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When I lived in Cuba, there was a thriving black market for all sorts of commodities. There was always one person in the neighbourhood you could trust to tell you where to go to get the best cheese, the freshest fish, or a stick of deodorant when there was none to be found in the shops.
Of course, illicit vendors can’t just throw cash into Google Ads or run glossy public marketing campaigns. But you know what? These vendors grow their businesses – and fast – by building relationships with people who are connected to their end clients: tourists and cashed-up locals.
Now, part of this success is simple supply and demand, but in thriving competitive markets, strong referral networks can separate the winners from the losers. Referrals are one of the best means to acquire new business and can really move the growth needle. Referred clients:
- often cost less to acquire;
- are more likely to convert; and
- usually spend more once they do.
Your business can build a structured referral program that attracts and motivates other businesses to refer you clients.
All good stuff. So where do you start? Here are 7 steps to create a winning referral program that will supercharge your business’ growth:
1. Identify Potential Referral Partners
The first step is to brainstorm potential partners. Referrals can come from a variety of sources, for example, existing clients, strategic partners, affiliate marketers or influencers, and brand ambassadors.
When identifying potential referral partners, it can be useful to think about groups or industry verticals, then drill down into specific examples.
2. Size the Prize to Set Your Program Structure and Resourcing
Once you have identified potential partners, you need to run the numbers and be clear on what you stand to gain through referrals. This will help you determine how to structure and resource your referral program.
Size the Prize
First, ask yourself how much revenue you want to earn to justify investing in this channel (you can always double down later once there is traction!). Then, reality-check this figure by asking the following three questions – the answers will determine your program structure and resourcing:
- how many referrals can you realistically expect from each referral partner?
- how much revenue will you likely earn from each referred client?
- how many partners will you, therefore, need to have in your referral program?
Now you will know whether you will need to structure your referral program as a “volume play”, or a “quality play” (or some combination of the two). i.e. whether you will have:
- a large number of partners referring a small volume of leads each (volume play);
- a small number of partners referring a large number of leads (quality play); or
- a small number of partners referring a small number of high-value leads (quality play).
Understanding which approach you’ll take is important because it will influence how you resource your program. For instance, engaging with a small number of high-value partners may require a senior-level person with experience in negotiating complex strategic partnership deals. On the other hand, a volume play will require someone experienced at building lead acquisition funnels and engagement frameworks for larger networks – and will likely also require software support.Continue reading this article below the form
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3. Segment Your Potential Referral Partners
It is likely that your potential referrers will be motivated by different reasons to partner with you. To ensure you hit the right notes for success, segment your referral partners into groups that are motivated by similar themes. A good way to approach this is to:
- group your potential partners into industry verticals;
- identify what is important to each of those verticals. You can do this by first asking a sample of them (e.g. Do they generally want to grow their own client base, nurture existing relationships, or better monetise their network?);
- collate these industry verticals into groups that follow similar motivation themes and try creating a “persona” for each segment.
4. Choose Incentives
Now that you have your segments and structure, it’s a lot easier to start thinking about incentives.
You should tailor incentives to the segments/personas you have identified. Make sure the incentives relate to that segment’s goals. While the best approach is to ask your potential partners for feedback, here are some general guiding principles:
- non-monetary rewards are often more effective than cash, especially when seeking referrals from existing clients (e.g. account credits and gifts);
- partners who are big on adding value to their network will respond better to incentives that allow them to do just that;
- partners who want you to help grow their customer base require more thought – can you refer clients to them at scale? If you have other partners in the same industry you will need to think of other ways to help them – it’s unlikely you will have enough leads to go around!
5. Build a Partner Recruitment and Engagement Framework
Recruiting new partners and keeping them engaged (and referring) are what will make or break your program’s success. Your chosen structure will play a part here:
For small programs with a small number of partners:
- personally connect with the target business to explore the opportunity to work together;
- expect for it to take a while to obtain and build momentum with the right contact. Setting dates for regular catch-ups and being clear on next steps each time can combat this;
- shoot for simple minimum viable product (MVP) tests first – not the moon. While you might see an opportunity to integrate your technology or change the world, start small and easy. You can build from there once there’s traction to avoid a stall.
For large programs with a high number of partners:
- building an inbound recruitment funnel for new partners is vital.
- you won’t have time to contact every partner to keep them engaged and to keep you top-of-mind. Automate some of your engagement to ensure scalability. Create a series of emails to nurture partner relationships that are tailored to your different segments. Create others that automatically send upon certain actions/inactions from your partners (e.g when they refer, or have been inactive for a period of time);
- communications should always add value to the partner or their network. A good example is content that is relevant to their industry, or that engages with a problem faced by their network. If they pass it on – they’ll not only look good to their network, but the referrals will follow!
Get creative! Try different rewards for different partners, test different levels and types of engagement (e.g. live events, email, face-to-face meetings, pigeon post…), or experiment with gamification. Your results will tell you what works best.
6. Track Results
Tracking referrals is crucial because:
- it helps you to measure your program’s efficacy, allowing you to optimise it; and
- it is important for keeping your partners engaged (through accurate reporting and timely and proportionate rewards).
If your program is small, it’s possible that a spreadsheet is all that you’ll need to track it. If you have a large number of partners or referrals, you may need a better system and potentially some software to help.
7. Test, Fail, Learn, Pivot
Your ability to optimise your program and really get it humming is highly dependent on the quality of your data and willingness to fail fast and iterate quickly. Capture all the data you can – and embrace the growth mindset: fail fast, learn faster!
You may not be a back-alley bootlegger or black marketeer, but a strong referral program can be a heavy-hitter in your business growth arsenal. Building a great referral program that will supercharge your business’ growth boils down to three key guiding principles:
- identify the best partners and work hard to uncover their motivations and goals;
- create a scalable, engaging program that caters to those goals while keeping you top of mind; and
- keep track of what does and does not work – and continue to drive improvements.
Want to learn more about building a great referral program or explore partnering with LegalVision? Get in touch! Call 1300 544 755 or complete the form on this page.
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