People trust recommendations from those they know, and this is precisely why marketers are embracing referral marketing.
Since we were kids, we’ve been told that sharing is a very good thing. As toddlers, we were encouraged to share our toys; at school we shared the contents of our lunchbox; as teens, we shared our clothes and books and pens.
Now that we’re all grown up, sharing advice and recommendations is how we get through life. Need a new haircut? We ask our bestie where she gets hers done. Need an electrician? We ask our local Facebook group. Want to know if Fiji is a good holiday destination for families? Let’s ask other parents at the school gate.
People trust recommendations from family and friends, and people love being rewarded for their tips, and this is precisely why marketers are embracing referral marketing.
What is referral marketing?
Referral marketing is a strategic marketing technique that leverages personal recommendations to expand a business’ customer base and sales.
It is intentionally designed to influence and promote the natural human desire to share information and opinions by offering incentives.
What are the features of referral marketing?
Referral marketing depends on customers doing the legwork for you, by sharing your social media posts, forwarding emails, or texting promo codes to people they know.
The key feature of referral programs is rewards. They often take the form of discounts or free items that encourage customers to recommend a business.
What are the benefits of referral marketing?
Including referral marketing into your marketing strategy can elevate your brand and bottom line in a number of ways:
1. Referral marketing targets specific audiences
Because your existing customers understand your product or service and know what issue they help with, they are in the best position to recommend you to others with the same needs. This is a highly targeted, and very activated, potential customer base.
2. Referral marketing attracts high-value, loyal customers
Loyalty marketing encourages recommendations from close friends or family, fostering trust and loyalty in new customers, often resulting in higher-value, long-term clients.
3. Referral marketing allows you to measure customer satisfaction
Referral programs can serve as a powerful tool to measure customer satisfaction. High-performing programs with many participants typically indicate a happy customer base, whereas a lack of referrals may suggest areas where you need to improve the customer experience.
4. Referral marketing allows you to expand market reach
With the right incentives, a referral program can dramatically extend your reach in a short time.
5. Referral marketing builds brand awareness
Referral marketing introduces your brand to people you might not ordinarily reach, in a way that resonates deeply, building your reputation, and strengthening your brand.
6. Referral marketing helps identify loyal customers
Referral programs tell you exactly who are your most loyal customers, allowing you to market to them in a more personalised way to increase their loyalty and sales.
7. Referral marketing increases conversion rates
Referred customers are more likely to become repeat purchasers because they already come with increased trust and interest.
8. Referral marketing enhances customer engagement
Referral programs integrate seamlessly with other marketing efforts like email campaigns, social media, and customer service to provide ongoing opportunities to engage with your customers, strengthening relationships.
9. Referral marketing improves retention
Referral programs nurture long-term relationships, as engaged participants are more likely to remain loyal to your brand.
Why should marketers adopt referral marketing?
Referral marketing is one of the most cost-effective strategies for businesses to increase their customer base. In essence, your customers become your marketers and do it for a small cost to the business.
Customers are becoming increasingly distrustful of media and marketing, especially when it comes from the online space, but customers do trust their family and friends, making recommendations from them extremely powerful.
Evidence tells us that referred customers purchase more than those acquired by different marketing approaches and have a higher lifetime value.
Want to know more? Speak to the marketing experts
Assemblo is a full-service marketing agency based in Melbourne, and many of our clients are referred to us by other satisfied clients. We know the value of personal recommendations and we know how to make them work for your business too.
To find out how we can help your business, give us a call on (03) 9079 2555 or send us a note via the contact form below.