As a B2B Marketer, you're still marketing to individuals. Here are the three layers of communication you need to appeal, equip, and mitigate.
6 reasons you should build your B2B SaaS referral program
In B2B SaaS, sustainable growth is achievable only with the combination of multiple marketing efforts. This includes a balanced focus between short-term efforts such as paid media campaigns, paid social campaigns, events & trade shows, and long-term efforts such as referral programs.
You want to develop scalable strategies that grow revenue exponentially while reducing your CAC. This blog lists why you should create your B2B SaaS program early. It’s the type of campaign that speaks directly to your customer's needs. It helps engage your existing loyal customers and install a climate of trust. Let your customers tell their success stories and let them sell on your behalf.
6 reasons you should build your B2B SaaS referral program today
A successful B2B SaaS referral program allows you to reward your current customers instead of using your marketing budget on pricey ad placements with questionable performance ratios. Here are six ways to benefit from a SaaS referral program:
1. Lower Customer Acquisition Cost (CAC)
It is reasonably easy to build a SaaS referral program. While launch might require a bit of promotion to your current customers, it is designed as an evergreen marketing strategy that, for the most part, runs itself organically. Besides the early outreach through a newsletter, nurture email campaign, and social posts, you need to choose your incentive and push your program live. Of course, you’ll also have to build nurture campaigns for new customers, but this should not be too extensive.
Additionally, besides the original investment in building and maintaining it, the only cost associated with this marketing effort is whatever your incentive costs. There is no discretionary cost related to running a referral program. Your financial incentive won’t cost out-of-pocket expenses since you can deduct it from your new acquisition’s payments. This is known as a pay-for-performance marketing strategy. Since you are operating in the B2B world, you might have to create an incentive for both your referees and their company. More on that later.
2. Shorter Sales Cycles
The higher your ACV, the more complex your sale cycles are. Multiple stakeholders might be involved in the negotiation. Sometimes it can be quite an extensive process to close a deal. The advantage of receiving referrals is that you can skip navigating through the hierarchy altogether and be in touch with the ultimate decision-maker from day 1.
This is especially true at the enterprise level. Imagine the ROI if you could reduce by half your sales cycles simply by connecting with the good people right at the beginning. Additionally, high-impact recommendations are more likely to convert than low-impact recommendations.
3. Improve Lead Quality
While promoting your SaaS, your current customers will refer to like-minded peers. Especially if the financial incentive is significant enough, they want their referral to convert. This means that you’ll get high-scoring leads that are more likely to convert. Bottom of the funnel (Bofu) leads are less likely to drop out and are usually already problem aware.
They know the benefits of your solution and the problem you solve. It will also reduce the time of your sales cycles, which will drive quicker growth. Your overall conversion rate will grow, and Marketing will have time to focus on nurturing leads that are still in the awareness stage of the funnel. In addition, social proof is powerful, and nothing will outperform happy customers' recommendations to drive new sales.
4. Increase Customer Lifetime Value (CLV)
B2B SaaS ventures must focus on customer acquisition. Yet, successful companies also excel in customer retention. Your goal is to acquire customers that stay for a long time, not a short time. Your referral program will allow you to reward your current customers financially. Such practice will create an additional incentive for these customers to stay engaged with your business and further recommend you.
Additionally, a referred customer is more likely to stay longer with your company since they have a social tie to you through their referee. Subscription-based solutions offer an avenue for great customer rewards while locking them with your service for longer.
5. People Listen to People, Not Companies
The human brain is full of bias. One powerful one is the conserving mental energy bias. When asked to decide whether or not a business is credible, the brain will avoid the complexity of conducting extensive research. Instead, it’ll look for an alternative way to gather that information with minimum effort.
This is where Social proof enters the game and why customer referrals work. These days, people are busier than ever, and attention spans are reduced to a few seconds. If you want to stand out, you must spend time encouraging your first customers to become your “raving fan.” Let them promote you. In a Harvard Business Review article, Dorie Clark wrote: “Social proof enables others to “relax” about you; they don’t need to be so vigilant in evaluating your credentials because others have already vetted you. That primes them to listen to your ideas more carefully and with an open mind.”
Social proof is not a recent phenomenon and referrals are happening even if you do not have a formal structure that encourages such practices. In fact, we live in a time where most word-of-mouth is happening online. Private channels such as social media (Messenger, Whatsapp, Discord, Quora) are used to share opinions about brands.
It’s known as the Dark Social. Dark because modern marketers have little to no tools to track this kind of referral. Setting a customer referral program helps structure the flux of referrals. It will help you know where people hear from you and give you precious insights into which channels perform better.
6. Public reviews are now part of prospect research patterns
In B2B SaaS, prospects are usually spending someone else’s money which means they are more likely to do some research about your solution. The fear is the risk of choosing the wrong solution. The dream is to find a “risk-free” solution. Before hiring, you probably check candidates' social media profiles to see who you are dealing with. Prospects do the same.
They often visit websites like Capterra, Software Advice, Q2, and Google reviews to see what peers and other trusted organizations say about you. Online review is a heuristic that gives a quick yet impactful first opinion of your brand. A referral alone does not carry the same weight as a referral supported by social proof. Many B2B SaaS fail to recognize the importance of publicly available reviews. Unfortunately, the more you wait, the harder it gets.
Human beings are social creatures; they follow the herd. If a company has been around for years, how come no one posted online reviews. Even if customers are satisfied, they might be reluctant to post online reviews because others haven’t. That’s the belonging bias. (If you are interested in learning more about human bias, check out Nudge by R. Thaler and C. Sunstein. It’s a New York Times bestseller –social proof approved 😉 ). The longer you wait, the harder it will be to get momentum, and the less powerful your referral program will be. To get results, polish your online presence early.