referral marketing plan

The Winning Marketing Strategy Most Businesses Miss

If the numbers from a CallRail study of small businesses’ marketing activities is to be believed, three-quarters of those small businesses are ignoring their best source of quality leads.

Now, I realize you have to take studies like this with a bit of a grain of salt. This one surveyed 600 small businesses in the US. So, not huge and I wouldn’t be comfortable extrapolating the results to represent all small businesses. Still, 600 is a decent-sized number for a business survey and I think we can safely talk about broader strokes from the results.

The number that got my attention was part of a question about what marketing strategies these small businesses currently used. Here’s the list, see if you can guess which one jumped out at me:

  • 57% use social media marketing
  • 49% have a website
  • 43% use email marketing
  • 35% publish a blog
  • 32% issue a newsletter
  • 29% create campaign-specific landing pages
  • 28% gather reviews and testimonials
  • 26% have a referral program
  • 20% use customer relationship management technology
  • 17% use paid search or PPC (pay-per-click)
  • 15% engage in SEO or local search optimization
  • 6% do not do any marketing at all

Now, that over half of these businesses don’t have a website in today’s market is pretty mind-boggling, but the number that REALLY jumped out for me is the 26% that have a referral program. That means that three-quarters of small businesses have no program or plan for getting referrals.

Why am I so worked up about that? Let me explain.

If I think about all the small businesses that I speak to, I’d have to say that 70-80% of them tell me that referrals are where most of their business comes from. If I just count B2B that number is in the 90s.

And it makes sense. Referrals are much easier to close than a lead you get from paid advertising, someone who found your website on Google, or even someone who saw you speak or reads your blog. Why? Because they come to you with an endorsement that takes right to the third stage of the customer buyer’s journey: Trust. Someone they know and trust has already vouched for you.

And yet, most of those businesses tell me that they have no formal referral program, which is in line with the CallRail results. They just let it happen “organically.” Here’s the thing: if you don’t ask for a referral chances are you won’t get one. Even from a truly happy customer.

More than twice as many small businesses are using social media to attract leads, according to the CallRail study. So, rather than spend time and money cultivating leads from people who already trust them, they are spending time and money on raising awareness with strangers through social media.

Don’t get me wrong, social media is a great marketing tool and it has its place in nearly every business’ marketing program, but instead of a referral program? Not a chance.

As a small business, you have got to have a referral program. You need to get new ideal customers from the ideal customers you already have. As I said earlier, they’re more likely to buy and more likely to spend more money. But don’t take my word for it. According to data from the Wharton School of Business, companies with formalized referral programs experience 86% more revenue growth compared to those without.

Okay, have I convinced you that you need to think about a referral program for your business? I hope so. Here are a few parting tips on how to start building your own referral marketing strategy:

  • Identify the type of client you want to get referred to you – write it down so you can describe them to other people.
  • Create a core talkable difference that will make your business memorable. What do you do, or can you do, that will stand out and make people want to talk about you to others?
  • Ask your customers. Don’t just wait for it to happen, explain to them the type of person you would like to have referred to you.
  • Choose an incentive. This doesn’t have to be monetary (although it can be). You can also incent people to refer you business by showing them how they will be helping others by letting you serve the people they refer. Altruism is a huge reason people refer other businesses.
  • Create a Strategic Partner Network. A group of businesses that serve the same ideal customer. You can refer business to each other, but also create joint content like webinars that add more value and introduce yourselves to each other’s audiences.
  • Deliver on your promise once you get a referral. How well you serve a referral customer is likely to get back to the person who referred them. Do it well, and they’ll refer even more people.


This is not an exhaustive list, but it’s a start. If you want to talk more about a referral program for your business, schedule a free call with me. If you’d like to do a little more reading on your own, I highly recommend The Referral Engine by John Jantsch.