Low on budget, and want a high impact growth strategy for your business, then referral marketing could be your golden ticket. Referral marketing leverages one of the most potent tools in all of business: word-of-mouth marketing. Done correctly, you can turn your customers into raving fans of your brand.
This post will walk you through what referral marketing is, why it’s effective, and how to implement a referral marketing process to help accelerate your business growth.
What is Referral Marketing?
Referral marketing is a process of promoting a company’s products or services to new customers further through referrals, usually such referrals are made by happy customers. This might be something as straightforward as inviting a happy customer to write a review, or as advanced as a referral program with incentives, rewarding customers that generate leads for your business.
Referral marketing is not like conventional branding where ads promote the product. If a friend, a family member or a colleague suggests a product or a service that they like, it’s worth more than any types of adverts. It’s not just simply about satisfying existing customers; it’s about taking that satisfaction and then using it to win new business.
Why Referral Marketing Works
And marketing by referral not only works, it has its own set of trustworthy statistics. Nielsen found You good person! that 92 percent of consumers trust recommendations from friends and family over all other forms of advertising. Pair that trust with social proof, and that’s one of the most powerful marketing tools out there.
Referral marketing works better than Traditional marketing. Here’s why:
Builds Trust
Your friends generally trust what comes out of your mouth more than any ad or marketing campaign. A recommendation is automatically more authentic because it’s been endorsed by real users.
Higher Conversion Rates
Referred customers convert at a greater rate. Because their friend convinced them to consider your brand in the first place, they’re easier to convert into sales.
Cost-Efficiency
Saves you time and money Instead of taking the risk on the new leads referral marketing is far less of a shot in the dark. You can effectively let your potential clients find you through your satisfied customers, without paying hefty ad spends.
Encourages Long-Term Loyalty
When customers are invested in your brand’s success, as they are with a referral program, it cements their loyalty. They’re more invested in your business and its reputation.
Building a Killer Referral Marketing Program: How to Maximize Its Potential
You now know the impact of referral marketing, now it’s time to devise a plan that will be effective. Take these six organized steps and structure your referral marketing strategy for success.
1. Know Your Audience
Before running a successful referral program, spend some quality time with your customer profile first. What motivates them?
For example, rewards for sharing a referral could be discounts or exclusive access to a new product or line for Millennials and Gen Z cohorts.
Free shipping, or membership points, might hold some charm for older demographics.
Learning what your audience likes is the first step to developing a referral system that they would actually want to take part in.
2. Offer Attractive Incentives
Your brand is more likely to be referred when there’s something in it for the referrers. Give your customers incentives for referring new leads! Offer the right incentives for your audience like:
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Bulk rewards or cash back on every referred person to make a purchase.
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VIP or early access to products or services
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A gift card for a certain referral threshold ($20 gift card for referring five friends!)
Also make the incentive elements simple (for clear understanding) and transparent (as hunting round for obscure or hidden elements can reduce or negate their impact).
3. Utilize The Right Tools
And while you can certainly manage a referral program on your own, using a referral marketing platform makes it simple to track and manage your program. Referral Candy, Yotpo, Ambassador automations are great for @mention referral marketing. They help you:
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Track referrals in real-time
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Automatically remind customers to refer their friends
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Manage rewards seamlessly
Opt for a tool that plays nice with your current business systems so you can easily get started.
4. Craft Your Outreach Messaging
Your referral marketing program’s success has a lot to do with the way you talk about it. From an email campaign to a social media post to an in-app notification, your messaging has to be crisp and compelling. Here is a checklist to create successful referral messages:
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Personalization: Personalize the email or the notification using the customer name.
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Emphasize Benefits: Do a good job of articulating what’s in it for them — and their friends.
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Call to Action: Utilize a direct and clickable call to action like “Refer a Friend” or “Earn $10 Now!”
5. Make Sharing Easy
Take the friction out of the referral process by enabling it to be as easy as possible for customers to refer your brand. Offer some pre-written text, strong visuals, and link them to share by social media or email invite. And the easier the process, the more they’re going to do so.
For example:
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Include “Invite Friends” buttons in your app or on your website
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You will receive a referral link or a special code to share
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Take advantage of one-click integrations with WhatsApp, Facebook, Instagram
6. Analyze and Optimize
And if you’re not tracking, and you don’t have any visibility, it’s difficult to know if your referral marketing strategy is actually effective. Utilize analytics for tracking the following metrics:
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Number of referrals made
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Overall conversion rate
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Referral cost per acquisition (CPA)
This is the type of intelligence that helps you determine what’s working well and what needs improvement.
Example of Successful Referral Marketing in Action in Real Life
Just to illustrate further, look at Dropbox. The cloud storage service darling went gangbusters with referral marketing. Dropbox was also one of the earlier companies to give both the referrer and referred 500MB of free space. This straightforward, transparent incentive resonated with their audience. The result? They had 60% higher sign-ups, acquired users quickly without spending a fortune on marketing.
Final Tips On Growing Your Business Through Referrals
The strategy of referral marketing is one of the most intelligent ones to create consistent business growth. You can achieve unique advantages for your brand by using word of mouth recommendations to their full potential.
Start small but think big. Design a Referral Program that Works for Your Business You need to design a referral program that is engaging for your customer base, effective in motivating your customers to refer, and to do all that is scalable and trackable. And remember, your best customers are your best brand ambassadors!
Ready to kick your referral marketing up a notch? Software like Jasper can assist in building irresistible customer communications, creating processes that facilitate automation, and personalizing the outreach that is meant to achieve the biggest impact.
Leverage your referral marketing strategy effectively and it’s a product not only customers, but a loyal community will get behind.
