Referral Marketing — Discover the Power of Word of Mouth Promotions
Referral Marketing has emerged as one of the best methods of promotion. “Customer is the king”, is a statement that led to the increasing success rate of referral marketing as this type of marketing is solely dependent on customer experiences and satisfaction. Campaigning by proving rewards and prizes for spreading a good word about a quality product or service can never go wrong. With the impact of social media in today’s world and the power of “word of mouth”, this is the best marketing strategy you can go with.
Stats in favor of referral marketing
What more do you need than proven facts to start your own referral campaign? Sharing experiences and letting friends and relatives know about the product or service is a very common thing. This is grouped as a marketing strategy called referral marketing. Various referral campaigns and programs are held to market a particular product or service. 65% of new businesses come through referrals according to New York Times. Studies also show that customers are more likely to buy a product referred to a friend and the rate of such purchase is 4 times more than normal, and 92% of respondents trusted referrals from people they knew.
Businesses where referral marketing can be used
Referral campaigns can be used to market any type of business as it has a wide scope. From SMEs to large scale companies, this type of marketing brings in desired results for businesses of all sizes. Service-based organizations such as restaurants, travel agencies, banks, gyms, and hospitals are majorly benefitted from referral marketing. Product based companies such as specialty stores and clothing brands also employ this type of marketing. With the power of social media, online companies also benefit from this type of campaigning. This is faster and helps in widening the market. Non-profit organizations use this marketing strategy to increase the number of donors. They also do this using a joint venture with for-profit companies.
Effective Referral Campaigning Techniques
Keep it simple and direct
For effective referral marketing, it is very important to keep it direct and simple. You have to make sure that you express what you want in a straight forward manner. You could provide rewards and prizes for customers who refer their friends and relatives. Many leading companies use this type of marketing campaign where they provide rewards in the form of discounts and freebies. You can also provide reward points which can be redeemed for future purchases. This will also help in bringing in new customers and in customer retention. A simple and direct expression for bringing in referrals combined with rewards can seldom go useless and is in fact motivating.
Email referral campaigns
Send your customers regular emails of referral links which redirect to landing pages that they can use for referral purposes.If 3 people visit your landing page and one person signs up, you have a 33% conversion rate. One thing you need to be mindful of here is the time you choose to send such emails. You can either send it as soon as they get a delivery of the products or after some time. The time gap is to let them use the products and judge them. If you send an email after such time gap, it is likely to be more successful. The rewards for referral should also be mentioned in the mail. The other problem here is the technological limitations. The mail you send out must be compatible with all the devices and it should also be directed to potential customers.
The influence of technology is inevitable in any aspect. Database management systems are very much useful to foster referral campaigns in multiple ways. It is normal for a business to have regular customers, not-so-regular customers, and new customers. A database listing of all such customers will make things organized, and save time and energy by increasing efficiency. Prevention of fraudulent referrals, handling details of a number of customers, marketing via social media, effective marketing to the relevant audience, identifying a potential audience and fostering marketing by implementing market segmentation are a few such advantages that you can enjoy with professionalDBA services.Updates, change of various fields and deletion of old and irrelevant information can be done using database management services. This is where DBA services become useful in referral campaigns.
Identifying potential referral sources
Treat your regular customers to lunch or refreshments and keep them updated on what is new in your business. You never know, they could post pictures on social media and this will become indirect referral marketing done in one of the most direct ways possible. This will enhance the market for your products. Who doesn’t like to be treated like a VIP? Show them what it means to be your regular customer. Thus, identifying potential referral resources is a way of showing your gratitude and you also getting to market your products.
Client list and case studies
Publish a client list. Do not be skeptical about this as this can never lead to loss of your clients. Your clients will never leave you and choose your competitor, especially if you provide good products and services. Make sure you get your clients’ consent before publishing the list. This also helps in new potential customers notice you and they will also be able to see what sort of clients you work with. This will increase the trust and credibility of your business. Case studies are to be updated now and then as a prospective customer could have an acquaintance in your existing client base and this might get you a new business. Make sure that these case studies are showcased in all your proposals, bids and presentations.
Studies show that the top left area of a web page is the most viewed area. You can just insert a tab that invites referrals. This is implemented by many businesses in the present days. The customer just has to click on that tab and will be redirected to the referral landing page. By increasing such visible tabs, you can increase the amount of referred customers.
The best example of a company that uses referral codes is Uber. Referral codes are a win-win to the person who refers, the person who was referred, and your company. The person who referred and the person who was referred get respective rewards, and you get a new customer.
The points above are a few referral marketing techniques. Now let us see why reference marketing is worth the hype.
Reasons why referral marketing is worth the hype
Increasing customer satisfaction
It is relatively easy to understand a customer who has come in by way of referrals. You can easily read the mind of such customers and provide products or services based on their need. Customers who come via referrals are likely to be retained when compared to other customers. Customer satisfaction obviously leads to increased sales and reputation.
One referral leads to another
If one customer refers another customer, it does not stop with that. It is a continuous process. Once you establish your stand and show what you are capable of, there might be an array of referrals approaching you.
It is a win-win situation for all the parties involved. This is where you should be mindful of the rewards that you promise to give. The calculation of reward points and the tactics involved within are to be carefully observed. You should make sure that it should be beneficial to you and the customers.
Another reason why referral marketing is awesome is because you deliberately influence your customers to refer your business. Out of all your customers, if 83% are satisfied with your products or services, only 17% share such experiences. By the indulgence of referral campaigns, you can increase the number of referrals, which is definitely advantageous.
Large scale management by use of software
The reason why all the businesses do not resort to referral campaign is because of the requirement for large-scale management. This is where custom-built apps and referral apps come to the front stage. DBA services come in handy in the scenarios where business is large and handling referral campaigns become harder.
Examples that showcase the positive results of referral marketing
There are various famous cases, where referral campaign was used as a marketing strategy. The result was a considerable increase in the Return on Investment. Some very famous examples are Airbnb’s referral program which involved travel credits for referrals, Uber’s referral campaign where discounted rides are offered, Amazon prime’s referral program where you are rewarded when your referred friend makes a purchase are a few such famous examples.
Budgeting for a referral campaign
With all things said and done, one major thing to consider is the cost for referral campaign. You have to calculate how much you can afford on the referral campaign, the number of human resources you will need, and the return you expect from the campaign. If technological solutions are to be used, you should consider the cost of the software intended to be used, cost of rewards you are planning to give and the cost for the persons involved in the administration of such referral campaign.
Referral Campaigns for expected ROI
With proper planning and budgeting, referral campaigns tend to offer the expected return on investments. The success of your referral campaign depends on customer satisfaction and the quality you provide.
If you liked this post, check out our Small Business Guide to Referrals.
About the Author
Sujain Thomas a pioneer in the field of DBA services. She has more than 5 years of experience in helping out customers with their referral campaigns. She has researched on the impact of dba services in referral marketing and has submitted various research papers on the same.