Tons of businesses out there have successful referral campaigns. Why not yours too? While launching your own referral strategy may seem intimidating and overwhelming, we are here to help guide you through the process from start to finish.
What Is Referral Marketing?
The referral process involves gaining new customers by incentivizing your existing customers to spread the word about your company to family and friends. In an ideal world, brand ambassadors would make this happen organically without any intervention. However, companies often need to implement marketing tactics and programs to harness the true power of this concept. If implemented well, this can turn into a win-win situation for you and your loyal customers.
What Are the Benefits of a Referral Marketing Campaign?
There are endless benefits of initiating a referral marketing campaign for your brand. Here are some of the biggest factors that you may want to consider:
Referral Marketing Is Cost-Friendly
Although referral marketing may cost you in terms of free products or credits, it doesn’t cost you in the traditional sense wherein you’re paying money to another entity for traditional marketing purposes. As a result, you can rest assured that you’re getting a solid ROI on your customer referral programs.
Referrals Drive Conversions
You’re able to get such a great return on your investment since referrals drive conversions. Research shows that 14% of people that visit a referral landing page will convert. This is in contrast to conversion rates below 1% for other types of marketing.
Referrals Generate More Revenue
Again, referral marketing provides you a great return on your investment since referrals tend to generate more revenue. At the end of the day, everything comes down to money — which you will definitely get from your referral program. In fact, recent studies suggest that referred customers spend 200% more than the average customer.
Referrals Increase Customer Retention Rates
Referral marketing boosts customer loyalty and helps you retain your best customers. For insurance, referred customers have a 37% higher customer retention rate when compared to customers acquired through other means.
Referrals Boost Brand Awareness
Even though referrals offer a relatively high conversion rate, those you don’t convert aren’t lost. Instead, referrals that don’t convert are still beneficial for your brand in that it boosts brand awareness and reach.
How to Launch Your Own Referral Marketing Campaign?
Here are the steps you need to follow to successfully launch your own referral marketing campaign:
Step 1: Choose Your Target Referrers
The first step in launching your own referral marketing program involves identifying your target referrers. Many companies falsely conflate this group with your base customer group. However, not every customer will be willing to refer others. Instead, you should target your most loyal customer group by looking at purchase histories, social media engagement, and customer feedback.
Step 2: Choose Your Type of Referral Program Rewards
The second step in launching your own referral marketing program involves choosing your referral program rewards. These rewards are going to incentivize people into participating in your program. There are several different approaches that you can take here. For instance, you can offer product-based rewards. You can offer two-sided incentives for both the referrer and the referred. Finally, you can create a tiered incentive system to encourage multiple referrals.
Step 3: Get the Timing Right
The third step in launching your own referral marketing program involves getting the timing right. You shouldn’t just randomly ask customers for referrals. Instead, you need to be more strategic about your timing.
For instance, you may want to ask for referrals after they have made a purchase. Conversely, you can wait until they leave a great review for a product to ask. Maybe you decide to ask them after engaging on social media. No matter which approaches you choose, make sure that it’s clearly laid out for a cohesive strategy.
Step 4: Promote Your Referral Program
The fourth step in launching your own referral marketing program involves promoting it. If people don’t know about your program, odds are it won’t be very successful. Effectively promoting your referral program goes beyond simply reaching out to customers directly one time.
Instead, you should advertise your referral program on your website and across social media platforms such as Facebook, Instagram, and TikTok. You may also want to send out email reminders for customers who haven’t yet taken advantage of the program. You can also write about them in a blog or several other marketing channels. Any way that you can get the word out to your customer base is best.
Step 5: Track and Measure the Results
The fifth and final step in launching your own referral marketing program involves tracking and measuring the results and success of the program. You need to monitor metrics like referral rate, participation rate, referral cost, churn rate, and average order value.
Monitoring these metrics manually requires a lot of time and effort. So instead of doing it manually, you may want to consider using referral marketing software to do all the heavy lifting for you. There are programs out there specifically designed to help you manage a successful referral program. You can also monitor your metrics through Google Analytics.
Unless you’re a total referral marketing genius, odds are that you’ll have to make adjustments to your referral marketing strategy along the way for better results. This definitely isn’t a big deal so long as you’re acting proactively rather than reactively due to failing marketing programs.
Examples of Successful Referral Marketing Campaigns
Although we have covered a ton of information about how you can create your own referral marketing campaign, sometimes it helps to look at real examples of how these programs work in practice to business referral ideas for your business. So feel free to use some of these examples of successful referral marketing campaigns as inspiration:
1. Uber
Uber’s referral program is incredibly easy to use as it’s built directly into the company’s application. It is able to promote this program on a free and frequent basis whenever a user opens the application. From there, all the customer has to do is use their unique code to send to friends. When this code is used, they receive credit for their next ride.
2. DropBox
DropBox takes a different approach to its referral program through products rather than credits. They offer up to 16 GB of free storage space within their system to users that invite their friends to use the platform. The joining user receives this special product offering as well. This program was so successful that it led to a membership increase of over 60%.
3. Stitch Fix
Similar to the Uber approach, Stitch Fix uses discounts or gift cards to incentivize users to refer their friends and family. Each Stitch Fix user receives a unique link that they can send to their referrals to sign up. For each person that signs up with that link, the user receives $25 in Stitch Fix credit that they can then use to purchase more clothing.
Final Thoughts on Referral Marketing
When done correctly, referral marketing can be extremely valuable for any business looking to increase conversions, revenue, customer loyalty, and brand awareness. Since everyone strives for improvement in these metrics, we believe that referral marketing can be effectively tailored to fit any business in any industry.
If you’re stuck or unsure about how to develop the right referral marketing program or affiliate program for your brand, you need expert assistance. Greg Gillman can help you achieve incredible results within the realm of referral marketing and beyond. He has helped his clients generate more than $4 billion in annual revenue and he can help you achieve the same level of results.
Sources:
11 Simple Ways to Incentivize Customers to Refer Friends and Family | SmallBizTrends
