Word of mouth has always been among the most effective ways for businesses to grow. But in the digital era, this tried-and-true approach has transformed into something even more valuable: digital referral marketing. By leveraging the massive profile you have on the web and social, you can multiply your message using one of your best resources – your current customers.
In today’s blog, we will be considering the digital marketing essentials that are critical parts of a marketing strategy, or the journey advertisers must go through in order to set everything up and leverage their data. And we’ll provide you with examples of brands that get it right as inspiration for your own campaign.
What is Digital Referral Marketing and its Significance?
Definition: At its most basic form, digital referral marketing is the act of inspiring your customers to share your business with others online. It uses online resources, including email, social media, and specialist referral software, to implement efficient referral schemes rather than traditional word-of-mouth.
The benefits are clear:
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Low-cost expansion: Referral marketing is usually an economical alternative to other advertising , but produces superior leads.
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Greater trust: Recommendations from friends and family are more trusted than any brand ads.
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More customer retention: Referred and new customers will be more bonded to your brand.
Dropbox is a standout example of this, achieving rapid user adoption by giving extra space to both the referrer and the new user. Through digital referral marketing, Dropbox transformed its users into one of its most reliable sources of growth.
Setting Clear Goals for Your Referral Program
It’s important to define your goals before starting a referral program. What do you want to happen? Knowing precisely what you’re trying to achieve will ensure it’s not just easy to implement your strategy, but also assess your success.
Start with these questions:
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Do you want a brand awareness boost?
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Are you looking to expand your customer base?
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Are you interested in increasing revenue or retention?
Set measurable objectives:
Some examples of concrete aims could be:
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20% new subscribers within six months.
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500 new customer leads in Q1.
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Getting 1,000 social shares to your campaign hashtag.
And by defining these targets early on, you’ll lay the groundwork for success and ensure your campaign has synergy with your overall marketing goals.
Selecting the Best Referral Marketing Tools
The right tools are the key to successful digital referral marketing. These tools do the work of automating, managing, and analyzing your referrals to help free up your time to work on other important things in your business.
The best referral marketing tools to consider:
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ReferralCandy:
Great for e-commerce brands, ReferralCandy allows you to organize referral links, reward referrers, and monitor their referrals in one easy-to-use platform. -
Post Affiliate Pro:
With this solution, businesses can easily handle both affiliates and referral marketing campaigns. -
Ambassador:
Features With plenty of options, why not try out one of our favorite software with these Ambassador out-of-the-box features! You won’t be disappointed with all that Ambassador has to offer. -
Talkable:
Creating shareable, conversion-friendly content for your referral programs is the way to go.
When choosing your tools, you should be mindful of costs and practicality, how well the tool syncs with your current systems, as well as the potential for scaling with a particular tool. The right software can make running your program a breeze.
How to Get the Most Out of Your Referral Program
Even the most well-conceived referral program is of no use if your customers are completely unaware of its existence. Effective communication and good promotion are essential to mobilizing participation.
Some better ways to advertise your referral program:
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Use email marketing:
Email existing customers directly and let them know about the program and the rewards it offers. Use enticing subject lines to call out the offers, such as “Refer a Friend, Get Rewarded!” -
Leverage your website:
Include a page or banner specifically about your referral program. Provide clear information about how it works and what your customers will get. -
Utilize social media:
Promote sharing with pre-written posts, hashtags, and images. Social media platforms such as Instagram and Twitter are great for broadcasting your message to a larger audience. -
Promote at the end of checkout:
Prompt your new customers to make a purchase, then ask them to refer your referral program to their community.
Engage creatively and often. If nobody knows that something exists, then they really can’t use it, even more so for your customers.
Calculating The Results Of Your Digital Referral Marketing And Some Tips To Optimize It
As soon as you’ve implemented your referral program, you need to measure it. Not all campaigns are perfect out of the gate, so by measuring results, you will have a better understanding of what you need to change to succeed.
Key metrics to track:
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Referral rate:
The ratio of the sharing of the referral link by the customers with other people. -
Conversion rate:
The number of new customers who made their first purchase (or signed up) via referral. -
Customer acquisition cost (CAC):
The cost associated with acquiring a new customer.
Figure out what you’re paying per new customer to be in the program.
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Customer Lifetime Value:
Referred customers are also more likely to become repeat customers. Track how much they spend versus non-referred customers.
Optimization tips:
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Experiment with incentives:
If the involvement in the program is low, consider changing the incentives. Discounts, free products, and limited-access perks are all good places to start, but you need to know what will work best for your audience. -
Check customer feedback:
Ask participants what they found valuable about the program and/or how it might be improved. -
A/B test program elements:
Experiment with various email subject lines, reward structures , and sharing tools to see what pushes results.
Successful Digital Referral Marketing Campaigns
Check out a few of the best-in-class digital referral programs from brands for inspiration:
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Dropbox:
Their hallmark Refer a Friend program yielded temporary extra storage for both the new subscriber and that new subscriber’s friend. It’s this deceptively engaging reward that took Dropbox from 100,000 users to over 4,000,000 in about a year. -
Tesla:
Tesla’s referral program gives its participants bonuses, such as supercharger credits, and a chance to win a free car. Its strong community and aspirational incentives generated a lot of buzz and loyalty. -
Airbnb:
Airbnb invited participants to refer friends and earn travel credit, and the company promoted its program with email and social campaigns. What, then, is the secret to the campaign’s success? Simple messaging and a reward that all can enjoy.
These examples demonstrate that with wild success, referral programs can create rocketing growth.
5 Keys To Acceleration In Digital Referral Marketing
You know say referral marketing is key to growth? You’re not alone, because in the digital economy, it isn’t just a buzzword, it’s the real deal for growth, because you can tap into your most powerful advocates – your customers. Through establishing clear goals, utilizing effective tools, and promoting your program successfully, you can craft a strategy that yields results for years to come.
Now you can follow this strategy yourself to take your business to the next level. Not sure where to begin? Begin with the type of software that suits your requirements and trial offers depending on what you think your audience will give a damn about.
And it’s only going to get better, with features such as AI-driven recommendations or personalized recommendations in future years. Start to get real value when you grow your consultancy discipline and mindset on giving versus taking.
