Now that you have asked for the referral, what are you going to ask for? Analysis from a recent B2C study, revealed that 62% of survey respondents cite referral as being one of the most effective strategies due to its ability to generate tangible results, compared to other marketing channels. To be super effective, it requires some forethought and planning as you start to build and design your referral marketing program. Consider it essential to do these two things as you create the foundation: first, determine your objective, and then, define your target audience.
Step 1: Identify your objective (The What)
In referral marketing, often this step isn’t considered or planned for. When you are going to ask for the referral, what is it that you want exactly? What is the end goal? More reach? Repeat customers? Increased Sales? Take some time to think about this and what is suitable for your e-business. Be sure to determine an objective that you can measure- one that will showcase your referral marketing program’s success. This objective will guide how you design the offer and what the call to action is for your campaign or program.
Let’s say you are an activewear clothing company, you want to use referrals to generate new purchases. Your repeat purchases are high as you have somewhat of a cult following- your happy customers come back time and time again for more.
Step 2: Define your target audience (The Who)
Being smart about defining your target will ensure your program’s success. Know your audience. Who do you want to be talking to? Existing customers? Advocates? Influencers? At Talkable, we advise if you are including advocates, to plan to divide your referral program to allow it to be accessed both on a public, standalone landing page, as well as post-purchase. Know your audience. Be sure you not only identify your potential customer, but customers who would be most likely to provide a referral.
Back to our activewear clothing example, you have identified the objective of new purchases. For this campaign we are going to target those who purchase 4+ times a month, incent and encourage them to refer a new customer. This target audience is already made up of brand ambassadors and believers, and are likely already talking about your product and/or brand.
Remember, referrals have the highest margin and best conversion rate from prospect to purchase. They also have a higher lifetime value and better retention. Your referred customer is expected to have at least a 16% higher lifetime value than customers acquired through other means. So plan for this program. Execute it well. Be thoughtful on how best to design the offer to reach your desired outcome.
You too can have a well-executed referral marketing program with higher conversion rates, shortened sales cycles, and improved customer retention.