Is Your Referral Marketing Strategy Using The Power Of The 80/20 Rule?

Which would you rather have?

A) A lead you secured from a cold call who may or may not want to hire you (and which you spent far too much time just trying to secure an appointment)

or

B) A highly qualified lead referred by a colleague who had previous success with your firm

Everyone wants more of the second kind of warm leads, right? The trick is in getting those business referrals and getting them regularly in order to grow your firm. Fortunately, inbound marketing helps you grow those referrals over time.

Here’s how to get more referrals for your business:

The 80/20 Rule Of Referral Marketing

The 80/20 rule of referral marketing comes with good news and bad news for your firm:

The good news:

In most companies – and especially in professional services firms – around 80% of a firm’s business comes directly through referrals or references. Since word-of-mouth referrals are so highly qualified and vetted, they usually present the best business opportunities as well. After all, they’re the most qualified form of a lead that comes with its own built-in success story.

The bad news:

The remaining 20% of your firm’s business requires nearly 80% of your efforts to secure, that is, if you’re still using traditional marketing tactics such as direct mail, trade shows, cold calling, etc. That figure sounds like a pretty low return on investment if you ask me. This small fraction of your business isn’t worth the enormous amount of time and budget required, so you should abandon these old-fashioned tactics as soon as possible.

So, with the 80/20 rule being the case, do you think most business owners and partners actually have a referral marketing program in place? Does your business? The answer in most cases is no.

Creating Your Referral Marketing Strategy

If 80% of your firm’s business comes from referrals, the first step you need to take is to align 80% of your efforts (or more) to growing your number of high-quality referrals. Then, ditch your traditional, outbound marketing efforts that only give you 20% of your business in favor of inbound marketing efforts that nurture your new referral leads. The result is a major boost in your bottom line – one that only inbound marketing is able to deliver.

Your referral program needs to incentivize current clients after their referrals sign on as new clients to your firm. When you incentivize clients for their referrals only after a new client has signed on with you, then you don’t waste time or money on incentivizing for referrals that never become new revenue for your firm.

The Why And How Of Your Referral Marketing Strategy

First, remember the reason why many customers refer you in the first place: Referring your services validates your clients’ decision to hire you. Plus, the more people they know who use your firm, the better they feel about their previous decision to sign on the dotted line.

When it comes to the how of crafting referral marketing strategies, the most difficult aspect to keep in mind is that you’re not in control of the conversation: a current client or customer has to do the marketing for you – and they may or may not do a good job. However, that doesn’t mean you can’t help your clients in that process: The best referral marketing strategies tap into the power of a human-to-human (or H2H) conversation, and your strategy should empower their word-of-mouth discussion, making it simpler and easier to share about your business.

Here are a few tips for crafting your referral marketing strategy and helping your clients sell your business in an H2H conversation:

• Ask for referrals – It may seem obvious, but many businesses don’t know how to ask and therefore never do.
• Be remarkable – The more your business stands out among your competition, the more likely your clients are to share and talk about your business.
• Create simple, sharable stories – Storytelling is the most powerful way to spread the news about your business, and when you give your clients simple, easy-to-share stories, they’re more likely to give you better business referrals.
• Harness the power of lead nurturing – Just because you were given a referral from a client doesn’t mean they’re ready to do business with you right away. You need to nurture these new leads with pain-solving content specific to their needs and industry.
• Accelerate your referrals with a social media strategy – While most referral conversations take place offline, customers are more likely to get reminders or conversation starters from your social media content.
• Reach beyond the referral – Getting new business referrals for your firm is only the first step: In order to convert your new referral leads into customers, you need an inbound marketing strategy tailored to your audience.

Building your referral marketing program requires no more work than your other promotion efforts – but the payoff is much better for your bottom line. Put these word-of-mouth marketing tips into practice and watch your referrals soar.

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