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How likely are you to sign up for something a friend or colleague recommends? If I find the recommendation interesting, it takes less than a minute. So, I have great confidence in referral programs and wrote this article for anyone considering building a B2B referral program.
Referral programs have been around for a while in the B2C segment. You are probably familiar with the type of offerings you get after your first purchase in a clothing store;
"Invite a friend and get a 10% discount."
Some B2B companies, such as Dropbox, have succeeded tremendously by incentivising customers to refer their business.
But far from all B2B companies that use this tactic, according to ThinkImpact, only 30% of B2B businesses have a referral program.
If you're looking for reasons to launch your referral program, the report from ThinkImpact has fascinating and convincing statistics.
According to them;
A well-designed referral program will open enormous opportunities for your business. Regardless of the industry, I'll go through how to build it step by step below.
A referral program aims to turn your delighted customers into brand ambassadors. Thus, to get a return on investment for building a referral program, you need to estimate how many satisfied customers you have. If you currently need more delighted customers, there is no case for building a referral program. Then it would be best if you instead focused on improving customer service and producing helpful content for your current customers.
What incentives should you offer users who refer your brand? It could be anything, but the most successful programs have incentives based on which value they offer. PayPal is a well-cited referral program case. As an online payment system, their core value is money. Thus they gave money as incentives. The cloud storage service provider Dropbox, which grew its users by 3900% with its referral program, offered free storage as an incentive.
So, in this step, you must analyse your core value thoroughly.
There are three main incentive structures;
The dual-sided referral program
To return to PayPal's referral model, the users who referred their solution received money if their friend signed up. But it didn't stop there. They offered money to the person who signed up as well. Similarly, Dropbox offered extra storage to both the referrer and the referees. This dual-sided model is an effective incentive structure for growth as it encourages existing users to spread the word and potential users to sign up.
Milestone referral program
In my previous article, "What is referral marketing?" I wrote about The Hustle Daily Newsletter, which reached 300K subscribers in a few months. They have built a milestone referral program. As a referrer, you earn one credit per referee subscribing to their newsletter. The program has several milestones; when you have 25 credits, you get a hoodie, 75 means a subscription to their premium community, and once you have 1000 credits, you'll get a getaway. This model is engaging as it 'gamifies' the experience for referrers as they get a notification on how many referrals they need to reach the next milestone.
Leaderboard referral program
Another type of incentive structure is 'the leaderboard'. Here you share an updated list of users with the most referrals. Once, for example, every month, you can reward the top list. This is another example of a structure that turns referrals more into a game.
It would be best if you had software to manage your referral program. Here you have multiple choices. Just google it, and you'll find results such as;
I haven't tested any Plug-And-Play software as we at Zooma decided to build our customised referral program in HubSpot. However, having your solution is excellent when you want to customise, experiment, and improve, which is highly valuable. Also, you're guaranteed that all data is gathered on one contact card.
If you'd like your referral program in HubSpot, please get in touch with me, and I can guide you on how to set it up.
So, once you have everything in place - it's time to promote your referral program, and there is room for creativity.
The most important thing is that you have a short, clear, and understandable explanation of why your users should join the referral program and how it works.
When the message is ready, you'll be able to promote it in channels where your delighted customers are present. For example, subscribers to your newsletters, listeners to your podcast, or users who recently purchased from you.
If you're considering building a B2B referral program, let's get in touch.