What’s the word on referral marketing? How to create a referral marketing strategy
We’re living in a world where advocacy is everything.
Let’s look at the numbers, shall we?/
- Companies with a referral program close deals faster than those without.
- The lifetime value of a new referral customer is 16% higher than a non-referral client.
- 92% of respondents trust recommendations from people they know.
It’s no wonder that every organisation — from sensational startups to worldwide enterprises wants to know how they can snag more customer referrals. The only problem is, asking for referrals can be complicated. After all, you don’t want to come across as annoying, or desperate.
The good news is that your customers are happy to advocate on your behalf. According to one study, 83% of satisfied customers say that they’d be happy to refer a company to friends, industry peers, and colleagues. The only problem is — only 29% of those customers make that referral.
So, what gives?
For most brands, the problem is a lack of referral marketing strategy. If you don’t have the right plan in place to cultivate your ambassadors and ask them to share content on your behalf, then their powerful messages go unheard and unseen. A referral marketing plan is the key to capitalising on the undeniable power of word-of-mouth marketing.
Whether you’re reaching out for the support of a professional referral marketing company, or you’re going it alone, the following guide will give you the support you need to launch the best referral marketing ideas, leverage your loyal customers, and power-up your profits.
What is referral marketing? The benefits of a referral marketing plan
Let’s start with the basics of referral marketing.
Over 2.4 million conversations related to brands take place in the US every day. This means that people really aren’t shy anymore when it comes to talking about company experiences. All you need to do is figure out how to leverage that chatter for your brand.
If you can sway the conversations your customers are having in your favour, then you can benefit from:
1. Precision-targeted sales
If you’ve struggled to get the right audience onto your landing pages in the past, then referral marketing could be the key to your success. After all, about 14% of the customers that visit your referral page will actually convert, which is a much higher rate than most digital marketing strategies have to offer.
With a referral marketing strategy, you can make sure your message gets out to the people in your user persona list, who are most tempted to work with your brand. These are people in the right demographics, the right location, and the right stage of the buyer journey.
2. Improved Trust
Today’s customers are more empowered than ever. Before they decide about how they want to spend their cash, they need to make sure that they can trust the brand they’re working with. Your clients are already looking for evidence that they can trust you online in the form of reviews and testimonials.
Who better to convince your customers that they should buy your products than their very own peers? After all, we’re far more likely to feel comfortable buying something that our friends recommend, instead of deciding based on advertising materials.
If you need proof that a referral marketing plan will create trust, just check out this Neilson Trust Study saying that referrals are the most respected form of advertising by far.
3. Market reach and brand recognition
In the past, referrals were great – but they weren’t too much of a big deal. Without the internet to add volume to the words that people said, a customer’s review could only go so far. Of course, now that we’ve entered the digital world, there are more ways for people to make their voices heard than ever before. Today’s clients can share their opinions on public forums, Twitter, or even Instagram.
Because referrals have such a huge reach, it’s easier for companies to accelerate their brand marketing strategy and improve recognition for their company. For instance, if a customer uses a branded hashtag when referring your company to their work friend, then everyone in your network will be able to see this positive feedback.
Wooing word of mouth: Tips for the perfect referral marketing strategy
You know why referral marketing strategies are valuable, now you need to figure out how to get the most out of your own plan. Referral marketing is all about putting your message into your customer’s mouth. Essentially, you want them to tell other customers all the positive things you’ve already been saying about your company.
While you can’t force people to say what you want them to, you can make it easier for your clients to share the positive comments that can boost your company profits. After all, today’s customers are compelled to talk about their experiences. People want the social points that come with visiting a new restaurant and talking about it on Facebook or sharing a pic on Instagram.
All you need to do is give your clients 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 perfect referral marketing plan.
Step 1: Get closer to your clients
Before you ask your customers to do something for you, you need to make sure that you have a strong relationship with them. Even if they are happy to talk about your company with a review, or testimonial, they might not want to put their reputation on the line by referring you to a friend too early in the relationship.
A good way to nurture endorsements is to ask your customers to join an exclusive “VIP” club of members online. When they sign up, you can ask for a few basic details like where your clients come from, what they like most about your brand and so on. This information will make it easier for you to create tailored experiences with your referral strategies in the future.
Step 2: Reward and recognise
Of course, your customers won’t sign up to these membership programs out of the goodness of their hearts. They’ll need something in return. Real brand loyalty is the perfect precursor to a referral strategy. However, that doesn’t mean you can’t make your customers feel more strongly about your brand with a few rewards.
If you’re worried that monetary rewards or free items might cheapen the referral marketing experience in some way, remember that you don’t have to actually pay people to refer you to their friends. Instead, you can offer:
- Discount coupons for their next purchase.
- Early access to sale events.
- Exclusive perks and product upgrades.
Step 3: Build on affinity and transparency
Aside from letting your customers know that they’re going to get something in return for referring your brand, you also want to make sure that you’re building strong relationships with each advocate. The best referral marketing programs take advantage of the affinity that exists between a customer and a company.
Remember, today’s customers deliberately connect themselves with brands that share their values and make them look better in the eyes of their peers. With that in mind, you’ll want to make sure that you’re highlighting the parts of your identity that matter most to your customers. For instance, when you’re asking people to join in with your referral marketing plan, let them know that they’ll be giving something back to the environment because every referral leads to a new tree planted or another dollar donated to charity.
At the same time, be transparent with your requests. Let your clients know:
- How the referral process works.
- How information they provide is used.
- What will happen to the person they refer.