Managed Service Providers as a whole have a tough job: convincing organizations they need to outsource specific technology tasks to boost efficiency and grow their business. However, some businesses may see this as an added cost with few benefits and need significant convincing to see the true value MSPs add. Creating a culture of selling within your MSP can be challenging as well, as brilliant technology leaders are not always comfortable selling themselves or their exceptional services. How can you grow your business quickly without the need to add to your sales team?
Why Referral Programs Work
A formal referral program can help by providing a benefit to existing customers willing to spread the word about your business while growing your customer base. The relatively large investment required for a new client can make it difficult to sell them on your services. However, when you’re generating leads within the circle of influence of your current customers, you’re more likely to close a sale. These warmer leads often buy in at a higher rate and with better conversion than unqualified leads—making a referral program an efficient use of marketing dollars. Fortunately, implementing a customer-referrals program doesn’t have to be overwhelming when you follow the simple steps and outline below.
Create Long-Term Results
Customer-referral programs will not generate overnight sales, but with diligent effort, they will become the long-term structure that supports your business. As your customer base grows. so does your opportunity to reach additional prospects with your message. Here are a few statistics and best practices before you jump into the implementation of your program:
- According to Nielsen, 92 percent of consumers trust referrals from people they know.
- New referral customers have nearly a 20 percent higher Lifetime Value than non-referrals.
- Texas Tech research shows nearly 85 percent of people are willing to make a referral—but only 29 percent actually carry through.
- Be goal oriented: Set timelines and precise goals for the boost you expect to receive from your program.
- Clearly define benefits: Your current and future customers should be well versed on what’s in it for them.
- Personalize your program: When you say ‘Thanks’ in a highly personal way to each person who takes the time to make a referral, you’re building an important bond with that client.
- Create FAQs: Clients will have questions; you should have answers. Train your sales team and customer service team and actively look for ways to educate staff on your new program.
Sample Referral Program
It’s no secret customer-referral programs accelerate your brand’s online engagement and expand your reach, but what are the specific steps that will help deepen current customer relationships to the point they feel comfortable making a referral of your business? Perhaps most importantly, what are the incentives that will cause clients to take action and make a recommendation? Clear, consistent communication and execution of the program are of the utmost importance, and keeping the program simple is the best option. Let’s follow Company X as they implement their first customer-referral program.
As a Managed Services Provider, Company X realizes their program needs to be relatively straightforward and offer a significant value to the referring client. Company X determined their average new customer acquisition cost and decided to offer that dollar amount as a credit to any organization making a direct referral that resulted in a new MSP client signing a new 12-month contract. Company X’s referring client would receive the credit on the first month after a new contract was signed, with the dollar amount being a set percentage of the new contract’s first monthly payment.
Once the offer was determined, Company X’s marketing team went to work defining how to message this simple offer to current and future customers via a variety of channels. Here are some of the tactics they employed for current and future customers.
- A postcard mailer outlining the program with a clear call to action
- A direct appeal during their sales rep’s next scheduled check-in
- An email outlining the terms of the program, with a link to clear and concise online FAQs
- Monthly posts about program aspects or wins on social media and the company blog
- Live engagement with brand advocates and evangelists on social media, tracked by their lifetime engagement with your organization
- Integrated materials within the sales packet showing benefits of the referral program
- Create brand advocates by re-posting positive messages from current customers and prospects
- Pitch referral program as an added value not offered by competitors during a live sales review
The very best customer-referral programs have three key components: a promotion that is targeted and specific, incentives that fit your customer’s needs, and access to strong brand advocates. If you’re like most businesses, you likely have dozens of happy customers who are more than willing to recommend your services. Creating a proactive referral program provides that added boost of urgency and offers a benefit to your customers—while also having the positive side effect of filling your pipeline with quality sales leads.