How to Refuel Referral Sources to Revitalize Revenues
Know the three pillars that build a profitable and sustainable referral management program.
Small businesses are always searching for more ways to generate more referrals. Business owners and their sales teams, if they have one, must always work hard to foster deeper relationships with strategic partners, external referral sources, clients and frontline-facing colleagues so that they will receive more referrals or warm leads.
Regardless of whether a referral is uncovered by an employee or co-worker, delivered by an external partner, or sent from an existing client, referrals are vital to the growth and sustainability of one's business. After all, any time one receives a referral, it is much easier to establish trust and confidence with the prospect. Therefore, it's easier to set appointments and have more productive initial discovery and ongoing sales conversations. Thus, the sales cycle is typically shorter and sales acquisition costs are usually lower. In many cases, referrals stay on longer as clients frequently produce many new referrals themselves.
Despite the clear benefits of referrals, few firms have a reliable and efficient referral acquisition and management strategy. Many companies that are fortunate enough to obtain a steady inflow of referrals are still unable to capitalize. In many cases, it's because their referral tracking and outreach process (really their entire end-to-end sales process) is broken, decentralized and far too complex. The lack of urgency and poor follow-up with referred prospects results in missed opportunities and referral sources drying up quickly. As non-worked, delayed and lost referrals accumulate, an industry leader can quickly drop back to the pack by the end of the next quarter. Moreover, such a company may even be out of business soon thereafter.
Below are the three pillars of a successful referral management strategy and process that best-in-class companies follow to help them better nurture existing referral relationships and more profitably build new ones:
1. Automate and accelerate your referral processes
In order to create a more effective and efficient referral process, it is critical to eliminate error-prone manual-intensive referral communication, tracking and reporting systems (such as Excel). Instead, leverage a leading CRM tool to simplify, standardize and streamline your end-to-end referral workflows and analytics. Having the referral tracking process centrally located in CRM enhances staff collaboration, inspires more proactive referral seeking and follow-up behavior and instills more accountability throughout the organization. Since there is a more uniform and automated process, account managers receiving the referral will be more focused, organized and spend less time entering, updating and trading phone calls or emails to provide updates on the outcome of the referrals.
Additionally, sales reps will be more productive and prepared to follow up on the referral because they will have the complete 360-degree view of the client profile right at their fingertips in CRM. Plus, business owners or sales management can easily and instantly monitor and analyze referral trends and top-performing referral sources so they are better positioned to coach their business development team and devise strategies to exceed sales goals.
2. Create urgency and diligently follow up
Another leading practice that elite firms demonstrate in their formalized referral programs is to always contact the referred prospect in a timely manner. Without a prompt outreach and urgent ongoing follow-up approach, many interested prospects and customers are regrettably not contacted fast enough before they decide to go in another direction and evaluate another solution. Being swift and consistent with your follow-up and relationship building does not apply just to referred potential clients, though. It's just as important to repeatedly carve out time to meet and catch up with your key referral sources. While doing so, be sure to maximize your time, energy and effort with your most profitable referral connections that repeatedly send you highly qualified prospects.
3. Reward your clients and staff for providing referrals
The third key ingredient of a successful referral management strategy is to incentivize your clients and strategic partners (assuming your industry does not forbid this practice) for sending you referrals. It's recommended to frequently remind your clients of your referral rewards program and the incentives available to them. Examples here can be lucrative cash payouts, add-on "bonus" services or free trials for referrals received that convert into clients.
On a related note, it's essential to train your staff on the importance of securing a steady flow of referrals and establishing and maintaining great relations with internal and external referral partners. Having one department track their referrals in a spreadsheet, a different area filling out a clunky form on a shared drive and another group only sending an email with contact info and limited background will not cut it. By putting in place a consistent process and instilling accountability across the organization, you will mitigate the risk of high-dollar referrals slipping through the cracks. Again, a great way to motivate your staff to uncover more referral opportunities is to incentivize them to ask and receive referrals to prevent your leads and sales opportunity pipeline from shrinking.
Referrals should not be your sole revenue source, but they should be a cornerstone of your customer-driven growth strategy. As you can see, a poorly designed and executed referral process can result in disarray, wasted time and lost revenue.
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