Building a B2B Referral Program

Did you know that top-tier SaaS companies get 20% of their customers to refer new clients through word of mouth marketing??

Imagine if 20% of your customers started doing the same for you.

Referrals aren’t just nice to have– they can become a steady and reliable source of growth for your business. The best part? You don’t need to sit around hoping for referrals. There’s a proven way to create a system that actively encourages and rewards your happiest customers for spreading the word.

In this article, I’ll break down the three key principles to building a successful referral program that brings in high quality leads from your happiest customers. When done right, this strategy can drive quality leads, shorten your sales cycle, and accelerate your growth to the next stage.

Principle 1: Have a Solid Customer Base

Before you can build a successful referral program, there’s one essential requirement: having enough customers. What we’ve found with companies of all sizes is that there is a minimum bar of customers you need. You need at least 100 customers as a baseline. If you don’t have that yet, your first focus should be hitting that target with satisfied, engaged customers. After all, referrals come from happy customers, so you need a strong foundation before scaling up.

To get those first 100 customers, there are three core pillars of a scalable Go-To-Market strategy that you need to focus on:

1. Ideal Customer Profile

By defining your Ideal Customer Profile, you fast track your path to 100 customers. This ensures you’re targeting the right people, AKA, those most likely to benefit from your solution and refer others. Rather than trying to appeal to everyone, narrow your focus on a specific segment that aligns with your product or service.?

2. Differentiated Messaging

Next, you need a message that clearly communicates why your product stands out. It’s not enough to just tell people what you do… You need to articulate how you’re different and why your solution solves their problem better than anything else on the market.

3. Execution

Lastly, execution is key. To build momentum, you need to run a consistent set of sales and marketing activities. This could include inbound strategies like content marketing, SEO, and social media, or outbound efforts such as cold outreach and targeted ADs. The key here is consistency– show up where your ideal customers are, and deliver your message over and over again until it resonates.

By focusing on these three elements, you’ll lay the groundwork for acquiring your first 100 customers, setting the stage for a successful referral program.

Principle 2: Keep Customers Happy

Before you can ask for referrals, you need to ensure your customers are not just satisfied, but genuinely happy. The worst mistake you can make is sending out mass emails to your entire customer base asking for referrals. This could backfire, reminding your unhappy customers of their dissatisfaction and even lead them to cancel their subscription. You want to avoid this at all costs.

So, how do you know which customers are happy and ready to refer you? The key is having a system in place to measure customer satisfaction and engagement.

Here are some ways to measure customer happiness:

• Customer Satisfaction (CSAT) Scores: Regularly ask your customers how satisfied they are with your product. A simple survey after key interactions can give you valuable insights.
• Net Promoter Score (NPS): Use NPS surveys to find out how likely your customers are to recommend your product or service to others. This is a direct indicator of referral potential.
• Product Usage Tracking: Monitor how frequently your customers use your product or service. High engagement often signals that they are getting value from it.

By collecting data from these sources, you can assign each customer a “happiness score.” Customers with high scores are your ideal candidates for referral requests. They’re satisfied, loyal, and most likely to advocate for you and your product or service.

On the flip side, if a customer has a low happiness score, don’t ask them for referrals. In fact, this should raise a red flag as they could be at risk of churning. Reach out proactively, address their concerns, and work on turning them into satisfied customers. This is a two-fold strategy. Not only does it help you improve customer retention, but it also primes your happiest customers to become your best referral sources.

Principle 3: Referral System

Once you’ve identified happy customers, the next step is to set up a consistent Referral System. This system should run like a well-oiled machine, ensuring that you not only ask for referrals but also create an easy and rewarding process for your customers.

There are three key components:

1. Ask Consistently

If you want referrals, you need to ask… regularly. It’s not enough to ask once and hope for the best. Every 3 to 6 weeks, you should be nudging your happiest customers to send referrals your way. Of course, doing this manually would be time consuming, so you’ll want to automate this process.

Set up a system that tracks customer satisfaction (using the scores we discussed earlier) and automatically send referral requests to those who are happiest with your product or service. This way, you can consistently engage your customer base without overwhelming them.?

Tools like Megaphone can help you automate both scoring and outreach, making the referral process seamless.

2. Incentivize Thoughtfully

Offering the right incentive is crucial, and it’s not always as simple as a gift card. In fact, many B2B customers see small monetary rewards as undervaluing their relationship with your company. A $5 gift card might come across as impersonal or even offensive.

Instead, consider non-monetary incentives that feel more aligned with the value of your relationship. These could include exclusive access to new features, VIP treatment, or recognition in your community. Not only are these incentives often more meaningful to your customers, but they can also be more cost effective for your business.

3. Pre-Draft the Referral Email

Lastly, make it as easy as possible for your customers to refer you. When you ask for a referral, provide them with a pre-drafted email or message they can send to their network with just one-click. This reduces the effort on their part and increases the likelihood that they’ll follow through.

Include a clear call to action and make sure the message conveys the value of your product. By doing the heavy lifting, you streamline the referral process, making it a simple, one-step action.

In Conclusion

By putting these three elements together into action, you can build a referral system that can generate 20%+ new customers through word of mouth marketing. This is how you kickstart the referral flywheel and turn your B2B business into a growth machine.

Want to learn more about building a proper Referral Program? Grab a complimentary copy of my 3-Point B2B Referral Automation Blueprint here.

TK was CEO & Founder at ToutApp (backed by a16z, Jackson Square Ventures and prominent angel investors in Silicon Valley). After scaling ToutApp, it was acquired by Marketo where TK went on to join Marketo's executive team and serve as their Senior Vice President of Strategy. After running a 2-year transformation as part of the executive team, Marketo was acquired by Adobe for $4.75bn.?

TK now spends his time as a Strategic Advisor to 300+ B2B SaaS Founders globally. As the Founder of Unstoppable, he helps other SaaS and B2B Founders grow their startups faster through his Weekly Youtube videos and his application-only SaaS Go-To-Market Program.?

Want to learn more about building a proper Referral Program? Grab a complimentary copy of my 3-Point B2B Referral Automation Blueprint here.