According to a survey by TOPO, it takes at least 18 touches to connect with a single buyer. With call back rates declining and consumers becoming increasingly wary of traditional sales tactics, it’s becoming more and more difficult for businesses to reach customers.
Thankfully, there’s one sure-fire way to effectively reach prospects and customers - personal referrals and introductions. From the top of the funnel to the bottom, personal referrals are the golden ticket to success in B2B sales. Hands down, they are the most effective way to sell and boost customer value.
1. Customer acquisition
Personal introductions are potent from a customer acquisition standpoint. When we hear about a company via a friend or a close connection, we are more likely to trust it as compared to other forms of advertising. This is why referrals convert at a 3-5x higher rate than average. We trust our close connections not to lead us astray. When it comes to customer acquisition, few tactics move the needle as forcefully as personal referrals.
2. Customer retention
Not only do referrals increase customer acquisition, they also increase customer retention rates. Personal referrals and introductions are, in essence, a form of precision targeting. Existing customers know their networks well and tend only to make referrals to those individuals they believe are best suited towards a particular offering. Referred customers are thus more likely to stay with a brand for a longer time. They boast a 37% higher retention rate compared to non referred customers.
3. Customer value
What’s more, referred customers also contribute most positively to the bottom line. They are the most valuable type of customer. Referrals, because they’ve been vetted by current customers as a good match for a particular offering, tend to have higher levels of engagement. They also tend to be more likely to upsell. A study by the Wharton School of Business underscores how effective referrals are in terms of maximizing customer value. The study found that a referred customer has a 16% higher life-time value than a non referred customer. Referrals are a direct route to increased revenue and customer value.
It’s important to make a concerted effort to leverage your existing customer base, investors, and advisors for new referrals. Referrals won’t magically appear at your doorstep. According to research by Texas Tech University, 83% of consumers are willing to refer after a positive experience — but only 29% actually do.
There are also several research-based explanations that shed light on why personal introductions and referrals are so effective. A lot of it boils down to human psychology. Referrals are the most trustworthy form of advertising. Additionally, referrals reduce complexity. Decisions, especially B2B purchase decisions, are rife with complexity. It takes a lot of brain power to make decisions. University of Minnesota researchers have found that decision making expends our cognitive resources. When we have reassurance from a reliable and trusted source, it's much easier to make a decision.
Personal referrals can be a game changer in terms of customer acquisition, customer retention, and customer value. Affinity makes it easy to ask for referrals. You can use Affinity to source and request these valuable connections from your internal team and extended network.
Affinity is a relationship intelligence platform built to expand and evolve the traditional CRM. Affinity instantly surfaces all of your team's data and shows you who is best suited to make the crucial introductions you need to raise your next round of funding and close your next big deal. Using AI and natural language processing, Affinity helps teams curate and grow their networks by unlocking introductions to decision makers that they cannot easily tap into right now.
Interested in learning how Affinity can help your team? Request a demo to get started.
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