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The Advocacy Channel Ep. 24: Beyond Word of Mouth: Exploring The Potential of Referral Marketing with Seasoned Expert Keith Posehn

Home » Blog » The Advocacy Channel Ep. 24: Beyond Word of Mouth: Exploring The Potential of Referral Marketing with Seasoned Expert Keith Posehn

In the final episode of our first season of The Advocacy Channel, we were joined by Keith Posehn, a marketing leader with an impressive 17-year track record of leading referral and affiliate marketing programs for startups and tech giants, like Uber and Square.

Keith shared profound insights into the often underutilized marketing channel of referral marketing, highlighting common pitfalls and revealing strategies to harness this growth channel effectively. His journey underscores an important narrative: referral marketing isn't just an add-on; it's a potent growth engine that, when executed with precision and creativity, can significantly amplify a company's reach and impact.

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Why Do Most Referral Programs Fail?

(Starting from 3:46)

Keith points out two main pitfalls in referral marketing: under-resourcing and the misalignment of organizational priorities. He emphasizes that successful referral programs require dedication, realistic expectations, and strategic positioning within the company's growth agenda. Overcoming these pitfalls involves a shift in mindset or philosophy, viewing referral marketing not as a program/project, but as a marketing channel and integral component of the marketing strategy.

Resistance from Leadership

(Starting from 3:46)

Keith delves into the common issue of resistance from CMOs and leadership teams. He suggests that past failures with referral programs often lead to skepticism. To counter this, Keith recommends a thorough analysis of past efforts to identify what worked and what didn’t, using these insights to build a more compelling case for a revamped referral strategy.

Finding and Nurturing Talent

(Starting from 8:35)

Given the specialized nature of referral marketing, identifying or developing the right talent within an organization is challenging but essential. Keith's approach includes nurturing 'athletes' with the help of 'experts'—individuals who are adept at completing tasks quickly and are motivated by action, with additional assistance from experts with deep expertise in referral marketing. In this part of the episode, we also delved into strategies for discovering and empowering these individuals, ensuring they have the mandate and resources to innovate and drive the program forward.

Listen to the full episode here.

Referral Programs and Risk-taking

(Starting from 11:42)

Furthermore, the leadership team needs to be comfortable with taking risks associated with referral programs. This channel requires time and investment to yield long-term results. A change in the leadership team's paradigm is needed. As Keith puts it, you do not need to cheapen your product, instead provide value to your customers. For instance, Dropbox offered free space to its users during their referral program. They did not lose their product's value but instead added value for their users and those they referred.

“Fear never drove the same hypergrowth. It requires boldness to say, "I am willing to test this. I want to test an assumption." This often challenges many companies' ingrained assumptions. It's about questioning, "Why do we believe that?"

What if we did prompt at this critical customer point? Sure, we might sacrifice a few points in further uptake, but the gain from the referral should outweigh it. It's about having the staying power to say, "Hey, we're going to test this, and we're going to see if the value we get from it is greater than the value we gave up by not doing it, or that we gave up if we hadn't done it."

This becomes critical. You can certainly over-prompt. Absolutely. And you can make the prompt something you get blind to by always doing it at the same point. But at the same time, don't be afraid. Fear, I think, is the greatest enemy of this channel's success, and it holds companies back.” (32:20)

Strategies to Improve Your Referral Program

Moving Beyond Monetary Incentives

(Starting from 14:34)

Keith emphasizes that the most effective referral programs often transcend simple financial rewards. He advocates for creating value through unique experiences, exclusive access, or enhanced product features. Keith and Will talked about how companies can design incentives that resonate more deeply with their customers' desires and motivations, thus fostering a more engaged and loyal advocate base.

One standout example Keith and Will discussed was the concept of offering non-monetary rewards that carry high perceived value, such as upgrading seats on an airplane. This approach shifts the focus from financial incentives to experiences that deepen the customer's engagement and satisfaction with the service. For instance, offering a free seat upgrade to first class not only delights customers but also encourages them to share this positive experience with others, leveraging the power of social proof and personal recommendations.

The Importance of Timely Prompting

(Starting from 31:07)

Throughout the episode, Keith highlights the importance of understanding the proper timing for referral prompts. A practical application of this is seen in the strategy used by Uber, where they discovered that prompting for referrals right after a customer experienced a five-star trip significantly increased the likelihood of them making a referral. This example underscores the necessity of integrating referral programs into the customer's journey at moments of peak satisfaction to maximize their effectiveness.

Understanding the Timeline for Referral Marketing Success

(Starting from 18:17)

Successful referral programs are integral to a company's growth strategy, requiring a nuanced understanding, strategic resource allocation, and patience. The key to seeing substantial results from a referral program lies in recognizing its potential as a major growth driver, which can contribute significantly to a company's overall success. Companies that deeply integrate referral programs into their core growth strategies, give them the necessary resources and patiently optimize and refine their approach over time are the ones that see remarkable growth contributions, often in the range of 10% or more of their total growth.

Keith emphasizes that to unlock the true potential of referral programs, companies must overcome institutional misunderstandings, align the program with their broader business strategies, and ensure it is well-resourced and prioritized. 

Additionally, the timeline to witness substantial results from referral programs can vary, with a baseline of six to twelve months suggested for a program to start significantly contributing to a company's growth. However, early indicators of success, such as increased customer engagement and higher value from referred customers, can often be observed within the first few months. This gradual but impactful growth underscores the importance of commitment and strategic planning in the execution of referral programs.

Starting Small and Scaling

(Starting from 20:53)

Keith advises companies to start small with their referral programs, focusing on integration within the broader marketing strategy and ensuring there is a clear alignment with company goals. He stresses the importance of leadership support and cross-functional collaboration for the success of referral initiatives.

Where Does It Make Sense for a Referral Program to Live?

(Starting from 27:06)

Keith emphasized that referral programs often start within product teams due to their initial focus on product usage and customer engagement. However, as these programs mature, they tend to shift toward the marketing domain because they encompass broader marketing strategies and objectives. This transition is largely due to the need for a holistic approach that spans multiple departments, ensuring the referral program aligns with the company's overall growth strategies and leverages marketing channels effectively. Keith's insights suggest that while the initial development of referral programs may benefit from the product team's close connection to the user experience, their full potential is realized when integrated into a comprehensive marketing framework, underscoring the importance of cross-departmental collaboration for maximizing the impact of referral initiatives.

Using Referrals as a Tool to Establish Long-term Partnerships

(Starting from 42:30)

Keith discusses transitioning referral customers into partners by emphasizing the importance of recognizing and nurturing those who show exceptional engagement in referral activities. He suggests monitoring the performance of individuals who frequently refer others and considering upgrading these relationships into more formal partnerships or affiliate roles when they reach certain referral milestones. This approach not only maximizes the potential of referrals as a growth channel but also encourages a deeper, mutually beneficial relationship with highly active advocates, converting them into partners who can contribute significantly to the company's growth over time.


This wraps up our final episode of the first season! We are grateful for Keith Posehn joining us for this episode to discuss the critical role of referral marketing in driving company growth. The key takeaway? Building a referral program that works means focusing on creating value for your customers that is worth sharing. It's about more than just incentives; it's about fostering a community that values and supports your brand. 

Listen to the full episode for even more expert advice on referral marketing: 

Connect with Keith on LinkedIn: 

If you are tuning into The Advocacy Channel for the very first time, make sure to check out our previous episodes for more expert advice on customer marketing and advocacy!

As we wrap up the current season, we're already hard at work preparing for the next one. So, make sure to stay tuned as we continue to bring you more experts and thought-provoking discussions in the upcoming season.

Got questions or feedback about the podcast? Send us an email!

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