Rampant Referrals for MSPs – Part 1


Referrals for MSPs – Part 1 : Why Referrals?

In this short series about getting more business referrals, we’ll be uncovering what B2B business owners (and in particular, Managed Service Providers) can do to gain more referrals than they ever thought possible for low-cost or no-cost, except for a bit of thought, time and effort.

Why Are Referrals So Important?

Before we get into the mechanics of improving referral-flow, it’s a good idea to remind ourselves of why it’s a good idea to optimise the business for maximising referrals in the first place. So, with that in mind, here’s a short list of some reasons which will hopefully remind and inspire you to give this the attention it deserves.

Some Reasons Referral-Marketing Is So Important

“Most Marketing is relatively expensive, stressful and doesn’t work”. That’s quite a controversial quotation from someone who ran a digital marketing company for over 25 years, so why does Mike Knight of MKLINK keep saying it? To help answer that, let’s look at some statistics about conventional advertising versus referrals …

“71% of Business Ads are Useless” This shocking statistic comes from the LinkedIn-backed B2B Institute.

However, as far as referrals are concerned, “84% Of B2B Sales Come Via Referrals” (according to Influitive) and “87% Of Their Clients Would Refer Them” (also attributed to Influitive).

Let’s look at some of more of these statistics …

According to Nielsen:

  • 92 percent of respondents said they trusted referrals from people they knew.
  • People are four times more likely to buy when referred by a friend.
  • Not only are 4 times more likely to buy, they’ll typically spend 200% more than the average customer.

According to Edelman Trust Barometer, “84% of B2B businesses initiate the buying process with a referral.”

Some Heinz Marketing Stats :

  • 71% of companies report a higher number of conversions with a referral program.
  • More than 90 percent of consumers look to online reviews for guidance before making a purchase.

The New York Times noted in one of their articles that 65% of all new business in the United States comes from referrals.

Some Softwareadvice.com Statistics :

  • 78% of marketers say referral marketing produces good or excellent leads
  • 60% of marketers said that referral marketing produced a high quantity of leads
  • 52% said that referral marketing had a low cost per lead, bettered only by nonpaid social and in-house email across all channels

From Influitive.com :  Of companies with referral programmes in place :

  • 69% reported faster closing rates
  • 87% reported highly effective sales efforts vs 42% without referral programmes

So, we’ve briefly seen some pretty compelling numbers that show referral-marketing is the best thing for MSPs since sliced-bread but here’s the kicker … Only 11% Of MSPs Ask Their Clients For A Referral. There’s a massive disconnect here which can – and should – be exploited by any sensible MSP owner.

Some Reasons MSPs Don’t Optimise Referrals

You’d expect that the main reasons most MSPs don’t get as many referrals as they should is down to the three likely causes including that they “Don’t Appreciate The Importance”, “Don’t Know How” and lastly, they “Can’t Be Bothered” … and you’d be right! This means that they mostly rely on random chance as to when inbound referrals occur. That really is quite incredible, isn’t it? Think about that for a moment … around 90% of an MSP’s new business growth comes from referrals and yet it’s left completely to luck!

Looking At Luck

Looking at a common scenario for this, perhaps one client is talking to another client on the phone when their VOIP-call is patchy or the printer doesn’t work or something else goes wrong. Then (if you’re very lucky and your client likes you) this coincidence could be an opportunity for your business because one client might say to the other one “Oh, my VOIP-calls used to be patchy like that but my current supplier is really good, you should try them” … and then you may get a referral. Maybe.

Now, here’s the thing about coincidences. They are everywhere and anywhere, they truly are! It’s actually quite mind-boggling if you start to think about this. The overwhelming majority of these so-called coincidences are never recognised in the first place because they go unnoticed and they’re never passed back as a referral even if they are because life can be so inefficient. How many should-have-beens is the subject for the philosophers but we need to consider at least part of this world of possibilities.

Just look at the universe we live in. We’re surrounded by probabilities that are so insane that humans just can’t understand them and so we ascribe effects to causes as luck when it’s more a case of inevitability. For instance, you may be on a bus with twenty other people and you’re all wearing green underwear, but you’d be very unlikely to ever know it, would you? You could all have the same middle name or favourite brand of washing powder but again, how likely it is that you’d ever find out?

All the staff in your office may have walked on the same number of cracks in the pavement on the way to work that morning. The last 10 people you emailed might all be reading it on the same type of device or browser or they could all have just emailed someone before you called Henry Smith … how would you ever know? The fact is that if you could multiply all the potential things where opportunities might coincide, you’d have an infinite number! Of these infinite chances or “coincidences” (which occur all the time) you’ll only ever notice an infinitesimally small number of them. Let that sink in, if you can!

So, what’s the answer? The answer is to have a system in place that can dramatically increase how you and your clients and prospects can become aware of those “coincidences” and which not only ensures that referrals actually get passed back to you but which also helps you to stop self-sabotaging your chances of getting referrals in the first place.

That’s quite a tall order! Nevertheless, we’ll make a start on that system in the next session …


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Mike Knight