Referral Marketing

Alongside growing existing customer business, referral is the “low hanging fruit” of new business development

Referrals are the most prized type of lead and are viewed by many as an outcome of the business doing its job. Referrals are also usually a faster path to revenue and have one of the lowest acquisition costs.

Many service providers and sellers believe that if they exceed customer expectations the customer will tell their friends and broader networks. Some might expect social media recognition or endorsement.

While referrals can happen, they may not, even if a customer loves your products and services. How often do you pull your phone out to search for a product or service? The answer will likely be more often than not.  

Research indicates that as much as 80% of customers will say they’re willing to provide referrals but less than 30% do. There are many reasons, but most often it’s a failure to properly prioritise and manage the referral process.

You cannot just expect your clients and customers to invest their time and resources into supporting you. They may not have the tools or the know-how.

Making it simple is key. Consider the following: 

  • Create a hashtag for them that they can share on social media.

  • Provide templates that guide them to your online pages.

  • Direct them to a contact in your business. 

Do not simply have it as “info@” or some other generic description, name a person. People like dealing with real people.

“Your customers and clients will not always be thinking about you and your service.”

Always look for opportunities to engage with your most loyal clients and customers and if necessary, encourage them with incentives to engage in the referral process.

Consider where you want your referrals to take you. Target the most active clients and customers and then prioritise which incentives are most likely to influence action. 

Customers often like to be the first to discover or experience a new product or service under the innovator or early adopter category on the diffusion of innovation - being regarded as special or VIPs. Others are driven by monetary and personal gain.

Regardless of what might motivate your customers and clients, you need to know them and understand their motivations before you reach out for a referral or contact. 

Once you have launched a referral marketing programme, you must actively run it by constantly tweaking and optimising it. 

Some use a software tool to manage their referral marketing. 

There must be a structured system of tracking, monitoring,  testing and changing methods of incentivising. 

You must use some process of measuring the trends, the activities, channels and customer personalities that are giving you the best results.

The referral programme should be integrated into your marketing and business model. If you have a CRM, marketing automation, ecommerce technology, point-of-sale systems, and anything else in your management systems then integrate your referral process as much as possible. 

Referral marketing can also be integrated into newsletters, blogs and social media. By having some referral marketing feature such as a downloadable whitepaper, eBook or asset below the signature panel, you’re adding value and encouraging your readers to engage. 

Finally, focus on under promising and over delivering, be honest and transparent in your dealings with clients and customers, help them with their problems and always thank them. 

The most overlooked opportunity is to simply ask for a referral.

So how do you encourage referrals? 

Neil Parker, VP Marketing at RewardStream recommends the following simple tips to lift your brand and convert referrals into customers. 

  1. Ask for referrals at the right time.

    Making sure you find the right moments in your customers’ journey is crucial. Identify and engage them when they’re feeling most satisfied with your brand, company and products or service offering. 

  2. Make sure you are providing the right incentives

    Providing the right incentives to the right recipient will give you more bang for your buck when it comes to referrals.   

    • Know your customer acquisition cost (CAC) and understand your customer lifetime value (CLTV). 

    • Research and understand rewards your customers might want and what amount appeals.

    • Consider tiered rewards in relation to your budget.

  3. Make referring as easy as possible

    This goes without saying. Don’t make your customers search for your referral program. Feature it prominently and align it with your customers journey. 

  4. Find ways to help your customers overcome reputational risk

    When you give a referral, your reputation is on the line. If the company does a good job – it boosts your reputation. A poor job – your reputation may be hurt. Follow these four simple tips to put your customers at ease and reassure them that their reputation will remain intact. 

    • Make your site secure – if your site doesn’t have HTTPS enabled, speak to IT or your web developer.

    • Prominently feature details about the referral program – legitimise the process through easy-to-find links to dispel any doubts. 

    • Keep it simple – don’t make your referrers jump through hoops.

    • Be good – promote a positive brand image and design a trustworthy, attractive referral program. 

  5. Encourage referred customers to become referrers themselves

    A referred customer already knows the process works and is legitimate. They are up to 4 times more likely to on-refer customers to your brand. Consider employing a refer-a-friend program in a timely fashion to remind them how they discovered your brand. Thank them for their purchase, encourage their first referral within 30 days and remind them again at the 60 day mark.

  6. Remind people who have referred customers in the past to refer again

    This follows on from the point above. Customers who have previously participated in a referral program are ideal candidates. When reminding referrers or promoting your referral program, make sure you include a personal touch – reward them in a way that works for them, not you. 

  7. Engage with your users on social media

    Interacting with your customers is one of the most important steps. By humanising the brand and letting your customers know there’s a real person behind that message makes all the difference. Your customers will be far more likely to refer your brand if they have a sense of personal connection and trust.  

  8. Approach product reviewers and encourage them to become referrers

    According to a survey conducted by Zendesk, positive reviews influence buying decisions for 90% of customers. Ask your customers to leave a review when they make a purchase and thank them afterwards. Having reviews displayed on your website saves your customers from having to seek information elsewhere. 

  9. Train your staff to promote the referral program

    Depending on your marketplace you will have different touch points with your customers. 

    • Online stores – make sure you involve customer representatives in the promotion of the program. As mentioned above, there are several opportunities to interact with your customers along their journey. 

    • Physical stores – make sure your staff are consistently promoting the program for you. Train your cashiers to ask shoppers if they are interested in enrolling in the referral program. 

  10. Build an automated referral program

    If scalability is important to you then this step is key to keep on top of tracking and rewarding your customers. Automated referral marketing systems can monitor referrals on social media or distribute rewards to clients who have referred friends. They also maintain lists of people who have signed up for your programs and can send automatic, timely reminders to customers who haven’t referred for a while.  

Time to implement

Referrals are the most prized type of lead and are viewed by many as an outcome of the business doing its job. Yet most people don’t ask for referrals, or have a process for it.  Follow the tips and tools above to make your referral program streamlined, simple, easy to find and easy to follow. Implemented properly - your referral program will lead you on a faster path to revenue growth with a low acquisition cost.


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