86% of B2B purchasing decisions are influenced by word of mouth. That's the finding of a Gartner study. Yet as a Customer Success Manager, you may still be hesitant to tap into the potential of referrals. In other words, to ask your customers to recommend you to their network.

One common obstacle is that the company has no referral strategy in place. And setting up a structured recommendation programme comes with its own challenges. To help you, Louis Jamet explains how to turn your customers into advocates.

What is a referral?

It's getting introductions from prospects, customers or people in a company's ecosystem. It's also sometimes called sponsorship.

The important thing is that when you ask people for referrals, they draw on their network. In other words, people they know and already have relationships with, usually business ones. That's what sets it apart from introducer fees or affiliate marketing.

Why are referrals essential for generating leads?

Because it's the most effective acquisition and sales channel. Several studies show this:

69% of B2B companies with a referral programme say they close deals faster
Referred leads convert at 3 times the rate of others
Customers acquired through recommendations have an average order value 30% higher

For Customer Success, referrals have several advantages:

Referred customers have a LTV 59% higher than others
They are 37% more likely to make another purchase, according to Deloitte

Referrals also boost the satisfaction of the customer who made the recommendation. They strengthen that customer's sense of belonging and loyalty (the consistency principle). You're likely to benefit from that too.

There are very few downsides to asking for recommendations. The risk is that someone says no, and that's it! The main thing is to ask in the right way.

Why put a referral strategy in place?

If you just let things happen naturally, whenever the opportunity arises, a lot of potential goes untapped. Put simply, some people would be willing to recommend you but don't. Perhaps you don't ask them enough, perhaps they don't know how, and there may even be people who come to you through recommendations without the company knowing.

Second point: it's very rare to get your referral strategy right first time. You need to test it on a fairly consistent number of contacts before you can draw conclusions. Remember to set yourself a small target, too, because if there's nothing to measure, you can't optimise.

Another thing we've noticed is that there's no universal recipe. It depends on the company, its industry, what it sells, who to, and so on. As a result, the only way to end up with something optimised and suited to your business is to run tests. Without a referral strategy, you can't do that.

How do you identify which customers to rely on?

There's no universal recipe. I think you shouldn't hesitate to ask as many people as possible, go for volume, and identify who's most likely to recommend you.

That might be:

Existing customers: the most satisfied ones make the most recommendations.
Prospects: if they like you, even if they don't yet have the green light to buy your solution, they may well recommend you.
Customers who have churned: if the service no longer meets their needs, they may mention it to someone it would suit.

Think about the company's suppliers and partners too. You can even ask users of the solution you don't usually talk to.

Should you use incentives to encourage recommendations?

Incentives aren't compulsory. A truly convinced customer may make a recommendation without one. Plenty of companies don't offer any, whether for the referrer, the referee or both. However, you're more likely to get recommendations when there's a reward, even though the amount and the form it takes don't make a huge difference.

Which reward should you choose? Again, you need to test, and put yourself in your persona's shoes. Ask what has the most value for that person. For example, the general counsel of a FTSE 100 company won't see an incentive the same way, or have the same expectations, as a restaurant owner. You should also start from the company's or department's goals. If the aim is to upsell, ask yourself how you can feed that.

You can also reward companies as well as individuals. In France, this is legal and clearly regulated; check the rules that apply in your own country.

When should the referrer's incentive kick in?

In my view, incentives should reward the conversion, i.e. winning a new customer thanks to someone, rather than the introduction. Rewarding the initial contact is very easy to game. If tomorrow someone tells me "bring me 10 contacts and you'll get €100 per contact", I'll go after everyone I can. I won't necessarily be thinking about the quality of the contact.

Which incentives work well in B2B?

Here are some ideas:

Discounts: these often work well for subscription businesses such as SaaS, especially if you serve small businesses or freelancers.
Gift cards: these can be a strong incentive, as long as the amount is worthwhile.
Pre-funded donations: a more CSR-friendly incentive.
Free workshops or consulting, or early access to features.

What are the key moments to ask for recommendations?

Look for the moments when you know the customer's perception of value is likely to be fairly high. When you get a positive review, on Trustpilot or Google Business Profile for example, when a customer gives you an NPS of 9 or 10, or at renewals, upsells and cross-sells.

As these events are often tracked, you can automate. That guarantees a minimum volume. On the other hand, trying to do everything by phone is very ambitious.

Make the most of human interactions too, where feelings come into play. Don't hesitate to ask every time.

How do you ask for a recommendation?

Ask open questions. For example, if I ask "Do you know anyone you could recommend to find out about my company?", it's very easy to say no, I don't have time, or no one comes to mind.

With an open question, on the other hand, such as "Who in your network might be interested in finding out about the solution?", the person will think about it and search through their network.

Asking in person works better than automated emails. However, I've realised that expecting your employees to ask systematically is wishful thinking. You need to make people aware that they should ask, and explain why and how. Alongside that, you need automation for volume and consistency.

Alternatively, during your team's next 50 calls with your contacts, ask either for recommendations, or "What would you think if we asked for recommendations?", "How would you feel about it?", "What would encourage you?". You'll get 50 different insights.

How do you structure an effective referral programme?

Think about the journey of the customer who's going to make a recommendation. It happens in several stages: they won't recommend you straight away. It's important to get them to take small steps. In practice, you need to be able to identify those steps and follow up.

Make life easy for people who want to recommend you, too: be accessible to make the introduction easy. For example, draft a short message, a direct introduction form, a website, a newsletter or an email signature.

What results can you expect from a referral programme?

Companies that manage to optimise this channel can get 10 to 30% of their lead acquisition and sales from referrals. That's significant, given that this channel costs less.

To give you an idea of scale, people with optimised programmes can expect between 90 and 120 recommendations for every 100 people signed up, because a small share of contacts will make lots of recommendations. Also, half of those who say they'll do it will do so within 6 months.

It's estimated that 10 to 30% of your customers can become advocates, with the average around 15%.

Do referrals work the same way in B2C and B2B?

They work in B2C too, but the mechanisms, processes and tools are different. The big difference is the value of the incentives used to reward people. For example, Netflix might give €10, whereas a company with an average deal size of €15,000 can afford to give €300. The individual perceives it as more valuable.

What common mistakes should you avoid?

Here are the main mistakes:

Not testing
Testing but giving up because the first tests didn't deliver enough results: you need to take your time and go step by step.
Not having at least a basic process: a shared Excel sheet or Notion page helps avoid mistakes such as "I didn't keep the referrer updated" or "I didn't hand out the rewards". That can turn an advocate into a detractor if they have a poor experience.

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