Referrals are critical to grow your business. Let’s face it – warm introductions are usually much more effective than cold calls, perhaps as much 10 times more effective. In layman’s terms, it means that for every deal you close through warm referrals, you would need to make at least 10 cold calls. Imagine how much money and time you could save if you had a steady stream of high quality referrals at your disposal. Imagine how much faster you could grow if you received just one more high quality referral each month.
In order to get more referrals, you should be ready to invest in them. That is why a referral incentives program can be an important weapon in your arsenal. However, not all referral incentive programs are created equal, and as such, not all referral programs are as successful as they can be.
We believe that to run a strong referral incentive program, you should consider the following:
- Offer truly attractive incentives – If you want to attract the best connectors, you need to make it worth their while. In many cases, this could mean a commission on the value of the sale (anywhere between 5-20%), but it all depends on the size of the project, the level of effort required, and how payments are scheduled. If the initial sale value is relative low, but the potential lifetime value is high, perhaps a fixed finder’s fee may be more appropriate. Just make sure you align the incentives you offer with your business’s needs.
- Clearly document roles and responsibilities – Make sure that your referral partners understand your expectations, and ideally, make them sign on it, so that it is legally binding. Aside from introductions, are you expecting monthly progress reports? Do you expect referral partners to facilitate the first meeting? Do you need them to protect confidential information? These should all be spelled out through a formal referral agreement.
- Educate and enable your referral partners – In order to help them sell your product, you need to arm your referral partners with the training and tools they need. While you shouldn’t expect them to be the foremost experts in your product, they need to understand your value proposition, what sets your company apart, and how to identify high potential prospects. They should also have access to marketing materials that they can use to help spread the word and generate demand for your services. In the B2B space, this often involves training, white papers, articles, or other items of value to prospective customers.
- Follow-up rigorously and consistently – Make sure you touch bases with your referral partners on a regular basis. We recommend at least a monthly cadence when starting out, but it largely depends on your business. You should also seek and provide feedback when a referral is made and after every major interaction with customers.
- Last but not least – Earn their trust – No matter how generous your incentives are, savvy connectors will not open their networks and recommend your product unless they can stand by your quality, reputation, and professionalism. Take the time to build credibility right from the start, and make sure you follow through on your promises. When referral partners try to reach you, get back to them promptly, ideally within 24 hours. And it should go without saying – when the deal closes, honor the agreement. Always do the right thing.
When done right, referral incentives can help you build a highly valuable sales pipeline and scale your business. But building and maintaining a successful referral program requires integrity, discipline, and collaboration – qualities that are also essential to running a long-lasting business.
Ramon L. Rodriguez is the Founder/CEO of Collaborate.Biz, an innovative technology company that helps businesses find and connect with strategic partners to get more referrals, collaborate on projects, and grow together. Through its exclusive Trusted Referrals Marketplace, high-quality businesses are matched with well-connected professionals who can get them more referrals. Click here to learn more.