This guest post was written by Bubba Page, CEO at OUTRO.
Referrals are one of the most powerful lead sources but yet go untapped by many businesses. Emarketer found that 52.2% of most effective marketing tools for small businesses in the US come from friend referrals. Research done by the New York Times shows 65% of new business comes from referrals. So why aren’t referrals utilized more and how can you make your customer referral program more effective?
Dale Carnegie stated: “91% of customers say they’d give referrals [but] only 11% of salespeople ask for referrals.” Asking for referrals can be challenging and most often people simply don’t know how to go about asking for them. When asking a customer for a referral, it’s important to identify the right time to ask. The best time to do this is when a client is happiest and pleased with your services (which is more likely if you use an AI-Powered sales automation CRM, like Spiro).
Though many happy customers, investors, etc. would be more than willing to make referrals for you, they will likely face these three challenges.
1. They’re Busy
Making referrals takes time and often takes the back burner since it is not a high priority for them. However, according to research done by Nielsen, stats showed 92% of respondents said they trusted referrals from people they knew. Nielsen also found that people are four times more likely to buy when referred by a friend.
2. Who to Ask?
It can be challenging to identify who within their network would be a good fit for your services. You know your target market best. Letting them know who you’d like an introduction to makes their life a lot easier.
3. What’s in it for them?
Offering a reward increases referral likelihood, but the size of the reward does not matter according to the American Marketing Association. Software Advice found more than 50% of respondents are likely to give a referral if offered a direct incentive, social recognition or access to an exclusive loyalty program. Other incentives may include cash/gift card rewards or discounts off future services. Depending on who the referral is coming from will determine the type of incentive you want to use.
OUTRO has made all three of these issues easier for people to ask for and make referrals. We recognize customers, investors, coworkers, etc. already have full plates and making referrals is one more obligation they feel they don’t have time for.
However, with OUTRO we have automated and simplified the process, enabling them to make multiple introductions in minutes. We have taken the pain out of finding the right people for them to introduce and composing individual emails to each of their contacts. And with our built-in rewards program, you can quickly determine how you would like to incentivize them for making referrals.
The latent potential of friends, coworkers, investors, and clients’ networks largely goes unutilized. However, overcoming these hurdles and accessing that latent potential can result in an increase in revenue for your business. How much is one new customer worth to you?
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