A referral program is the best organic lead generation process that you can have. All you need to do is invest in your customers instead of the ad giants, and you will get a stream of ROI. However, many software founders have yet to utilize this fully, but once they do, they’ll wonder why they haven’t done it much earlier.
In this episode of SaaS-Story in the Making, B2B SaaS Sales Coach and Host Matt Wolach with Referral Factory Founder Kirsty Sharman sat down to discuss how to do your referrals to ace your close rate. They also discussed why referrals are important and valuable advice on customer feedback. Watch to find out how to design your referrals and expand your customer base massively!
Podcast: SaaS-Story in the Making
Episode: Episode No. 229, “How to Drive Tons of Great Referrals – with Kirsty Sharman”
Host: Matt Wolach, a B2B SaaS sales coach, Entrepreneur, and Investor
Guest: Kirsty Sharman, Founder at Referral Factory
TOP TIPS FROM THIS EPISODE
Keep Your Referrals Simple
The best referral programs will always be those that your customers can quickly grasp and retain. It’s easy to get lost in enthusiasm and make an intricately layered referral. One might think that it makes the program more fun and interesting, but it couldn’t be further from the truth.
If customers can’t understand your referral program, they won’t be participating in it. An ideal referral program would be giving one reward per referral. Sharman also suggests throwing in a bonus if they get you ten referrals. Customers have a short attention span, and you will close more deals by adjusting to that.
Implement Double-Sided Referrals
Double-sided referrals are the best of both worlds and Sharman even goes so far as to say it’s the best form of referral she’s seen. After all, the referrer gets a reward while the new customer gets an incentive. Everyone gains something from the referral making it the ultimate win-win deal.
While it’s true that rewards motivate us to take action, we’d be more likely to recommend a business if we know that the receiver of the referral will also benefit from it. Sharman explains that this is due to the inherent good nature of humans. We’ll be much more likely to do something that results in helping another person instead of an action that makes us seem like we’re just taking advantage.
Remember to Promote Your Referrals
If you’ve experienced putting out content on YouTube, you’ll know the pain of working so hard on a video only for it to just have 10 views. Now, if you’ve put as much time into promoting your videos as you did into creating them, then the view count will certainly be higher. Sharman explains that the same logic applies to referrals.
Most entrepreneurs who create referrals focus on the process of designing it. Maybe they mention the referral in one of their blogs or put it in the corner of their website, then that’s it. Stop that. That’s an excellent way to get your referral ignored. You must regularly remind people about your referral, as that will be more likely to prompt them into taking action.
Act on Feedback That Helps Your ICP
When you’ve grown your user population, feedback will naturally flood your company inbox. It’s a very welcome outcome of successfully marketing your product as it would mean more valuable insights from your customers. However, you must be careful about what feedback you forward to the dev team.
While it’s tempting to act on every single customer request believing that it would make the product more valuable, it would be a waste of effort if it doesn’t matter to your ICP. Sharman once acted on the request of adding Shopify only to realize that the price range of those who use it does not align with the cost of the Referral Factory. The result is that they built a feature that didn’t get them anything, so always filter out the noise and listen to the feedback of your actual target customers.
Referrals Generate High-Quality Leads
Compared to the leads that resulted from sponsored ads on Google and Facebook, those from referrals have a much higher closing rate. This is due to the trust factor that is present when it comes to referrals. Sharman explains that a friend’s recommendation is prioritized over the internet because you know they tried the product on top of your trust with the friend itself.
Referrals Encourage Good Business Behavior
Circling back to the inherent goodness of humans, people are not going to be ruining their friendships over a voucher. No matter how high the reward is, it will never be worth losing a friend. What this means for business owners though, is that we will have to make sure that their products are top-notch. We have to make sure that we are truly serving our customers to the best of our ability. This means that referrals work as a catalyst for businesses to do good.
Referrals are Free if Done Right
Assuming that you are getting solid leads from your well-made referrals, you actually will not have to pay for anything. Think about it. The money is always coming back. You give $5 to Marie and she brings in Susan who pays you $20. Then you give another $5 to Susan who then brings you Mark to give you another $20 and so on. It’s highly sustainable and even encourages retention as your customers will want to earn back more money.
Incentives Drive More Referrals Than Rewards
If you had to pick between rewards and incentives, definitely pick the latter. An example from Sharman is the story they heard from a wine company where their customers get a free bottle of wine if their friend buys from them. The customers felt bad and so they switched it to giving a free bottle with a tag saying it’s from the referrer. It actually got them more new customers than the previous campaign so always make sure to prioritize incentives in your referrals.
[7:11] “But actually, as I’ve found– we’ve gotten bigger and bigger– it actually becomes more dangerous to just do what you want to do. And we’re really shifting more to, like, finding the best ways to process our customer feedback. We tend to filter it by, like, the types of customers that we target. So that’s been a really good lesson for us.”
[9:32] “And even though you get feedback from all directions, sometimes it’s okay to say, ‘This feedback is really valid, but maybe there’s another product in the market that’s better suited to solve this. Maybe there’s a solution that is better suited to solve this.’ And, you know, sometimes saying no, like, is the best possible thing you can do.”
[15:36] “You know, five years ago, the ad budget got them 100 leads, you know. Now the same ad budget gets them, you know, 70 leads of which the quality of those leads is worse, because, you know, often people are also doing research online. They’re looking at multiple products. So we really find, like, the trust factor of a referral is a great way to grow a business because there is no better– there is no better marketing.”
[20:31] “So if I say to you Matt, ‘Hey, Matt, can you please refer me to your friend?’ You will because you want the $200. But you will only do it if my business is actually good because $200 is not going to be worth ruining your friendship for. So it’s forcing us as businesses to actually go back to the basics and say, ‘Hey, like, we can’t just buy our way out of this, we actually have to provide good service, we actually have to provide value, we actually have to be a good product.'”
[19:30] “We really think 10 years from now, every business in the world will have a referral program. It just will make no logical sense not to. If you set it up correctly, you’re only ever going to pay a reward out on a conversion. So it’s free. Why would you not have it?”
[3:12] “And I think that’s so important– the way you phrase it. ‘Help our customers succeed,’ ‘Help our customers grow.’ With my clients, that’s one of the things I really try to drive home– is just constantly thinking about: How can you help? How can you make their business better? Make their lives better? And if you start thinking that way, it kind of becomes a little bit easier to decide how you’re going to be able to do that.”
[10:35] “You have to know who you’re building for. Nail your ICP. And know that if somebody is asking for something, does that fit our ICP? Our ideal customer? Is that something that our best customers are actually going to want?”
To learn more about Kirsty Sharman and Referral Factory, visit https://referral-factory.com/.
You can also find Kirsty Sharman on LinkedIn at: https://www.linkedin.com/in/kirstysharman/.
For more about how host Matt Wolach helps software companies achieve maximum growth, visit https://mattwolach.com/.