Turbo-Charging Referral Marketing
by Ruth P. Stevens.
A trend has emerged
recently in business marketing. You might call it referral marketing on
steroids. It involves a deliberate, structured program of soliciting and
rewarding referrals from current customers.
Referral marketing has long been a mainstay of business marketing. Who
is a better source of new prospects than satisfied current customers? As
a prospect, a referral is likely to be highly qualified, predisposed to
appreciate your product or service and thus easy to convert. The result
is an enviably low acquisition cost and a high ROI.
The only problem with referrals has been: how to get more of them?
Referrals are so profitable, companies will pounce on any chance to
increase their volume.
So along comes the Internet, which, with its viral ability to enable
pass-along messaging, has been a boon to referral generation. Business
marketers were quick to see the benefit of adding a pass-along request
at the bottom of their current-customer e-mails, and of building forms
to their Web sites asking for e-mail addresses of "who else should get
this white paper."
Day-to-day referral management can be a pain, so the Internet also has
been harnessed to ease the burden of tracking, analysis and follow-up of
referral solicitation. A few companies, like Takira and Kefta, arose to
help with software tools.
But referral marketing has risen to a new level. Some companies are
applying the power of points-based loyalty programs to the task of
persuading customers to take an active role in introductions to new
prospective buyers.
Consider Stellent, a Minneapolis-based provider of knowledge management
software and services. Stellent recently introduced its "Steller
Rewards" program, a way for its customers to earn rewards points for
testimonials and referrals.
Stellent gives 500 points, for example, if a customer agrees to serve as
the subject of an internal case study; 750 points for hosting a site
visit by a Stellent prospect to check out how the tools are being used;
1,000 points for participating in a press release; and 2,500 points,
plus expenses, for speaking on Stellent´s behalf at an industry event.
The points are redeemable, at a value of per point, toward deductions
against the customer´s Stellent bill. This approach neatly sidesteps the
perennial problem of points programs: namely, corporate policies
limiting the size of gifts. Here, the benefit accrues directly to the
company itself.
On the referral front, the Stellent program offers 250 points outright
for an introduction to an ordinary prospect, and a 500-point bounty for
a "C-level" introduction, meaning a CEO, CIO, CFO or someone similarly
titled. But wait, there´s more. If the introduction converts to a sale,
that earns another 5,000 points.
One Stellent customer enthusiastic about the program is DoubleClick.
Says Susan Sachatello, DoubleClick´s chief marketing officer, "I love
this idea. Usually there´s no benefit in helping out a vendor, but for
,000, we have a different level of motivation."
With this kind of reaction, it´s no wonder that business marketers are
looking at rewards programs for referrals. Sachatello is investigating
instituting a similar program for DoubleClick and its customers.
As they evaluate the opportunity, marketers will need to proceed with
care. A backlash is possible. In the industry-event arena, for example,
any whiff of a paid testimonial is likely to raise serious questions
about objectivity.
Dan Goldstein, director of conference program development at the Direct
Marketing Association, states flatly that he would reject a speaking
proposal if he knew it involved a payment by a vendor to a client. "This
practice is not illegal, but it´s not necessarily honest, either. It
reeks of a sales pitch. We recognize that companies want to get their
names out there, but they have to do it in the right way." However,
Goldstein added, the for-profit conference management community might be
more tolerant of the idea than is his organization.
On the other hand, the value of referrals is so high, it behooves
business marketers to do everything possible to reward customers for
introductions. Give referral awards a look.
About the author: Ruth P. Stevens can be reached at http://www.ruthstevens.com.
Ruth P. Stevens consults on customer acquisition and retention, and was
recently named one of the 100 most influential people in business
marketing, by Crain´s BtoB Magazine. Reach her at www.ruthstevens.com.
Referral Marketing Resources
•
Referral Flood - How to
create a flood of new business without spending one dime on advertising.
An insider's shortcut to referral marketing that will supercharge your
business, your wealth, and your life...even if you don't know a thing
about marketing. Ebook and Audio CD course.
•
The InfoGuru Marketing Manual - Robert Middleton
This comprehensive marketing manual contains everything you need to
attract more clients to your professional service business. Manual
includes complete 23 chapter text with hands-on action plans, audio
tutorials, articles, marketing discussion group, and many additional
bonuses.
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Page topic: Referral Marketing
Strategy
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