How To Create A Referral Marketing Strategy That Works

Referral marketing is a structured process where a company rewards its existing customers. Create a referral marketing strategy to be successful.

People tend to trust their friends, folks, and even strangers more than they trust brands and advertisements. They’re influenced by reviews, recommendations, social chatter, testimonials, and most importantly, referrals. That’s why it’s vital for brands and businesses to employ referral marketing.

If you haven’t implemented referral marketing yet, it’s time you do it. This blog lists six steps to create a referral marketing strategy that works.

What is referral marketing?

Referral marketing is a structured process where a company rewards its existing customers for spreading the word about it. Unlike conventional marketing that is launched to a general audience, referral marketing banks on the loyalty of its current customer base to bring in new customers.  Thus, it can act as one of your best business growth strategies.

Why is referral marketing important?

By looking at the following referral marketing statistics, you’ll realize the importance of referral marketing.

• 84% of people trust recommendations from people they know.
• People are 4X times more likely to purchase when referred by a friend.
• Word of mouth is the foremost driving agent of 20 to 50% of all buying decisions.
• 74% of consumers account for word of mouth as a primary influencer in their buying decisions.
• 70% of consumers find customer reviews and peer recommendations credible.

6 Steps to Create a Powerful Referral Marketing Strategy

Here are 6 steps to creating a referral marketing strategy that acquires customers for you.

Step 1: Work on your relationship with the client

Source: InviteReferrals

Before you request your customers to share your brand or product with their circle, you need to ensure that your relationship with them is strong. Even if they’re glad to write a testimonial or review about you, they might not want to put their reputation at stake by referring you to someone too early in the relationship.

One sure-fire technique to nurture customer relationships is getting to know about a customer. Collect details about them when they sign up for your newsletter. You can use this information to come up with tailored messaging that can boost their experience and strengthen your bonding with them.

Step 2: Channelize emotions

People tend to respond to you favorably when they are emotionally connected with you. This usually happens soon after they have a positive interaction with your business. They may not remember your words but they surely will recall how you made them feel. So, provide exceptional services and then channelize their emotions to get them to share your brand.

To put this into practice, get to know what your customers are looking for. Then figure out how you can help them. Then, do that thing. This can help you make happy customers, and thereby, increase referrals.

Step 3: Personalize your customer interactions

Customers these days look for high levels of personalized experiences. When you personalize your interactions with them they feel that you care for them. So, remember their details such as name, gender, geographic location, preferences, birthday, wedding anniversary, etc. to send well-timed promotions.

This will connect and engage your customers with your brand and reinforce your relationship with them. This in turn can gently nudge them to refer your brand, products, or services to others.

Step 4: Have a structured referral program in place

Source: InviteReferrals

Build and implement a referral program so that customers can share their brand experience with their circle. You need to employ referral program software like InviteReferrals for this purpose and then perform the following.

• Begin with customer referral templates.
• Set your referral marketing goals.
• Identify the channels that bring referrals to your business.
• Determine the persona that would be a ‘good fit for your firm.
• List potential sources of customer referrals.
• Decide the channels to host your referral program.
• Come up with a strategy to reach out.
• Decide upon your referral rewards.
• Design resources to alert your customers.
• Set up analytics.
• Say “Thank you!”
• Quickly follow up on your referrals.

Step 5: Recognize and reward your customers

Source: InviteReferrals

We’ve touched on this in the previous section. However, it’d be good to elaborate on this. So, here we go…

Brand affinity is what drives referral marketing. However, you need to push your customers to sign up for your referral program. Recognizing their deeds and incentivizing them can accomplish this. Your rewards should be something that your customers value and are affordable for you. It can take different forms such as-

• Cash rewards
• Gift items
• Discount coupons to be used for the next purchase.
• Exclusive product upgrades.
• Early access to sale events.

You can either choose two-way rewarding (both the referrer and the referral are rewarded) or one-way rewarding (only the referral is rewarded). The former is better as both the parties gain something out of it.

Additionally, it would be better to give out tired-rewards than a one-time incentive. For instance, reward them on multiple events like when they share your brand, when the referral reaches out to you, when he/she installs your app, and when he/she makes a purchase. You can get better ideas by looking at the dropbox referral program.

Step 6: Analyze and tweak

As mentioned earlier, you need to measure the degree of success of your referral marketing efforts. Your referral program can help you track different metrics throughout the program’s lifecycle. By looking at these, you should be able to find-

• The effectiveness of your program in attracting new leads.
• The number of website visitors who became your referrers.
• The number of referrals your visitors made and through which channels.
• The number of new customers who signed up to your program.
• The number of people who keep referring to you.
• Your program’s cost per acquisition.

Gaining insights into these can open up opportunities to improve and enhance various elements of your program. And this in turn can increase your conversion rates.

Wrapping up

People tend to trust recommendations from family, friends, and strangers more than they trust brands and ads. Your business can tap into this immense potential through referral marketing. This blog has discussed six steps to creating a referral marketing strategy that works. Implementing these properly can supercharge your customer acquisition for sure.