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Do you know who can make your business a total success? Customers. And we don’t mean because of the fact that they’ll buy from you, and bring in revenue. We mean because satisfied customers can spread the word about your company, with one client bringing in at least 2-3 leads.
Customers tend to trust a recommended brand. All you have to do besides working on customer experience and offering high-quality products and services is encourage every buyer to recommend you to their friends, family, and colleagues.
You may have the best product in your niche, but if nobody spreads the word, what’s the point? How do you encourage people to recommend you? A referral marketing strategy will help you to raise awareness about your brand and attract website traffic. In this article, we’ll tell you everything we know about how this strategy works, the reasons behind its success, and give tips on how to make it work best for your business.
Referral marketing is when a person refers your products or services to their friends, family, audience (in the case of influencer marketing), or contacts. The referee should buy the said item or service for the process to end successfully. This works because consumers tend to trust businesses more after getting a recommendation from another person, especially if it’s someone close to them.
Referral strategies are the most effective in terms of ROI. This model requires minimal investment but brings results in the form of warm leads that are easier to convert. Most B2B marketers consider a referral marketing strategy one of the best ways to get warm leads and increase referral traffic on their website. Besides, marketers say this method has a smaller cost per lead, which supports the point about the ROI scale.
Moreover, people are likely to buy if they are referred by a friend. In fact, 83% of Americans are more likely to purchase after consulting with family and friends members.
Refer-a-friend is an example of a referral program that works well based on user behavior - Purele
If we’re talking about niches, absolutely any business can set up a referral program. However, there are a few requirements that make your company qualified for a program:
The harsh truth about customer loyalty programs:— Alex (@heyitsalexP) March 18, 2022
- Your loyal audience is smaller than you think.
- They're already highly engaged, so driving incremental lift is harder than you think.
- A points program won't make casual customers more loyal.
Switch on your critical thinking when reviewing your business to see whether it fits the aforementioned requirements. Each aspect can be improved, influencing the results of your marketing campaign in the future.
Referral programs are considered perfect for businesses offering products and services because they make existing customers feel special, come to the site more often, and encourage them to share the business with people who are close to them.
A referral marketing strategy helps to keep the customer buying your products and make them loyal. Why is this important? Acquiring a new customer can be 5x more expensive than keeping a current one. A case study by Wharton found that referred customers also have an 18% lower churn rate in the banking sphere. This statistic reassures that referred customers are more loyal.
Instead of giving all resources to find new customers focus on keeping a current one
Here are the main benefits of referral marketing:
The best secret to a successful referral program is a good incentive. It should motivate your loyal clients to share their experiences with your brand and bring new people along. The incentive also has to fit your target audience.
Here are some tips for setting up a referral program:
First of all, is your brand ready for a referral program? Make sure you create high-quality products, promote them, and collect a base of loyal customers, and you’re ready to increase referral traffic and sales (in terms of website, logistics, packaging, products, and employees).
Reviews are the best indicator to evaluate customers’ attitudes toward the brand
Asking for a referral is a delicate action for your customers. You’ll need to get at least a few interactions with customers after they’ve had a chance to learn about the brand and the products you offer. Develop a relationship first. Offer a great customer experience, care about them and their impressions, have an effective support team, engage with them on social media, care enough to learn their name, and refer to them by it if you can.
Analyze your most loyal and active customers and list people who can represent your company in their families, at parties, or on social media. Thankfully, most information is easy to collect nowadays (email lists, data people leave when purchasing, etc.)
Remember that referring is your customers’ choice, but making a sale is mostly the responsibility of your sales team. Ensure you have strong sales managers that will increase referral traffic to the website from other channels and guide users smoothly to make a purchase. Remember that the website must be attractive to the customer, load fast, and contain detailed product pages with all the information about the product you are selling.
Ensure you have a presence on social media and an easy-to-use website that loads quickly and offers a great user experience. Also, explain the program properly, in easy-to-understand language.
Minimize steps for getting a referral deal to avoid churns.
The choice of the trendiest rewards will drive many more referrals to your program since people will only put in the effort if they know what they’re getting for it.
How will your customers find the referral program? Make it easy and convenient for them by being noticeable from first sight. Usually, brands place their referral programs in the navigation menu, footer, pop-ups, or sidebars, to increase referral traffic.
Where are people now? On social media, of course! This makes it easier to find and interact with you. Plus, you can share content, reach more people, talk to them, and build trust. Use Facebook. Instagram, and Twitter. You can also leverage the benefit of third-party Instagram tools available in the market to automate your efforts.
Reminding your subscribers about your referral program can boost sales
As you can see, referral marketing opens many opportunities for any business with a valuable product and loyal customer base. Improved LTV, lower CAC and churn rate, higher conversion, and AOV, just to name a few.
We’ve uncovered easy steps to set up a referral program! So, what are you waiting for? Thousands of businesses are offering incentives to their customers and building long-lasting relationships. Your business should be next.