The Pros & Cons of Using Referral Programs for B2B Businesses
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When it comes to your business, few things are more important than your reputation. A positive reputation boasts a range of benefits but isn’t built overnight. Sometimes, it can take years of consistent work to establish your business as an industry leader among your clients.
But, once you’ve established an excellent reputation in the eyes of your clients, referral programs can help you utilize that hard-earned reputation to boost business.
While there are many benefits to referral programs, there are some cons to consider. Here are a few of the pros and cons of using referral programs for B2B businesses.
Pros
Highly Effective
Referral programs have been shown to be incredibly effective for B2B businesses looking to grow. Harvard Business Review recently found that 84% of all B2B sales begin with a referral. From generating leads to retaining existing clients, a referral program can effectively boost business in a multitude of ways.
Generate High-Quality Leads
Lead generation is usually one of the main business goals for B2B businesses, and referral campaigns tend to generate high-quality leads.
First, when your clients refer you to colleagues in the industry, that lead is usually a duplicate of your existing client. Since the current client is a good fit for your business, chances are the referred lead will be as well.
Second, referred leads are of higher quality because they already trust you. Your existing clients have vouched for your business, eliminating the hurdle of building trust. They come to you knowing you’ve helped similar companies, and the proof is in the referral.
Improves Client Loyalty
One of the most significant benefits of implementing a referral program is that it can greatly improve client loyalty. If an existing client refers someone to your business and that referred lead has a great experience, it makes you and your existing client look good. This makes your existing look and feel good, earning more trust from them, and you’ve gained a happy new client.
Cons
Difficult to Get
Though referrals are effective, actually getting referrals—and getting referral programs going—can be a hurdle. These programs rely on someone else, aka your clients, to do the work for you and make the introduction. Regardless of how incredible your business is, if your clients don’t want to tell someone else about you, you won’t have referrals.
Can Backfire
While a great experience can multiply your client loyalty across the board, a negative one can cause double the damage. If a current client refers someone to your business, and the referred lead has a negative experience, you’re likely to lose that new client and your current one that referred the new business.
Time-Consuming to Manage
Referral programs are relatively low-cost, but maintaining them requires a lot of time and manpower. Each referral partner and lead must be tended to in order to foster beneficial relationships and create the ultimate growth outcome.
Conclusion
While referrals can be challenging to land, referrals can be effective in boosting your B2B business’s overall growth. Have questions about referral programs or if one may be right for your business? Our team of marketing experts is here to help. Contact Us.