If you want to grow your business, there's no need to rethink your entire sales or marketing strategy. Instead, work toward the goal of generating more customer referrals from the satisfied customers you have today.
Customer referrals are the common denominator among some of the fastest-growing small and midsize companies according to a Vistage study of 1,352 CEOs last fall. Our study found that the CEOs of high-growth small and midsize companies -- that is, companies with double-digit growth over 2 years -- ranked customer referrals as one of their top-three most successful strategies in marketing and sales. We found that these high-growth companies were 52% more likely to have a formal customer referral program in place than those that did not achieve any growth over that same period of time.
If your company doesn't have a referral program already, it's easy to create one. In fact, getting started only takes two steps.
Step 1: Evaluate your approach to referrals
In our experience, referral programs typically fall into one of three strategic categories: unconscious, conscious or optimized. Often, an unconscious strategy is ineffective at generating referrals, a conscious strategy is moderately effective at generating referrals, and an optimized strategy is highly effective at generating referrals.
As a first step, it's important to figure out where your company falls on this continuum so you know where to focus your efforts.
If you use an unconscious strategy, then:
- You approach referrals passively.
- You know that referrals are important, but don't have a program dedicated to it.
- You may get organic referrals, but they tend to be inconsistent and unpredictable.
If you use a conscious strategy, then:
- You approach referrals actively.
- You have a formal referral program that's aligned with your marketing and sales teams.
- You have tools, skills and processes in place to measure key performance indicators.
- Your referrals are more predictable; however, your referral activities may be inefficient or difficult to scale.
If you use an optimized strategy, then:
- You use data to drive your referrals.
- You have a formal referral program that is optimized by technology.
- You leverage social media and other online communities to deepen relationships with customers and strengthen your company's brand/reputation.
- You use customer relationship management platforms to keep your teams organized and accountable and use automation tools to improve the efficiency and impact of processes.
- Your referrals are increasingly predictable and scalable.
Step 2: Complete the referral program checklist
Once you know where your company's referral program currently stands, you can make changes to move it to the next level. Completing this checklist will help you get to that point.
- Define your ideal customer. Figure out who you work best with and articulate it in writing.
- Create a customer-first culture. Communicate your company's commitment to exceeding expectations and delivering an exceptional customer experience.
- Educate in accordance with KPIs. Set your employees up for success by giving them the processes and capabilities that support your referral goals. Offer professional development opportunities that are tailored to your company's referral activities.
- Prioritize relationship-building. Sensitize and educate the organization on how to better connect with customers. Figure out what aspects of your culture motivate and build better customer relationships.
- Identify and track the metrics that matter. To measure success, track metrics such as your Net Promoter Score, customer satisfaction rates, customer complaints and KPIs that include win/loss analysis, success rates, and referrals as a percentage of the business.
- Launch and learn. Use technology to monitor activities and outcomes so you can continually iterate and refine your strategy and convert failures into learning opportunities.