The most effective way to get prospects or potential customers is by using people to influence people. A trusted referral is the holy grail of advertising, according to Mark Zuckerberg.
To ensure that you get the most from your marketing strategies, it is paramount you incorporate a referral program due to its immense potentials.
Many who have implemented referral marketing to their businesses have confirmed that the results are mind-boggling. With this marketing strategy, companies can boost sales, increase customer base, and create more brand awareness.
This article is not about referral marketing, but rather a referral program, an essential element that will turn your business around.
With this type of marketing, customers can bring in more customers through word of mouth. However, companies will have to offer incentives, stimulus, and rewards to attract potential customers.
By leveraging this marketing strategy, you're able to compel potential customers to make an order or, perhaps, interact with your products and services. If you take a look at the stat for advertising in the US, your mind will be blown away.
In 2015 alone, Facebook advertising in the US alone was 8 billion. However, the figure tripled in the coming year with about 86% growth. It shows the tremendous opportunity that awaits you, which you can utilize to boost your referral program.
So, here are some reasons why referral marketing is vital to your business and a never-ending strategy.
Trusted Recommendation
Referral programs utilize familiar influence to bring in more prospects or leads. According to Nielson, about 92% of customers are more likely to believe people in their circle than traditional advertising.
The logic behind this is pretty simple since people you know are less inclined to mislead you. Many companies are using this peer to peer marketing to skyrocket demand, and you, too, can incorporate such a strategy into your business.
Come to think of it, many of your target markets have installed ad-blockers and numerous restricting measures. It means that referral marketing is now one of the most formidable marketing tools that you can use to boost growth and sales.
Instead of running traditional ads that might never lead to any lead, a referral program is more promising since it's all about friends bringing their friends. There is no trust issue in such a scenario, and the prospect is likely to take some action.
A Channel For Engagement
A referral program allows you to connect to your customers who make it a duty to spread the word to their circle. In other words, your business builds up a relationship with customers as it engages with prospects.
Through a referral program, you maximize relationship marketing in creating awareness for your products and services. Customers can also speak on your behalf by bringing their friends and family into using your products and services.
By using social media platforms like Facebook, you can reach more of these prospects who have the power to influence their social circle into taking action on your offer. If, as a brand and you've not started running a referral program, that means you're missing tons of leads without even realizing it.
You can engage your customers through social media, emails, or even customer support. Sometimes, it is needed for a customer to keep referring friends and family to use your products.
Cost-Effective
Unlike numerous marketing strategies, a referral program is cost-effective and spills more than some other approach. That is why big companies like Amazon, Dropbox, etc. used this strategy to boost customer base.
It is less expensive to push your marketing campaigns to old customers than to win new customers. Also, a customer recommending your business is far more effective than a sponsored ad.
If you’re running an online store like Etsy, you can use this approach to promote Etsy shop without issues.
It makes sense when you think about it since people prefer to get recommendations from people they know than standard ads. Instead of marketing to new customers, you have a better chance at engagement by allowing your existing customers to do the marketing.
That way, you have more chances of converting prospects without issues.
Pay Per Performance
Unlike PPC marketing, where you pay for every click, referral programs allow you to pay based virtually on your customer's marketing performance. By creating more channels for customers to reach you, you can make a good referral program. You can always nurture new prospects until they convert to regular and paying customers.
As a business, referral programs give you more value compared to PPC marketing, since you're only rewarding customers based solely on their performance. It doesn't matter if you're offering incentives, as a referral program gives you autonomous control over whom or what you pay for.
No matter how your customers work, you can choose to pay based on the leads that convert, not just traffic alone. Referrals often have a dashboard where they can see leads that convert. That way, they know when to expect rewards, since they are paid based on the value offered.
It goes further to prove how a cost-effective and incredible referral program is. When implemented in your business, you won't have to struggle for leads, since they come from trusted sources or channels.
Customers Feel Belonged
Another great reason why a referral program is vital to your business is the relationship you build along the way. Through a referral program, customers feel like they are part of the company and work to achieve the company's objectives and goals.
By thanking them for their efforts, they work even harder to prove themselves to your business. Imagine having an influencer or a public figure as a part of your referrals. No doubt, the growth will be mind-blowing.
If you can reward them based on their efforts, they will feel supported and even work more to bring in more prospects. Aside from bringing in more customers, you build a strong relationship with customers through this medium.
It is like killing two birds with one stone since you're improving your relationship with existing customers while working to bring new ones. Businesses that shy away from referral programs miss a lot, as potential customers get taken by competitors who have incorporated this marketing strategy.
Increased Marketing Scope
A referral program allows you to reach more customers faster and efficiently in a cost-effective way. If a customer should talk to about five people about your company, the people, in turn, do the same. The result of such a campaign will be groundbreaking.
If the trend is to continue, where the five people tell 20 more people and much more, your business will become a booming marketplace that never struggles to sell. If this was to be facilitated using social media, you could have thousands of reach per day from referral marketing.
The potentials that lie in referral marketing are exponential, and you don't want to miss the goodies which it offers for your business. That is why a referral program remains one of the strong pillars of marketing that isn't going away anytime soon.
For instance, a business that deals with easy to sell consumer goods like a Drum Set Lab or Hunting Bow Lab could benefit a lot from referral marketing. Through this approach, customers can bring in more prospects.
Increased Return On Investment
If you are to evaluate the ROI of some marketing strategies in contrast with a referral program, you'll discover that the latter gives more. Remember, you're only offering discounts or gifts to customers to referrals, which in most cases, are cheap compared to other marketing strategies.
In a referral program, you dictate what you pay based on revenue and capability. There are numerous ways to ensure you get value for the marketing strategy, which could entail awarding points to every referral. The points can be used to redeem gifts or perhaps, used as exchange for some products.
In other words, you're gaining customers without having to spend much on marketing. To many marketers, this is a great strategy that allows them to achieve more by spending less. But if you're to achieve the same result through PPC or social media ads, you discover that you're spending more in terms of finance.
Another surprising reason why referral programs should be top on your marketing checklist is the high cost of digital marketing. There is an estimate that digital marketing is rising five times faster than inflation, which can be bad news to many businesses.
However, thanks to referral programs as you don't need to spend ridiculous amounts just for one lead.
Encourages Repeatable Purchases
A referral program helps you interact with your customers, which is one of the most remarkable ways to build customer relationships. When customers are happy with your products and services, it drives them to make repeatable purchases.
So, they could make purchases simply because they like you or want to earn an incentive as a referrer. Whatever be the cause, this type of marketing tends to boost sales since people love discounts or better offers.
If referring a friend is all that is needed for a customer to qualify for an incentive, an exclusive offer, or discount, they are more likely to indulge you. As you keep this program running, you will keep attracting more sales and orders until perhaps; you've got all your customers. Is that even possible?
Well, the fact remains that referral marketing exposes your brand to more potential customers, who can, in turn, bring in more customers. It is like an infinite pyramid, a marketing strategy that never ends.
if the rate of abandoned carts is high despite your marketing efforts, perhaps you need to check out some abandoned cart software to mitigate the situation.
Easy To Run And Manage
Unlike some complicated and complex marketing strategies like email marketing, SEO, and many others, a referral program is straightforward to set up and simple to operate. You don't need any particular skill or talent, as you can easily set this up when you use the right referral software.
Rewarding your customers for their efforts has to do with working with a system that allows you to monitor their actions. That way, you can reward your referrals without having to guess whose working or who isn't.
About 83% of customers are more likely to refer for as long as their experience with your brand was pleasant. But sadly, only 29% end up doing so. But by implementing a referral program, you're able to compel customers to take that action.
A significant hurdle business face is finding the right referral software to use. In that case, the best in the marketplace is the OSI Affiliate. This software has the best reporting features that allow you to monitor your customers and disburse rewards based on efforts.
In case you don't feel like using a referral program, you can easily create a spreadsheet and monitor through Google Analytics. Since Google Analytics is a powerful tool that allows you to monitor your referrals and performance, you won't have issues managing this program.
Increased Brand Awareness On Social Media
Since referral programs involve people bringing people, their dominant channel for referrals is often social media. Do you know what that means? Increase brand awareness on Facebook. If you've run a Facebook ad before, you probably know how expensive running an ad can be.
But with a referral program, you're creating awareness for your business on social media without having to pay a dime. The only thing you end up paying is the agreed referral incentives, which you can easily pull off since you dictate what you pay and how much you spend.
According to a study, 71% of your customers are making purchases based on social media referrals, proving the incredible potential that lies in social media. Through a referral program, you can tap into this potential and market your business without hassles.
Conclusion
Since people refer people, it has made a referral program one of the best routes to getting new prospects and even creates more awareness for your business. It is cost-effective, easy to set up and manage.
You don't even need any particular skill or knowledge, as the model of this marketing strategy is pretty simple and straightforward. If you run a business and you're yet to start running referral programs, you're missing many leads and customers.
