A Guide To Referral Marketing
Marketing your company can be a tricky field to navigate. Each demographic responds very differently, making it challenging to create a brand that can cater to a wider audience. Although you might run a company that caters to a niche market, most companies welcome a wider demographic. If you feel like your marketing efforts are not going as far as you’d like them to, consider a referral program. Referral programs are not for every business, but are a great option for many.
What Is Referral Marketing?
Ecommerce referral marketing is a method of gaining new sales or subscribers by incentivizing current customers to share their positive experiences with their network. Usually how this works is each customer receives a unique code to share with anyone they please. If someone makes a purchase through their code, then they are awarded with a prize of some kind. You can choose to put a cap on the number of awards they can get (for example, they could refer up to 3 friends) or let them refer as many friends as they’d like! Offer their friends and family an incentive with a purchase or subscription as well.
Why Is Referral Marketing Effective?
Ecommerce marketing is extremely competitive. With algorithms constantly changing, new platforms rising, and trends constantly popping up, keeping up with the latest and greatest can seem impossible. However, by using referral marketing you can skip the gimmicks and get a fantastic and free source of marketing! Even if your marketing reflects the image and quality of your brand, customers tend to be wary of trusting products and companies they are not familiar with. By using social proof, you can dramatically raise your sales, especially if you are a smaller company who is not as well known. A report done in 2018 found that 83% of customers were influenced to make a purchase by word-of-mouth marketing. This means that you have a much higher success rate of converting new customers if their friends encourage them to try your products. Aside from having a fantastic conversion rate, referral marketing is extremely cost effective. Whether you are giving your customers points, a percentage discount, or a dollar amount off of their purchase, you are still earning money by recruiting new customers.
How To Choose An Incentive:
Having the right incentive is crucial to your program doing well. Think about what rewards you could offer that would be beneficial to both you and your customers. You’ll want to chose a reward that gives both your customers and their friend an incentive. Many airlines, such as Delta and American Airlines, team up with credit card companies to offer rewards programs. These programs rewards customers with miles they can redeem for flights or upgrades, and they get a certain amount of bonus miles if they refer a friend to sign up through a personalized link. Rideshare program Lyft encourages users to invite their friends to the app by offering each party a free ride when a friend signs up. FabFitFun, a women’s subscription box, offers their current subscribers to send $10 off their first box to friends who are interested, If the friend signs up, the existing member receives a $10 credit.
What To Be Cautious Of:
When used correctly, referral programs are a fantastic way to convert new customers and reward current customers. However, some customers will try to take advantage of the discounts by signing up as a new user multiple times, or sharing codes. To prevent this from happening, make sure you have a strict terms and conditions page. Hopefully your customers will use your referral program as intended, but in case someone is trying to be dishonest and cheat the system you can disqualify them from using the program.
Referral programs are a diverse and fun way to treat your customers for their loyalty, and to bring in more business. Use these tips to decide if referral marketing is a good choice for your company! Have you tried referral marketing before? What were your successes and challenges with it?