to get a Referral Marketing campaign going?

If you’re already selling by referrals, there’s no reason not to encourage this to happen more often and in greater volume. And Referral Marketing will enable this to happen in a structured way!

So it’s time to roll up your sleeves, put your strategy down on paper, and take action!