October 4, 2016
What marketing channel are SMBs using to initiate growth?
Of the 390,000 business services companies in the United States, the fifty largest have under 25% of sector revenue. But this isn’t surprising. The SMB business services sector is inhabited by diverse industries including telecommunications, security, fintech and SaaS. These industries have different target buyers, offerings, and benefits, making it difficult to capture a large percentage of business service revenue. However, with total annual sales equaling $ 815 billion, the overall business service sector contains tremendous growth opportunity no matter what industry you inhabit within the business service umbrella. And with that in mind, the question that many business service professionals are now asking is how to go about initiating that growth.
In order to make that decision SMB business services need to consider the psychology of buying within the business service sector. Regardless of a company’s industry within business services, the business services sector require a relationship-oriented business model. This means that business service companies need to build feelings of trust and authenticity with their buyers in order to have a profitable long-term relationship. But to do that their marketing strategies need to go beyond generic email and PPC campaigns. While those techniques are still important to keep alive as part of a general marketing strategy, they are missing the relationship experience that’s associated with the development of target buyers’ feelings of trust and can be perceived as inauthentic due to the lack of 1-1 personalized communication. However, by incorporating a marketing strategy that reflects the type of relationship you’re hoping to develop you start cultivating an authentic relationship with your target buyer from day one.
One innovative marketing strategy that aligns with business services’ business model and basis its success off the forming of relationships is referral marketing. While it’s true referral marketing has put businesses like Uber and Airbnb on the map, referral program have long been empowering SMB businesses services’ customer acquisition. These business services companies include ADP, RingCentral, ADT and TSYS Merchant Solution to name a few.
4 business services that are using referral marketing to increase customer acquisition
ADP is an American provider of human resources management software. Like other business service companies, ADP emphasizes the development of relationship and personalization in their technology as well as their customer acquisition strategy. Since the power of referral marketing comes from extending current customer and partner relationship to include your brand it uses the type relationship-oriented approach that was already a part of ADP’s culture to gain valuable leads.
ADP uses Amplifinity referral software to run four referral marketing programs that create a personalized 1-to-1 introduction to their products and acquire high quality leads. Of ADP’s 11 billion in annual revenue, they reported at the 2016 SiriusDecisions Summit, that their referral programs are their top source of demand creation.
RingCentral is a telecommunication business service company that is a leader in providing communication products and services to businesses. RingCentral’s customer acquisition model is based on the development of a small relationship in order to show the power of their products and services. Once a client sees the benefits, RingCentral nurtures the positive experience into larger, long-term buy-in.
RingCentral saw how a referral program fit into their current relationship-oriented business model and established their homegrown referral program, but later upgraded to Amplifinity after they discovered the momentous value automated referral marketing can provide.
Mark Brier, Director of Upsell and Referral Marketing at RingCentral says, “We’ve run a homegrown, successful referral program over the past couple of years. We knew we wanted to bring it to the next level and needed a proven referral partner who could help us scale the program. Amplifinity is our solution to get higher production, greater value, and more efficiency, without the operational headaches.”
ADT offers security products and services to both consumers and businesses. Their customer acquisition strategy is based on developing a trusting relationship with their target buyer in order to assure them of their reliability to protect their assets. Referral marketing works with ADT’s current business model by incentivizing satisfied customers and partners to facilitate a trusted introduction between their peers and ADT, thereby extending the trust of customer and partners’ previous developed relationships to include ADT.
With the security industry projecting strong revenue growth, marketing initiatives like referral marketing can help capture more leads and increase revenue generation. In fact, the 2015 annual report of physical security showed that between 2015 to 2020 global security sales will grow from $ 27.2 billion to $ 42 billion. This presents a large opportunity for the security business service companies.
TSYS Merchant Solution
TSYS Merchant Solution is a fintech business service company that handles payment processing. TSYS markets themselves as more than just another payment processing vendor, but a business with the goal of build lasting relationship with their target buyer as a way to accommodate their needs and help them better succeed. With a referral marketing program, TSYS’s advocates know the pain points their peers face and can communicate that to TSYS in order to help them better fulfill those needs and increase the likelihood of leads closing. That’s why it was a no brainer for TSYS to establish a referral marketing program with Amplifinity.
Andrew Brabec, Marketing Manager at TSYS Merchant Solutions stated, “In the first 4 weeks the referral program had almost paid for itself with over 75% of our referral leads turning into opportunities.”
With so many fintech companies trying to get ahead, this type of ROI can help fintech business services become a disruptor in the industry.
How will referral marketing help your SMB business service company?
These SMB business service companies have proven referral marketing can create amazing growth opportunities. Analyst and industry experts alike have seen how referrals are creating unmatched revenue generation with:
- 4x higher conversions than marketing leads (emarketer)
- 16% higher LTV than that of non-referred customers (Harvard Business Review)
- 18% less churn than non-referred customers (Harvard Business Review)
- 35% conversion rate from referral to purchase (Amplifinity)
Business & Finance Articles on Business 2 Community