Referral marketing aims to incentivize existing customers and brand advocates to tell others about a brand’s products or services. It has proven time and again to be an effective mechanism to acquire high-value clients at a low cost. If executed properly with the help of software from Talkable, referral marketing will deliver sustainable and scalable results that can help brands and businesses grow their revenue and customer base with consistency. Still, referral marketing is an evolving strategy that continues to change the way brands approach their marketing efforts. This article provides a look at the many methods and angles where referral marketing is utilized in a wide variety of scenarios.
Referral marketing programs can be a significant driver for customer acquisition. For some US companies, 65% of sales happen through referral marketing. The premise behind a referral program is to empower existing customers to provide offers on behalf of a brand to their own network of friends, family, and acquaintances. While the terms of a referral program can be constructed in a variety of ways, the person receiving the offer typically receives a discount of some sort to incentivize a purchase and the referrer receives a reward (such as store credit) for each successful referral purchase. This is a win-win-win scenario for the brand, the referrer, and the new customer, and allows the brand to focus less on lead generation and more on building a better business and customer experience.
Referral programs offer several distinct benefits when it comes to generating revenue through both new and existing customers.
When it comes to customer acquisition strategies, it would be challenging to find a more cost-effective approach than a well-developed referral program. Not only are costs fixed (as mentioned above) but it empowers and inspires action from a brand’s loyal customers and brand ambassadors. A referral program also boosts a brands visibility on social media and within real social groups, generating further awareness and priming the filter for more revenue opportunities. Here are some additional reasons why a referral marketing program is the best bet for a thriving customer-acquisition strategy.
To read several more advantages to utilizing referral marketing as a customer acquisition strategy, click here.
Referral programs are versatile and applicable to a variety of different businesses, and they are uniquely suited to help eCommerce businesses increase leads and drive sales. With Talkable serving as the foundational platform, referral marketing can easily be integrated into a brand’s existing online presence.
For more ways that referral marketing enhances customer acquisition for ECommerce businesses, click here.
The use case of referral marketing programs goes well beyond B2C physical products. It is highly effective with service and information-based businesses as well, such as educational services. The online-learning market is growing rapidly, and it has been forecasted that revenues for e-learning will grow to $325 billion by 2025. This means that there is a lot of opportunity for financial success in educational courses, services, and programs - however a key hurdle is always marketing such businesses. Traditional approaches to customer acquisition in this industry often include content marketing (giving information away for free), email marketing, and traditional paid ads. While these can be executed at varying levels of success, we believe that referral marketing offers an opportunity to reach highly targeted prospects at a much more sustainable rate.
We believe that one of the best ways to market a service-based business (especially within education) is to leverage the influence of those customers who are highly satisfied with the service. Those who have taken part in an e-learning program that helped them achieve great results or a positive transformation will be eager to share how much they love the service and will not hesitate to refer others who they think could benefit as well. Referral marketing is conducted by existing customers amongst the personal relationships that they already have. This personal aspect is so important within all forms of referral marketing, as there is inherent trust between direct contacts and friends. This recommendation from a trusted source carries much more weight than brand-driven marketing and advertising.
Our statistics indicate that an education-based business can gain a 3-15% sales increase with the use of referrals. With this influx of revenue, it is a good idea to reward and incentivize the referrers as a “thank you” for their invaluable contribution to expanding the business. Rewards can include gifts and giveaways, points to redeem for future purchases, store credit, discounts, and more. These rewards can help encourage referrers to continue to share the offer with their network.
An e-learning business must have crystal clarity on who their audience is and what they want. This will directly inform the courses or services that will be created to add massive value to this audience. Once the product has been proven and has begun to deliver positive results and feedback, referral marketing can take the reins of continuing the momentum that has been established.
From Beauty & Cosmetics to Fashion and Furniture, Referral marketing is a proven strategy across a variety of industries:
We know that referral marketing programs can make a significant impact on a business’ customer-acquisition success, and to a certain extent a playbook of others’ successes in the space can be followed to accomplish similar results. However, referral and word-of-mouth marketing practices generally do not remain static and old approaches may accelerate, shift, or fade away over time. Similarly, customer behaviors and tendencies can change over time as well. This is why it is important to always be open to change and experimentation within a referral marketing program, as well as keeping a pulse on trends in the industry.
How can a brand use referral marketing programs to set themselves apart from the competition? Here are a few referral program ideas that will help give brands a boost to their customer acquisition efforts.
For more referral program ideas and best practices, click here.
When it comes to referral marketing, the possibilities for promoting and delivering value through the program are endless. As a form of word of mouth marketing, a brand should strive to develop a program that is worth talking about. This will make it easier for an audience to share information (and be excited to do so) and help the brand market the program.
By focusing messaging on the rewards and the value that customers will receive by participating in the program, a brand clearly shows the return on investment for the customer. There should be no confusion as to what the benefit is for both the referrer and the person receiving the referral. Fortunately, the incentives are customized by the brand and each campaign can be constructed creatively. This allows brands to always deliver rewards that are meaningful and desirable to their customers, further demonstrating the benefit of doing business with a given brand.
Referral marketing programs do not have to be static, either. In fact, it is encouraged to experiment with different modifications to campaigns to determine what methods perform the best with a given audience. Brands can also modify their rewards for limited-time offers to rally engagement around a cultural moment or event that has particular significance to a brand’s audience. Whenever a campaign concludes, brands should fully evaluate the results before embarking on a new campaign so that key learnings can be implemented. Fortunately, Talkable’s Customer Success team can offer ongoing support and provide recommendations to ensure that all campaigns are optimized and effective, regardless of shifts in approach.
When a friend sends through a referral marketing offer to a friend via email, there is a high likelihood that they will take action on it. This is, in part, due to the personal nature of email and the direct outreach which is much more effective than posting it broadly on social media (for instance). Impressively, Talkable’s email conversion-to-purchase rate sits at 94.4%! We recommend sending an email blast once a quarter dedicated to driving referrals and engagement from your existing customer base. Here are a few tips to get you started:
Beyond the nuts and bolts of how one should properly construct an email, remember that it is also important to be personable and allow the brand’s personality to shine through. Every email communication is a building block for the brand and customer relationship, so brands should value and consider the consumer experience when crafting an email.
For more tips on using email to amplify referral program efforts, click here.
As brands realize the importance of deploying an effective referrals program, they should first determine that their product or service is of a high-enough quality to be honestly recommended by their existing customer base. Depending on the business, good customer or after-sale service should be in place as well. A referral marketing program alone cannot sustainably improve a business’ customer acquisition results if the product is not up to par. However, if a brand is proud of their product and their customers love it and naturally would recommend it to their friends, it is time to develop a defined referral marketing strategy to help guide their efforts.
There is much to consider when it comes to constructing a referral marketing strategy. Within a referral marketing strategy, brands should determine how the mechanisms of your referral program will work and what roles different stakeholders should play. Some examples of referral marketing strategy considerations include:
While these are just a few things to consider, a referral marketing strategy should be created to help brands have clarity in their approach for earning customer referrals. Operating without a strategy is akin to setting off for a journey without a map. Talkable is here to help if brands need additional assistance in determining best practices for successful referral programs.
Referral marketing does not always need to do all of the heavy lifting by itself. In fact, when it is used in tandem with an effective loyalty program the results can be even more substantial. It all comes down to brands having a clear relationship marketing strategy that deepens the connection with their customers and improves the likelihood of increased sales over time. Within this relationship marketing strategy is where referral and loyalty programs will reside.
Referral marketing will allow a brand’s most passionate customers to share relevant deals and offers with their existing network, while loyalty marketing helps reward customers (both old and new) for their continued patronage. Loyalty programs frequently allocate ‘points’ to customers depending on the amount spent on purchases. These points allow the customer to ascend the ranks of different perks and rewards, providing both status and tangible benefits for their loyalty. Loyalty marketing incentivizes repeat purchases with a brand, and serves as an added value proposition for their customers. So while referral marketing helps to expand the customer base, loyalty marketing helps retain customers and drive continued purchases. This makes the two programs somewhat of a power duo, as both programs add value to the customer in a mutually beneficial dynamic.
There are several easy and effective methods of using referral and loyalty programs together to tap into the benefits of each program. A brand could give members of its loyalty program the opportunity to unlock the ability to make referrals (and earn referral rewards) at a certain tier of the program. This both incentivizes involvement in the loyalty program while also ensuring that those entering the referral program are loyal customers who can speak authentically regarding a brand's products or services. Additionally, a brand could offer loyalty points for successful referrals, or create a referral activity leaderboard for their loyalty members. Running the two programs through one provider allows for consistency in offers, messaging, and total control over the number of offers on the site.
Whether you are new to this concept or a veteran of referral programs, hopefully this article has helped clarify the many facets of referral marketing. Well-executed referral programs can make a significant impact on customer acquisition and retention, and boost a company’s revenue in the process. Even better, referral programs can help deepen a brand's connection with their customers, and customers can receive regular rewards to incentivize ongoing referrals. Talkable makes it easy for your business to establish a referral program, and for your passionate customers to make referrals on your behalf. If you are ready to get started, book a demo with Talkable today.