Firms agree that formulating a plan for the organization’s marketing program and outlining the referral schemes is tricky. Marketers struggle to decide on the right time to launch such a referral strategy and the right value to pay.
For years, people have considered referral marketing as a consumer-focused strategy. There is so much evidence of impressive results from popular brands like Airbnb and Uber, but not much is heard about the referral marketing programs that B2B enterprise brands like HP, SAP, Volusion have successfully scaled. But, it is not right to assume that’s because B2B referral programs simply don’t work.
Marketers struggle to understand what is the right time to reward while developing B2B program structures. The confusion is that the B2B referral incentive only has one time to payout. This confusion has aggravated as most B2B sales cycles are lengthy. The B2B sales cycles are longer than 30 days, and the ambassadors tend to lose interest in a referral program if the referral activity isn’t rewarded quickly. They are less inclined to participate if some sort of financial reward takes 30, 45, or 60 days to come.
B2B marketers struggle to solve this situation. Experts recommend a smaller incentive for referring a qualified lead, which is considered a qualified entry point into the pipeline. The entire referral program should be technology-driven as the calculation of incentives should be smartly done as a qualified lead goes down the sales funnel.
For B2B marketing, when an ambassador knows that there’s a short-term incentive for referring a qualified lead and a potentially more significant reward for that customer closing, it removes a critical barrier to participation, immediately ramping up referral activity.
Quantitatively and qualitatively, B2B brands have seen this work time and again for customers. Business to Community researched to analyze the referral metrics of two customers — there was a massive difference between one that follows best practice and one that doesn’t.
Customer X, which offers an incentive for only a closed sale, generated a lower number of shares over 30 days as compared to customer Y, offering a small referral incentive for a qualified lead and a more significant incentive for a closed sale. There was a tremendous 75% difference in the referral share rate among customer X and customer Y.
If the incentive for referring is less, it still always ramps up referral activity. And, like other marketing activities, the more qualified referrals a firm gets into the pipeline, the better are the chances of driving a healthy ROI.
The study also revealed that cash incentives got the best responses for B2B referral marketing strategies. While points, loyalty credits, and discounts might be the right choice for B2C referral programs, B2B referrers aren’t interested in such incentives. Instead, they respond to cold, hard cash.
A Nielsen Harris Poll indicated that more than 77% of Americans confirmed they preferred to be rewarded for referrals with cash. An economically viable incentive structure is one of the most critical components of an effective referral marketing strategy. There’s no one-size-fits-all approach to incentives. Companies offer different incentives depending on their customer target, economic model, brand awareness, and referral goals. As firms are building out their referral programs, it’s critical to factor in the unique goals.