Did you know that a massive 84% of potential customers tend to trust your business more if a friend, family member, or acquaintance refers it to them? That’s right, a strategical referral marketing and strong recommendations from your existing customers can immensely help can help in not only bringing in more traffic but also in growing your business to the next level of success.
Research shows that more than 90% of customers are likely to trust recommendations by people they know or follow. Such references add social proof and credibility of your store or company that influences the purchasing decisions of many. And so, a referral customer (one who has been recommended to your business) has an almost 16% higher lifetime value compared to a non-referral user.
Therefore, if you can get your existing customers to share word-of-mouth, you will be able to accelerate the growth of your company in no time. All you need to do is create some effective referral marketing strategies and programs, and new leads will be automatically generated through your existing customer base.
And to help you understand the use of referrals in business marketing and how to strategize for the best effect, we bring you this blog – a complete guideline on how to create referral marketing strategies. Interested to learn in detail? Let’s dive right in and find out more.
Understanding What Referral Marketing Is & How It Works
Starting off with the very basics – what is referral marketing? It is an organized marketing strategy you can utilize to promote your products or services through existing customers (or, referrals) to their friends, family, and others in their network. In other words, this type of marketing simply turns satisfied customers into brand advocates for your company.
It’s the perfect tactic to add social proof to your business in order to expand, acquire new leads, and generate sales without spending large sums behind marketing. Only, effective strategies are structured is to offer exciting rewards or incentives to your referrals whenever their referred lead converts into a paying customer for your business. This only helps to increase customer loyalty and gets them to recommend your company or store more.
Why It Works Wonders To Grow Your Business?
As we have mentioned earlier, most potential customers trust recommendations from people they know. It is true for all types of users and businesses all around the world. And so, referral marketing helps to generate leads and convert them quicker than other types of marketing strategies.
Taking a different perspective on this, we can say, these advocates usually only recommend your products and services to those who actually need or might be interested in your product. This gives an added advantage – all leads are sure to become new customers for you because only targeted users are marketed to.
Moreover, in this tech-savvy world, most of your satisfied customers are likely to share their reviews and ratings of your products on their social media platforms. These brand advocates might even put you in front of a large pool of potential customers you might not otherwise have access to. This leads to a greater reach, and eventually more customers through social media referral marketing.
A Quick Overview Of How Effective Referral Marketing Is
Next, let’s understand one more aspect of marketing using referrals of your business – how much of a difference do these brand ambassadors or advocates actually make?
💡 A word-of-mouth referral marketing drives at least 5 times more sales than regular paid programs or strategies. 71% of organizations that offer strategized referral programs have reported such an increase in conversion rates
💡 Customers acquired through this type of marketing strategy tend to spend about twice more than the referrals who introduce them to the company.
💡 69% of companies have seen faster time to close, as potential customers have already developed a sense of trust for your business through their referrals.
💡 As again, as we have already mentioned, referred leads bring around 16% higher lifetime value. And among all the companies that invest in referral marketing, about 59% have reported so.
Tips To Create The Perfect Referral Marketing Strategy
By now, we hope, you have understood why referral marketing and strategizing for it are essential for the growth of your business. But it is still one of those types of marketing programs or campaigns that either gets left unnoticed by companies or does not do well even when implemented. So, it is also crucial that you know how to make the most of your own strategies from it.
Essentially, it is the art of getting your customers to say all the positive things they have seen or have been served with at your company. However, no matter how tempting it might be, you cannot force your existing users and clients to recommend your products and services. And so, instead, you need to encourage them to talk of their experiences, but in a positive light.
All you need to do is give them the right nudges, and you can transform them into the perfect ambassadors for your brand. Here are a few tips to help you craft the most effective referral marketing plan:
Build A Closer Relationship With Your Customers
Before you start asking your customer base to put out a good word for you among their network, you need to ensure you have a strong and well-built relationship with them. And a good way to nurture recommendations and endorsements of these advocates is to ask them to join and sign up for an ‘Exclusives Only’ or ‘VIP’ club of members. Once they do, try to get to know them better and provide tailored experiences that they will surely be willing to tell others about.
Incentivize, Reward & Recognize Good Referrals
Another thing we have already mentioned earlier is that you need to incentivize these customers (or, exclusive members) in return for their recommendations and positive reviews.
These incentives do not even have to be monetary rewards. Instead, you can offer:
💡 Discount coupons for their next purchase.
💡 Early access to sales, exclusive deals, and the latest products.
💡 Lifetime customer support, free product upgrades, etc.
💡 Recognition on your business websites, and social media platforms.
Be Transparent With The Brand Advocates
Along with giving the rewards and recognitions, you need to be transparent about your referral marketing programs and any added policies that you might have. It’s best if you let your customers know of the following:
💡How the marketing program will work and how they will be helping your business.
💡How the information they provide will be used or stored, etc.
Create Referral Marketing Strategies & Boost Business Growth
So far, we have covered the basics. Now, we are going to walk you down the tried and proven steps of creating effective referral marketing strategies.
While a majority of customers are willing to advocate for your products and services, only a few actually do. But not to worry, because there are also a few steps you can do to improve the chances of your customers referring your services to their friends, peers, and family members:
🎯 Set Up Good Referral Programs With Generous Rewards
Customers will sometimes gladly promote your company to their friends and family just because you ask, but most of the time, they will need a little nudge. These nudges are generally in the form of rewards, special offers, incentives, and other forms of encouragement.
This is why one of the best things you can do for your referral marketing efforts is to put up a robust, strong referral rewards program. And to build a program that actually drives conversions, you need to make sure you understand what your customer base needs.
Let’s take the massive brand Tesla as our example. The company has created more than nine separate referral marketing programs. Among them, in one such program, they offer the referrals $1,000 credits in their personal Tesla account and an astounding discount of $1,000 OFF for the referred person. Another of their campaigns offers up to 100% discount on specific cars if a brand advocate can refer to and bring in enough new customers.
🎯 Create A Dedicated Referral Marketing Landing Page
When you have created a program for this marketing strategy, you need to set up a web page on your site dedicated to the campaign. This is where you should include the details about joining your company’s referral or ambassador team – how customers can join, what they might get in return, any related referral links that need to provide for their referred friends and family.
🎯 Send Targeted & Personalized Emails To Build Relationships
We have found that research reports have revealed that for more than 59% of customers, emails are the preferred marketing and brand communication channel, garnering the most engagement.
So a referral marketing strategy you can go for is to send out personalized emails to a targeted audience and inform them of existing referral opportunities or programs within your company. Ask them to recommend your company to others, and also let them know of the benefits they will receive.
To look at an example, we have ReadyTalk, a cloud communication service provider, which successfully revamped its referral marketing program by sending more targeted messages to its customers. These emails offered rewards and incentives for different recommendations that they would provide, such as writing reviews or sharing related content on social media platforms. These successful email referral marketing strategies help the company bring in 183 referrals within the first 2.5months alone and additionally, closed 33% of those leads almost twice faster.
🎯 Offer Excellent Customer Service & Support
One of the best ways to encourage your referrals to recommend your company, products, and/or your service in their network is by providing your existing customers with constant, dedicated support. To really stand out, try to figure out ways in which you can exceed the customer’s expectations.
Users would love to talk about any exceptionally well service or support they receive from a brand; it automatically becomes one of their top favorites. So, when aiming to provide excellent customer support as a form of referral marketing strategy, you can focus on:
💡 Being responsive and readily available: Make sure you’re constantly staying on top of things and your support team is available to help the customers 24/7. Check out this blog to learn about all the skills your support team needs to know for the best results.
💡 Make the customers feel important: Customers who feel appreciated and have a great experience from your company will always go the long mile to advocate for you or refer your brand. You can send personalized emails or gift cards for their birthdays, send thank you letters, and more.
💡 Be sincere and acknowledge your mistakes (if and when you make any): Customers appreciate when you own up to your mistakes and be sincere when you or your team is interacting with them.
🎯 Leverage Your Social Media Platforms & Connect To Influencers
Once you’re done with these, leverage all social media platforms. Grow an engaged social media follower base first and then, promote your referral program through high-quality content.
You can host giveaways and contests for the referrals. For example, these days you will find many brands posting several marketing campaigns on Facebook or Instagram, where they ask their followers to share their posts with interesting captions and stories. Then they offer exclusive rewards for the winners. And, in most cases, these garner a lot of attention.
You can also reach out to influencers on different social media platforms and ask them to influence their follower base and audiences. Their recommendations are sure to bring you a lot of leads, new customers, and conversion.
🎯 Encourage & Promote User-Generated Content
Another referral marketing strategy you can use is to encourage your customers to share user-generated content. Ask your referrals and existing customers to share photo reviews, videos, or Instagram posts promoting your products and services.
Once they do, visualize and promote the content provided by them on your website or the product page. In this generation of online shopping, such positive, ‘real-life’, user-generated reviews left by existing users on your eCommerce store website is the best way to gain trust from potential customers and promote your business.
And use the other strategies mentioned above, such as providing rewards and incentives to appreciate the customers or referrals that do.
Take Your Business To Next Level With Referral Marketing Strategies
And with that, we would like to conclude our complete guide on how to take your business to the next level by creating excellent referral marketing strategies. We hope this blog was a help to you. Let us know if you use any of our suggested strategies, or if you have any others that we could learn from; feel free to comment below and get in touch with us.
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