Referral marketing is usually a form of organic marketing where the business is promoted to new customers through referrals by older customers, usually in a word of mouth mode. These referrals usually occur spontaneously but businesses can harness the practice in to increase sales by influencing referrals through offering rewards to consumers who recommend the products or services to other contacts, both online and offline.
Online referral marketing is an approach that is internet-based, depending on Software as a Service (SaaS). It can potentially elevate sales, brand visibility and referrals when employed strategically, the prior most requirement being tracking consumer behaviour online, through browser cookies or similar tools. Some of the key advantages of referral marketing include:
- Customers attained through this marketing strategy are better matched to the brand
- The cost is much lower
- The customers gained from referrals bring much more value and contribution
- This marketing strategy doubles as a customer satisfaction parameter. The more customers who are willing to recommend your product, the better the rate of satisfaction.
- Apart from gaining new customers it also helps in retaining old customers. Referral marketing also makes the customer-organization relationship a long-term affair.
Few of the many popular brands that have been successfully applying referral marketing into their business strategy successfully, include, Google Pay, Nykaa, Uber, Tesla etc.
If you are looking forward to incorporating referral marketing in your business strategy, here are a few things that can help boost your referrals considerably:
- Provide Considerable Incentives: If you really want your consumers to recommend your business to more people, you have to ensure two things- first, that your product or service provides exceptionally good consumer experiences that will make them want to refer them to the next person, and second, that the customer is getting rewarded considerably for the referral. Whether it be discounts or goodies, when you compensate your customers for doing something, they are more likely to do it.
- Strong Customer Support: In order to have your current customers refer your business to a third party, you have to make sure that the customer feels valued enough by your organization. A good customer support that is responsive, consistent and sincere strengthens customer relationship to a great extent and provides them an environment where they feel that their expectations have been satisfactorily met.
- Personalised Interaction: When it comes to one-to-one customer interaction, the more a business can provide them a personalised experience, the higher the customer satisfaction. From providing customised offers to sending reminders for important events to wishing them on their birthdays- all of these amount to a better, happier customer experience. Personalised experiences increase customer-base engagement, and subsequently the chances of the current customers referring your business to other people.
- Ask for Referrals: Although referrals are usually spontaneous and are done wilfully by customers, it might not be the case for every customer. It is also hard to have people remember your business once they have left your app or website. Hence, asking your customers is important to grab that referral. Usually businesses ask for referrals post the customer has made a purchase, as statistically that is when the customer is happiest and is most likely to go with the referral. You can automate a message asking for referral at the thank you page or the receipt page to make things easier for both the parties.
Even though referral marketing might sound like an old school strategy, the reality is that it is one of the most fool proof ways of promoting your brand. Anything that goes viral on social media is primarily a case of referral marketing where people share content willingly because it is interesting enough to engage with. The deodorant brand Old Spice for example, garnered a huge amount of sales through their viral ads, that were shared organically all over social media a couple of hundred thousand times.
Another great example of referral marketing would be the boyband called BTS, who could rise to immense success in career, both in terms of accolades and sales, purely based on word of mouth during the first three years of their career. So, regardless of the type, referral marketing is something that can elevate any business, if provided with quality products and services and applied strategically.