Do you want to expand your business without spending much on advertisement?
Do you want to try something new without losing focus on your business? Are you following the right marketing strategies?
If you have any of these doubts, then do read this article till the end. Indeed, by implementing a growth marketing strategy to your online business, you will increase your number of users/customers without too much effort.
In this article, we will learn different referral marketing strategies that will give a solution to all your problems.
Before moving towards referral marketing strategies, we should have understood its basics first.
What is Referral Marketing?
You might not hear this term before, because we all know it from another name that is word-of-mouth marketing (It can also be called advocacy marketing). Now, you must be wondering why we call it referral marketing, not word-of-mouth marketing. Word-of-mouth marketing is an old way of marketing where people used to recommend their friends and relatives.
But now we all are getting digitized and can recommend these products through online modes.
So word-of-mouth marketing also revolutionized its ways and became referral marketing for businesses.
There are some astonishing facts you should know about referral marketing, and they will help you understand the effectiveness of referral marketing as a tool.
• According to Neilson, 92% of customers are likely to follow their friends and family over the advertisement.
• Recommendations or word-of-mouth marketing leads to 20-50% decision making of the customers.
• Customers who joined after reference have a 16% higher lifetime value.
• People who got referred are four times more likely to buy those products that are recommended by their friends.
Let’s learn how referral marketing works through an example.
Suppose there is a company XYZ who sells books online. XYZ launched a referral program in which they will give $5 as a reward to referrer for every conversion, and his friends will get a 10% discount on his first order.
Now, see how it works.
Step 1: XYZ sends an email to their existing customers, in which they are inviting them to take part in the referral program.
Step 2: The Customer accepts the invitation and gets a referral link to share with his friends.
Step 3: The Customer sends invites to his friends.
Step 4: A friend accepts the invitation, makes himself register in the program.
Step 5: His friend orders a book and gets a 10% discount.
Step 6: Then, the customer will get a message that his friend has successfully converted, and he will get a $5 reward for that conversion.
By following the simple steps above, you will start leveraging the power of growth loops and skyrocket your business growth.
Now, you may have understood what referral marketing is and how it works.
Despite its massive impact on marketing, businesses cannot take its advantages because of the lack of referral marketing strategies.
Don’t worry, we will learn referral marketing strategies too, but before that, let’s learn the benefits of it.
Referral Marketing Benefits
Cost-effective form of marketing.
Referral marketing is a cost-effective method to expand your business. You don’t need many employees to promote your business on different platforms. You can handle them on a single dashboard and can track every activity of every conversion. Referral marketing allows you to decide according to your suitability. You can scale it according to your requirements and your budget.
High reliability.
Reliability is the main factor behind every referral program. Businesses use their loyal customers who can promote their products and services. Loyal customers know your company very well, and they have trust in your product. It’s a fact that when we like any product or service, we strongly recommended it to others. Therefore, the referral program allows them an opportunity to become your advocates while earning rewards in return.
Connect you with the right audience.
A referrer will promote your brand to only those friends who he thinks will use your product. Suppose you have a friend who does online transactions frequently, so you will refer him only to those services that are related to online payment benefits.Therefore, referral marketing helps businesses to connect with the right customers.
If you compare them, if the other form of marketing, like an advertisement, then you will realize that advertisement increases visibility, but referral marketing increases the number of engagements.
It creates multiple chains of customers.
The referral program is not a one time show. It benefits not only in the short term but also in the long run. Once you have launched a referral program, your referrer will start referring to the friends. Once their friends started using your services or products, and also like your products or services.
Then they will even begin to promote your business. So, next time when you will be launching a new campaign for your product, they will also contribute to improving your business growth by becoming advocates as their friend did previously. Before planning for referral marketing strategies, you should have all this in place.
An authentic product or service.
If you want to launch a referral campaign, make sure you have the goodwill of that product among your customers. The product’s trusted quality is a necessity for every referral program. If your existing customer believes your brand only, then they will recommend it to their friends because their friends are purchasing on their trust.The trust factor is the most crucial part of the referral marketing program, so make sure that customers have trust in your products. Know your customer’s choice and then make it best for your customers.
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There are a few ways to measure the goodwill of your products
• Positive online reviews.
• Appreciation mails from your customers.
• Facebook recommendations from customers.
1. Customer support system.
Nowadays, customers are aware of sales after service, if your product is good, make sure that your services are way more useful for them. The quality of services makes you the best among your competitors. Try to support your customers as and when required. The customer support system should be in reach for every customer. Your support speaks about your brand quality. A good support system works as an essential resource for connecting customers and the company.
2. Pre-defined moments.
Business before launching should make it clear that when they have to approach customers. Some companies wooed customers before even they started using products or services. It is a blunder that most of the businesses do. Before contacting any customer, make sure you have already defined the right moment.
Customers will only recommend you when they use it and like it’s quality.
Now, it’s time to learn how you should build referral program strategies?
We are going to learn some referral marketing strategies to make referral campaigns a hit.
3. Decide your incentives.
In referral program strategies, it is one of the essential points you should decide while planning. It’s difficult for businesses to decide on which kind of incentive they should offer. Cash benefit or discount?
It entirely depends upon the nature of products and services. If a customer goes for repeat purchases, then you should go for a discount incentive.
And if a customer is going to purchase it for once and do offer cash benefits because cash benefits will attract customers for future purchases as well.
Make sure whichever benefit you give, do try to provide an appropriate reward to your customer.
4. Choose the discount type.
Here again, you have to choose between types of discounts. There are two types of discounts- flat discount or percentage discount.
These discounts depend upon the value of the product or service.
If the value of the product is high, then you should go for flat discounts.
Suppose a customer purchases a mobile phone of $ 20,000 then considers him giving a $200 discount because when we provide a flat discount, then it’s likely to attract customers.
Similarly, if a customer purchases a book that costs $100, then you can give him a percentage discount. Because in the case of inexpensive products, customers like some discounts, for example, a 10% discount on the purchase of a book.
So, make sure you decide wisely.
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5. Target your loyal customers.
The referral program’s scale entirely depends upon the base of your loyal customers. If you have a good customer base of your previous customers, then make them your advocates. Targeting them will make it easier for you to get potential customers for the future.
6. Easy to refer to your advocates.
Referral programs should be simple and straightforward. People like to share referral programs on social media platforms, make sure that your referral campaign includes social media marketing channels to make it easier for customers.
Suppose if you are a telecom company, then messages seem to be the most straightforward option to share.
And if you are associated with the healthcare industry, then you can go for emails.
Platforms are dependent upon the nature of the customer. Make sure you care about every Customer’s needs.
7. Target them at the right time.
If you want to make your referral program a success, then ask your customers at the right time, at a time they’re happy with your service/product. Ask them after they check out because, at that time, they will not mind becoming an advocate. Because after purchasing a product, the customer feels happy and likely to become an advocate for you. Your marketing strategies should involve this right time to make it a success.
8. Reward your new Customers.
Reward those who have been referred by your advocates. And do send them to thank you mail or messages along with the incentives. Words will not only make them happy but will also attract them in the future.
When you send them the incentive, they feel privileged and have the potential to become your advocate in the future.
These were some referral marketing strategies that will help your business to grow positively. If you want to start a referral marketing strategy, I recommend you reach out to us so we can help you gain viral growth!
Keep learning and experimenting with referral marketing
Implementing a customer advocacy marketing strategy can do wonders for your business’ growth. When it comes to making decisions, we are all influenced by various factors – especially with acquiring or purchasing a product or service. These factors impact our decisions to varying degrees. And since you have learned about referral marketing from scratch, make sure you use this opportunity to expand your reach and customer base.
The key is to keep on experimenting with different referral marketing strategies from time to time because trends and markets change all the time. To help you streamline your processes, You can also use automation systems to build a better marketing strategy in place according to your changing needs as a business. Remember, keep an open mind about learning and Implementing different strategies that align with your vision and goals – whether that be short-term or long-term.
That said, Growth Hackers is an award-winning referral marketing agency that specializes in helping businesses and startups with all things marketing so your business can grow to its full potential. Contact GrowthHackers today to learn how we can help you implement a referral marketing strategy that’s tailor-fit to your business.
