Customer Referrals

 Customer Referrals

As a marketer at Camelot 3PL Software, I think a lot about what we need to be doing to grow the business. Are we focusing on the customer?  Are we talking to the right companies?  Are our prospects aware of us?  Do we have the right message?  Is our product/service meeting our customers’ needs?  Is our brand positioned correctly?  Are we spending marketing dollars in the right areas?

When thinking about revenue growth there are hundreds of ways to move the needle – but when you boil it all down, there are three primary ways to increase operating revenue: 

1. Buy another business (and their revenue stream)  
2. Sell more products/services to your existing customers 
3. Add new customers

The first option is not always possible, especially in the short term. So let’s talk about the other two.

Selling more products or offering more services to your existing customers is a great way to grow revenue.  This requires a customer-centric approach to product/service enhancements to bring more value to your customers (which should be happening already).  Everyone in the company should be asking, “What else can we do to serve our customers better and make it easier for them to serve their customers?” Obvious examples for 3PLs are kitting, eCommerce fulfillment or repackaging services.  Some consumer products companies grow the “share-of-wallet” of their customers with programs that increase “top of mind awareness”.  You see this now more than ever with loyalty programs automatically integrated within mobile phone apps.  (I always go to Chipotle to get my free burrito). 

The other way to grow top line numbers with B2B companies is by acquiring new customers.  This strategy has the potential to increase revenue significantly over the second option, since you are somewhat limited on the amount of revenue growth from existing customers, i.e., you can only sell them a maximum of what they are able to buy.

So what’s the best way to acquire new customers?  Do you have 10 hours!?!  There are a bazillion ways to find and acquire new customers.   As you can see from the chart above, some are more effective than others.  In the “old days” marketing was more about doing advertising to build awareness and then hope that they call into the sales department.  Today it is estimated that a prospect gets 60% through the “buyer’s journey” before they even talk to a salesperson.

One very effective (and often overlooked) way to gain new customers is through the use of Customer Referrals. As the chart shows, the conversion rate for referrals is over twice as effective as the next highest channel (website leads) and way more effective than tradeshows, email, social media, and other more popular channels.

Many companies are already getting referrals.  A formal referral program doesn’t have to be complicated.  In fact, the best referral program is one where your customers are so happy with the products and services you offer that they naturally want to tell others about you.  If you’re not quite there yet it is still good to have a formal referral program, even if it is a simple referral “finders fee”.  Depending on your products/services and your strategic goals, there are many ways to structure a referral program.  Here is a good resource to help you plan and implement a referral program.

The main takeaway is to be thinking about how do you want to grow your topline revenue.  In what areas are you focusing your efforts to grow revenue with your existing customers and acquire new customers?  There are many ways to spend money on marketing to attract new customers.  One of the more overlooked and most effective ways to gain new customers is through customer and employee referrals.