How small & Midscale businesses can drive growth through Referral marketing?

I have come across many small & midscale companies in India selling great products or services but still struggling to grow. Most of them are dependent on repeat business from existing clients or generate leads through local online marketplaces such as Indiamart, Just Dial, Walk-in prospects & Google My Business.

In many cases, these companies are selling low-value products or services & small profit margins do not justify spending huge money on ads.

In some cases, these businesses are still in nascent stages & do not want to borrow & spend money on marketing as the ROI is not guaranteed.

In some cases, repeat business existing clients & walk-in prospects may yield better results than any other marketing methodologies due to various reasons.

Building a B2B referral program will dramatically improve small & mid-scale organizations ’referral revenue, spend less on customer acquisition, and reward your loyal customers.

What is Referral marketing?

The technique of enlisting brand ambassadors and devoted clients to recommend your company, good, or service to others is known as business-to-business reference marketing. Adwords or marketing impacts through a reference marketing program are two ways that B2B and B2C might benefit from referral marketing.

Referral marketing leverages the relationships that your clients have in order to grow your clientele, generate leads, and increase revenue. By simply sharing their experiences with your brand or encouraging people in their network to check out your products and services, customers can effectively promote your business without you having to spend a lot of money on advertisements.

In a nutshell, Referral marketing is all about encouraging your customers to share your business with friends – repeatedly. 

Studies have shown that 84% of customers trust recommendations from people they know more than any advertising that comes from a brand. That’s why referral marketing is one of the best ways to generate leads and multiply your customer base. Plus, these recommendations mean free promotion for your business.

The benefits of referral marketing are numerous, including empowering word-of-mouth marketing and building social proof, both of which help to generate more brand awareness.

Why do you need referral marketing when you are selling good products or services?

All customers expect good quality products or services for the hard-earned money they are paying. When they get what they expect, they are satisfied & there are high chances that they will come back to you and also they may share their experience with their friends & family.  

Just because a customer is happy with your product or services, does not necessarily mean that they will come back to you or refer you to their friends or family circle.

Word-of-mouth marketing, relies on people spontaneously sharing information, it lacks frequency or predictability. It’s hard to build a strategy from it — let alone regular revenue.

A research study shows that 83% of customers are willing to refer your business to their friends after a positive experience, but only 29% make that referral.

If you are relying completely on word-of-mouth advertisement, you will lose a wonderful opportunity to utilize your strong asset – a loyal customer base!

So it is highly recommended to drive business growth through a deliberate strategy involving incentives and rewards for customers in exchange for successful referrals.

How does referral marketing work?

Once a customer utilizes your products or services, in some cases they proactively share positive feedback. In that ideal case, unsurprisingly you request them to refer you to friends, family members & other businesses. In a few cases, customers will happily do so.

In most of the cases that’s not the scenario. Western customers are easy to please & they are quite vocal about their experiences. In the Eastern part of the world, most customers remain silent & will be vocal in case of negative experiences.

It is important that you should pro-actively reach out to happy customers to help you share their experience in other ways such as –  

• Conference speaking –  A client may not be ready to tell their contacts about you, but they can advocate for your product in other ways. Speaking at or participating in your conferences can be one way this could happen.

• Case studies or quotes – Providing case studies for your marketing can be an effective way for clients to participate in your referral program without actively spreading word of mouth themselves. They can then share the case studies on social media or their website.

• Product reviews – Simply writing reviews of your brand or product is a simple way for clients to refer you to their peers. Create your business profile on Social Media, Google My Business, share the review link with them & request them to share their feedback. You can also make use of e-commerce platforms, your website, and social media or write reviews on common industry or product comparison platforms such as Zomato Swiggy, Amazon, Bookmyshow.com, capterra.com, zigwheels.com etc.

• Referral Reward – Offer an incentive scheme for each successful referral. It can be cash rewards price discounts or reciprocating their help in kind, which is acceptable in the business world.  

• Build a community – We are living in an influencer-driven era. All of us are using smartphones & creating various types of interesting content. Most of the youth have their own YouTube, Tiktok, Instagram & social media surfing has become a hobby as well as a source of secondary income. Most of these people can become your unofficial brand ambassadors & they are happy to review your products or services free of cost & become   

In today’s digital world, your customers are skeptical. It is easy for anyone to say anything online. With all the information, your customers will listen opinions of those they trust.

Referral marketing is a powerful strategy that encourages existing customers to promote a brand within their networks, turning them into advocates for the business.

If your customers are happy, if your incentives are attractive, and your program is well-promoted – your referral marketing strategy is primed for success.