What is Referral Marketing? And why is it so valuable?
Any business would love to gain exposure for their brand. To do this without spending a ton of money seems almost far-fetched.
With the change in consumer habits in the past few years, having a strong reputation and a well-working brand & communication can generate incredible business results.
When we talk about Marketing, we are talking about communication. Especially about value communication.
So, referral marketing is a marketing strategy that transforms customers into a sales channel, using the power of the indications.
Referral marketing can go beyond organic referrals, with tactics and metrics to encourage new referrals.
Is all about converting leads to customers, by using the power of your existing customer base.
Referral marketing is a way for a business to kick word of mouth into gear, so it can take on a life of its own.
Consumers around the world tend to rely entirely on the recommendation of a friend or family member, above any other form of advertising.
No wonder, news, products, and even people, are gaining relevance in historical speed on social networks.
Typically, referral programs prime customers to share, by using some sort of incentive or added benefit to the customer.
So it can be a bit more than typical word of mouth.
In fact, many referral marketing campaigns use referral software to help with reward distribution, sharing, and keeping track of the whole referral process.
Why use Referral Marketing? What are the benefits of using it?
Referral programs work because of trust.
People share the brands they love and trust with their friends and family. It’s important to remember that people don’t share brands with their close ones unless they have a good reason to do so.
This sharing of information is called word of mouth. By providing great service, word of mouth tends to happen automatically.
When a referral program is added on top of the already occurring word of mouth, exposure becomes amplified.
So, Referral Marketing is an example that customers have more and more power and influence over the success of your company.
Thus, it’s essential that your business turns to a great customer experience. That way, people who have had a good experience will share this with others. It’s simple.
Think of this process as a spiraling sales and marketing funnel.
The spiral funnel can be defined as the moment when your customers, those who have already purchased and passed the bottom of the funnel, refer your company to other people, taking them to the top of your sales funnel.
The process becomes a continuous movement. Because a satisfied customer can be responsible for generating even more customers.
How to Expose Your Business with Referral Marketing
If you plan on using referral marketing to grow your business there are a few logical steps that need to be taken in order to guarantee success.
- Provide good customer service
The most important thing you can do when running a referral program is provide good customer service.
The service someone receives correlates to their openness for word of mouth to occur.
So, it’s imperative to give customers something good to talk about.
If you are providing a good experience, for everyone, customers will be more open to sharing you with friends. This is where referral marketing comes into play.
- Think about implementing a referral program
You may have some occasional word of mouth leads being sent in. This probably means the majority of customers are happy with you.
This is a good sign you are ready for a referral program. A referral program can kick the good exposure you are already getting up a notch.
Fortunately, for businesses, there are plenty of great referral marketing platforms out there to help ease the referral process.
Starting a referral program doesn’t have to be time consuming, difficult, or expensive.
In fact, most programs can be up and running in a few days or even a few hours (depending on the complexity) with a good referral platform.
As soon as the referral program is running, people are motivated to share your business. Motivation comes from any incentives that might be given to referrers.
Motivation can also come from businesses simply asking for referrals, or promoting their referral program – which primes referrals to occur.
- Have customers spread the word on your brand
Referral marketing programs are stimulating for everyone involved. And, often provide many more shares than the typical, unprovoked word of mouth.
This happens for a few reasons, one being an incentive to refer, and two it acts as social currency making the sharer seem ‘in the know’.
The last big reason is that sharing is simplified. With most referral marketing programs, sharing is made easy. Typically, the referral marketing platform allows customers to quickly share via social media, email, text, etc.
To top it off, the referral message is often provided by the business to customers, so sharing is a simple click of a button. Because the process is easy to use, its power sharing occurs.
Lastly, watch your brand exposure increase.
There is a slight virality about referral programs, referrers almost act as brand advocates. Think of it like this, multiple people will be talking about your brand online, through email, and in person.
Therefore, exposure is bound to happen. Oftentimes customers will refer to more than one person.
They may even share their referral link and information about your business to all their friends on social media. Then their referrals become customers and join the program to refer their friends.
If your business is well liked, the referring cycle can go on and on. Even if not all referrals convert to customers, those people are now aware of your brand.
Having a referral program is like having an army of advertisers.
The best part is, many referrals tend to fit your business’s ideal customer (most commonly people share with their friends who they know need/want what you have).
Referral Marketing Increases Brand Exposure
It’s been found that referrals make the best customers as well as the people referring to them. Not only do they shop with you more often, but they remain customers longer.
To have customers rooting for your success comes with some added bonuses. One including a lifeline of referrals.
On the other hand, bad recommendations can spread even faster among the public, when a good user experience is not or is not offered.
For this reason, always pay attention to what your consumers are communicating about your business, ask for feedback, implement improvements, and demonstrate that you truly care about that relationship.