This is a guest post from Matt Heinz, President of Heinz Marketing. Matt has more than 15 years of marketing, business development, and sales experience from a variety of organizations, vertical industries, and company sizes. He focuses on delivering measurable results for clients by way of greater sales, revenue growth, product success, and customer loyalty.
Although less than one in four B2B organizations have a formalized referral program today, those that do enjoy significantly higher sales, lower acquisition costs, and far better relationships between the sales and marketing organizations. Furthermore, more than 70 percent of companies with formalized referral programs meet or exceed their revenue goals – far exceeding those without referral programs in place currently.
Perceived effectiveness of sales efforts is one thing. More than 55 percent of those with formalized referral programs ranked their sales efforts as highly effective, compared to 35 percent of those without referral programs in place. Another 51 percent of companies with referral programs rated their effectiveness at maintaining sales pipelines as very effective vs just 32 percent of those without referral programs.
But the volume of high-converting referral leads across companies with and without referral programs told the real story.
What You Should Know About Referrals
Companies with formal referral programs reported nearly 40 percent of their leads come from referrals, and further confirmed that those referrals close at a higher rate than lead sources. Those without a referral program generated just 22 percent of leads from referrals and relied far more on expensive outbound cold calling (23 percent vs 16 percent) to fill their pipelines.
Additional highlights from the survey worth noting include:
- Sixty-nine percent of respondents confirmed that referral leads close faster than non-referral leads
- Fifty-nine percent reported that referral leads have a higher lifetime value than other lead sources
- Seventy-one percent of respondents reported that referrals close at a higher rate than other lead sources
- Only 22 percent of respondents use some type of tool or system to increase referral leads
And for those companies with formalized referral programs:
- Eighty-six percent reported revenue growth over the past two years (vs 75 percent of companies without referral programs)
- Seventy percent are on track to achieve revenue goals (vs 55 percent without referral programs)
- The marketing department is nearly three times as likely to have primary responsibility for referral generation vs those without referral programs
- Twice the number of companies with formalized referral programs reported an increase in referral leads over the past 12 months vs. those without formal programs
- Nearly 45 percent of those with formalized referral programs report their conversion of referrals to closed deals has increased (vs 21 percent of those without formal programs)
Not surprisingly, those with formalized referral programs were also nearly three times as likely to have specific tools in place to accelerate referral creation and conversion (43 percent vs 14 percent).
For a full report of the survey findings, click here.
This post originally appeared on the Heinz Marketing blog.