In today’s digitally enhanced business environments, companies are investing a lot of resources to create their digital presence. However, how much investment is needed when it comes to attracting business partners, especially customers? Finding suitable customers and creating long-term business relationships is a challenge for firms of all sizes, especially for small and medium-sized enterprises (SMEs). Besides resource scarcity, they are facing the burden of anonymity while competing with the larger established companies. Thus, as a potential solution to their problems, we suggest using online referrals to level the playing field and become more attractive to potential business partners.

Online referrals

A great way to boost your company’s attractiveness is by using online referrals received from the business customers you have previously worked with or by simply using their logos strategically positioned on your website as a sign of previous cooperation. Doing this has the potential of benefiting three parties:

1. your own company, as it helps you stand out among the competition;
2. the customer’s company that is providing a referral, as they can use it as a promotional tool;
3. potential customers, as it makes their search and screening process easier.

Compared with other types of references, online referrals have the additional advantage of always being positive, since you are the one choosing them and publishing them on your website.

Having a logo of a longstanding customer on your website can be seen as a ‘stamp of approval’ from that company. It is a very simple yet powerful way of presenting a network of companies you are connected with to other potential partners. Using their logos is thus understood as a footprint of a business relationship (Toth et al., 2020). This is particularly important for SMEs that provide services (without tangible product offerings), as logos could be used as compensation for the intangible service aspect (Thrassou & Vrontis, 2006). However, it is important to make it clear and explicit that presented logos are those of the firm’s business customers, to avoid confusion with industry associations and other types of connections your firm might have.

In addition, you should focus on who you want to attract. Once you have an ideal partner you want to attract in mind, carefully select logos of the most representative companies, such as those from the same industry, the same size, respected, and reputable. Avoid logos of firms with a negative reputation and those that are not in line with your company’s values. Finally, before displaying any logos, ask for permission from the company to use their logo. And while having a logo of another company on your website might only be a first step in attracting a new partner, it is a crucial one, as it allows for further discussions between companies.

Another, more detailed type of online referral is a testimonial. A customer that has worked with you in the past or has tried your product or service gives a written or a video testimonial describing their corporate or personal experience (Braverman, 2008). The main goal of the testimonial is to interest new potential customers in following their footsteps and trying the product or service themselves. The advice is to keep testimonials short and to the point, to catch the attention and interest of the reader and to save their time (Toth et al., 2020). This aligns with the notion of resource scarcity that most SMEs face and it keeps the customer interested in learning more, which increases the possibility of further communication. Similar to using logos, you should carefully select and publish testimonials of those companies whose stories will best attract your ideal customers. While doing so, it is important to pay attention to the credibility, reliability, and trustworthiness of the company providing the testimonial.

Critical points to consider

Despite not having full control of all the network connections your company will come across, there are still some strategic marketing moves you can make to position yourself as a desirable partner and affect your attractiveness on the market. Hence, utilising the power of online referrals is a major step for any company to present itself in the best light to potential but also existing partners. We advise companies to consider embarking on this journey if they are not there already, or to analyse their current online referral tactics, while discussing and planning any possible improvements. However, it is important to note that this activity should be conducted together with customers, and as such, requires careful strategic planning (Toth et al., 2020). To avoid any potential misunderstandings in the future, the question of referrals should be negotiated already at the beginning of a business relationship. This will allow for better planning and execution of your online referral strategy.

A great example of a company utilising the benefits of online referrals to its full potential is Shopify. By using logos and written testimonials of companies from different industries (e.g., fitness, fashion, food, etc.) they appeal to a wide array of potential customers that are looking to build their own websites. By seeing logos of many big brands from their industry, and by reading about their positive experiences with Shopify, potential customers are more likely to choose them instead of a competitor. This demonstrates the positive effect of using online referrals as a ‘social proof’ and a way of appealing to new clientele.

Benefits and challenges of online referrals

As every investment has its pros and cons, we next present a list of potential benefits as well as challenges that using online referrals could bring to a company.

Benefits of online referrals:

• Increased brand reputation of both partners
• Bigger conversion rate
• Expanded brand reach
• Improved return on investment

Challenges of online referrals:

• Incentivising customers to leave a referral
• Targeting the ideal potential customers
• Keeping the referrals up to date
• Making the referrals engaging to a reader

Conclusions

Different strategies and investments can be used in an attempt to develop and grow your network of business partners and customers. However, using online referrals might be one of the most beneficial investments. It holds the potential for a triple benefit, as it turns your company into an attractive business partner, promotes your current customers, and makes the screening process of potential customers easier. These are just some of many reasons why using online referrals should be approached with a sound strategy and management that its huge potential deserves.

About the authors

Dr. Nikolina Koporcic earned her Ph.D. in Economics and Business Administration in 2017, at the Åbo Akademi University. Currently, she is a Senior Researcher at Laurea University of Applied Sciences. In addition, she is the Visiting Senior Lecturer at the Luleå University of Technology, the Adjunct Professor at the University of Turku, and holds an affiliation with Åbo Akademi University. Nikolina’s research areas include co-creation of value, open innovation, corporate branding, entrepreneurship, business relationships and networks. In particular, she is studying the importance of Interactive Network Branding for small firms in business markets. Nikolina has published 16 peer-reviewed academic articles, 3 books, 8 book chapters, 22 conference proceedings, and 4 Laurea Journal articles. orcid.org/0000-0001-5050-3819

Mato Koporcic is a practitioner with a wide range of experience gained working for different companies in Croatia, Germany, and Canada. His interests are in circular economy and sustainability from a B2B perspective. In collaboration with Nikolina, he is regularly writing articles for the B2B Insights series they introduced in Laurea Journal.

Reference list

• Braverman, J. 2008. Testimonials versus informational persuasive messages: The moderating effect of delivery mode and personal involvement. Communication research, 35(5), 666-694.
• Tóth, Z., Nieroda, M. E., & Koles, B. 2020. Becoming a more attractive supplier by managing references–The case of small and medium-sized enterprises in a digitally enhanced business environment. Industrial Marketing Management, 84, 312-327.
• Thrassou, A., & Vrontis, D. 2006. A small services firm marketing communications model for SME‐dominated environments. Journal of Marketing Communications, 12(3), 183-202.