In this era of proliferating business models, collaborative commerce, and as-a-service offerings, the ability to aggregate and facilitate payments on...
Paying for Referrals is Good for Business - Here’s How
Customer referrals are often the best source for generating new business. It's time to pay them their due and grow your business faster.
80% of consumers trust referrals from people they know and are more likely to buy when referred by a friend. If you’re not leveraging your customers, you’re missing out.
You already pay for leads -- one way or another. Whether you pay directly or indirectly based on your marketing strategy, growing your business requires investing in new business.
Given the trust level, it's no surprise that customer generated leads are more likely to close. But are they worth more?
Your best customers are your best advocates
Here’s more good news - referred customers spend more than non-referred customers (some 13% more according to one report). More sales, bigger sales. What could be better?
Turns out they are also more loyal: customers who are referred churn less often and are 4-5x more likely to refer new customers. Talk about a win-win-win, but how?
Your customers may love your product or service. But do you see this enthusiasm translated into reviews of your product that read like love letters? Do they share how indispensable your product or solution has become to end-users? Do they refer your brand so that future customers can learn to love your product or service as much as you do? If not, why not?
Find out which customers are your best advocates
You can’t make good business decisions without all of the information. Start by tracking customer customer loyalty and satisfaction to find your most likely advocates.
- Does your product or service have a built-in feedback loop?
- Do you offer incentives for Customer Surveys?
- Do you ask for Customer Reviews on review sites?
- Do you track Net Promoter (NPS) ratings?
- Can you identify your advocates? (8-10 NPS)?
Tracking Net Promoter Scores is one way to measure – and identify your best prospective referrer candidates. Net Promoter Score (NPS) is often used to gauge customer loyalty, satisfaction, and enthusiasm with a company that’s calculated by asking customers one question: “On a scale from 0 to 10, how likely are you to recommend this product/company to a friend or colleague?” Aggregate NPS scores can help businesses improve upon service, customer support, delivery, etc. for increased customer loyalty. But it’s also a powerful tool to identify your advocates (NPS score 8-10), to then create a targeted referral offer.
Reward them when they spread the love
Nothing sells like positive word-of-mouth. Regardless of your industry, both consumer and B2B customers want and expect to learn about products from independent sources and word-of-mouth. They’ll get the technical info from your website and your pre-sale teams once they’re convinced your product or service can meet their needs and your brand deserves their trust.
What’s more, they’re often more than willing to share their opinions with others (89% according to a Carnegie Institute study) so that they, too, can benefit from word-of-mouth recommendations.
Most customers making referrals say they don’t mind being paid for it. In fact, while 88% of Americans report they would like some sort of incentive for sharing a product via social media or email according to a Harris Poll, 75% say they’d prefer to be rewarded with money for making referrals.
What gets measured gets done
Embedding a referral reward into your product from the get-go can be a a great idea. But most firms prefer to earn the trust of their customers and users before asking them to refer others. Whether you ask for referrals from anyone buying or using your product or service or targeting only your advocates, there are APIs to automate the entire reward payment process to jump-start your growth marketing efforts.
And if you're not a software firm, you can tap into any number of firms specializing in building customer referrals into your business process.
Check it out - your bottom line will thank you.