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One of the fundamentals of running a successful business is using your services to create new brand advocates for your business.
After all, satisfied customers can do almost all the legwork for you.
Add to that an efficient referral marketing strategy, and you’ll effortlessly expand your customer base. It's all about repeatedly encouraging people to share your business with their loved ones.
Does it sound too good to be true?
Well, it’s not. To convince you that referral marketing is easier than you thought, we’ll discuss:
So, let’s jump right in!
The ultimate purpose of referral marketing is to bring in fresh customers through word of mouth.
Whether online or in person, people love sharing the things they value with their friends, family, and acquaintances.
And referrals from our loved ones are often highly trusted. In fact, according to Nielsen, 84% of all customers trust any and all recommendations they get from the people they know more than advertisements from brands.
So, if you’re offering good customer support and experience, they’re more likely to act like influencers and refer your business to others.
Why not maximize organic word-of-mouth marketing and incentivize your existing happy customers to refer your products and services to more and more people?
Even when people are generally satisfied with your business offerings and are willing to share your brand the organic way, they might not think about referring to their social connections without any prior reminders.
Referral marketing helps create this reminder with rewards.
Thus, referral marketing campaigns help business owners:
While it may take some time to build relationships and trust with your pre-existing customer base, it is definitely worth the wait!
Here are a few of our favorite reasons why referral marketing just works:
Empowers word of mouth
Referral marketing allows for a scalable word-of-mouth strategy.
Since you’re encouraging the biggest advocates of your brand to spread the word about your business, you’re putting your offering right in front of a wide audience without additional marketing efforts.
To maximize these results, you can use referral marketing systems. With such a system in place, you can turn your existing word-of-mouth cycle into a more organized endeavor to create better brand awareness.
Grows your audience
Usually, businesses are brought up in random conversations when people are discussing new products/brands they’ve discovered. And this is exactly how referral marketing works.
Your current customer base will share your brand/products with their acquaintances, already filtering out the people who wouldn’t be interested in your products.
What you get from this are qualified leads.
And since these potential customers would love to hear about your brand through their trusted sources, they are more likely to give your brand a try too!
Increases cost-effectivity
Traditionally speaking, acquiring new leads usually takes some time and can get super-expensive.
On the flip side, referral marketing is a more affordable way to advertise your brand and get the word out there almost instantaneously.
Since you’re inviting your existing customers to promote your brand, you’re actually making the most of the relationships you’ve already built.
And once your marketing channel is operational, it starts functioning as a performance marketing system since you’re only paying out rewards when you’re acquiring new customers.
The bottom line here is that referral marketing works. And we’re not just saying that!
Check out the following referral marketing case studies and see for yourself.
Plenty of other major brands have witnessed exceptional results with referral marketing. Here are our top three picks:
One of the most widely popular examples of referral marketing success is the Uber referral program.
Image Source: Uber
Uber sure does know how to use the power of its referrals to build its business!
In fact, a major portion of their growth comes from referrals.
Let’s break down how and why Uber’s referral marketing strategy should be on your watch list!
Since its advent in 2009, Uber has spread to over 71 countries. It is one of the top ridesharing services in the world.
When Uber first started, they used a $10 dual-sided referral incentive system for their customers and referred people to attract a wider audience base. It was truly a win-win for both parties involved.
Later, they upped their game and started offering $20-$30 dual-sided credit rewards to both customers and their referrals. What made this so special is the amount that can easily cover a free ride, which is exactly how it was advertised.
Since then, the Uber referral reward systems have fluctuated in monetary terms, but Uber has consistently offered value in terms of its credits.
All one needed to do was sign up and start sharing.
Every colleague and acquaintance you would have referred would receive a free ride upon signing up. Pretty easy, right? Here’s why this worked so well.
A newsletter-first media business that offers people personalized, engaging, and entertaining business news, Morning Brew has seen a powerful growth cycle since it started.
Image Source: Morningbrew
All thanks to their genius referral strategies, Morning Brew grew their subscriber base to over 2.4 million avid readers, 35% of whom come from referrals alone.
Their referral program proves that any business can offer free content to build its audiences, without breaking the bank.
Swag offers a great, cost-effective customer referral program to all its subscribers. It even goes ahead and offers free promotions when customers use it.
Here’s an overview of how it works:
Sharing and tracking
Their tiered structure, where customers earn valuable rewards to make more referrals by effective repeat purchases and sharing.
It even helps to make it easy for customers to track the number of referrals they get to the next stage, just the way Morning Brew does it with their counters.
Rewards for mobile-based referrers
Morning Brew came out with some big-ticket rewards, such as the ultimate work-from-home makeover, which helps mobile-based referrers. Even the most productive, mobile-based referrals will have rewards they’d keep working for.
Promotional strategy
Morning Brew even goes a step further to promote their referral marketing program frequently and naturally. They do so by using their emails to the best of their ability.
They promote everything, literally every single thing, in each newsletter they send.
Their strategy even involves using the promotion of their regular programs in all kinds of emails, not just newsletters.
Additionally, the brand also offers customers the option to make referrals via social sharing and not just emails using unique referral email links.
The subscription-based, organic female hygiene brand, Yoppie has managed to garner thousands of headlines, as well as investors — all through its tech-based approach to natural challenges.
Image Source: Yoppie
Yoppie referral program
Yoppie allows its subscribers to share £15 credit with their family and friends and get £5 with each order up to £5.
And wait, that’s not it!
Subscribers can also earn £5 for each referred friend sign-up. This way, all credits that you earn as a referrer will be put towards your subscription-based order.
To earn referral rewards, all one needs to do is become a subscriber, share their unique link and tell others why they should join the Yoppie club.
The customers can share these links via WhatsApp, Messenger, or any other social media platform. Every subscriber will get a unique referral code, which can be found in one’s dashboard upon logging in.
It’s only natural to want your referral marketing campaigns to go viral just like these brands. To visualize immediate results, you’ll need to put in your time, efforts, and thoughts, and just a few best practices. Let’s find out what these practices are.
Coming to our primary question: how do you create a successful referral marketing strategy?
Like all great marketing strategies, all you need to begin with is good research. Here are the eight referral program best practices you can start implementing to see results.
Referral rewards are the drivers of your marketing strategy, but they sure will never be one-size-fits-all.
The right referral reward will depend on the kind of business you’re running and the kind of audience you’re targeting.
So, before choosing your referral incentives, you should ask yourself questions like:
What kind of rewards will likely motivate my customers?
Here are some commonly used referral rewards:
Of all, discount coupons are widely popular and commonly used as referral rewards, globally. And all for a very good reason.
Discount coupons are rated as the most-valuable reward by 51% of total global customers, providing benefits to both business and customers.
Cash discounts are another great referral incentive. Remember PayPal’s referral program? Their dual-sided cash incentive became a driving force behind the popularity of their business.
Of course, the right referral reward is not limited to cash and discount codes. There are many more to choose from, but which one will suit your business the most?
To find the answer to that question, you need to start thinking like a customer.
What kind of incentives are you offering to motivate them? How will you ensure they’re talking about your business the way you want them to?
The final decision on the right referral strategy will depend on these questions.
But, whatever incentive you’re choosing, make it relevant to your business. If you’re, for instance, selling coffee, your referral strategy could be as simple as getting a free pound of your bestseller for each new customer.
This way, you’re sure people will refer your product to the right kind of audience, who’ll likely keep buying from you.
If your referral program isn’t that easy to find, you’re probably going to witness a low participation rate.
So, make sure you’re promoting your referral program so people can easily find it.
Keep in mind that your referral program promotion is always an ongoing process– you can’t stop it after it takes off.
List all the places you can easily promote your referral program, and place it on the platforms your customers are more likely to find it and participate in it.
Then, use all your resources to keep promoting it.
Remember, social media, email marketing channels, blogs, newsletters, and especially your website are great places to promote your referral marketing strategy.
You can try some of these strategies to promote your referrals:
Email marketing
Send your customers frequent emails containing referral program invites/links that they can forward to their loved ones.
Newsletters and transaction emails (emails that confirm people’s purchases, subscriptions, etc.) are the most effective way to send such information since they’re the ones that are opened the most.
Social Media Marketing
Social media is an amazing way to frequently promote your referral strategies.
After you launch your strategy, share the announcement on social media channels, ensuring it reaches all your followers.
Then, use social tools to frequently remind your customers about the program.
Also, be sure to link the referral program page to the social media posts as well as your brand’s profiles.
Website
Ensure you’re treating your referral marketing strategy like a serious marketing campaign.
This means you’ll need to include the information about the referrals on your home page.
It shouldn’t have to be over-the-top to work effectively. You can just add the referral link to the footer and be done with it.
Anything works as long as customers can actually find the link and are easily able to share it.
Customer Portals
You might not want the referral links sitting on your home page. The program you're running might be exclusive to a few customers.
So, give it to them where they’re likely to see it.
Add the referral links to your paying customer’s dashboard instead.
Website Pop-ups
Most businesses use pop-ups to interact with their site visitors. They are an effective way to quickly get your message across.
So, why not use them to promote your referral marketing strategy, too?
If someone’s about to exit your website, set up a pop-up to promote your referral codes.
If your referral marketing strategy is easy to share, people will end up sharing it more with their friends and family.
Since each referral has the potential for customer acquisition, it is crucial to make such referrals easy to share.
Here are some ways to ensure your referrals are easy to share by all your customers:
Dropbox is an amazing example that can help you understand how making your program easily shareable works wonders. Its referral program is a leading reason why it's a global success today.
Dropbox started leveraging its existing users’ referrals, doubling its user base almost every three months. Here’s how it worked:
Of course, referral marketing rewards weren't the only thing that led to Dropbox's popularity and success. They kept improving their product offerings as per the needs and feedback of their customers.
But, given the immense growth, all referrals leave a deep impact on the program’s overall success.
A clear indicator of its success is that over 245 million, or 35% of all Dropbox users, come from referrals alone.
Today, we’re all used to getting reminders for any meetings, appointments, deliveries, schedules, and other aspects of our life.
So, why not send reminders to your customers and follow up with their interest in your referral programs?
Some might sign up for your referral programs and forget. So, they might need a quick reminder every now and then.
Don’t hesitate to follow up with them.
Let them know about your referral process, any attached rewards, and other details.
Your follow-up can be as simple as “hope you’re enjoying the referral program”, or “We’re really excited to meet your loved ones”.
Generally, software makes our lives easier. The right software can make your referral marketing strategy easier, too!
Referral marketing tools offer you the ability to track all your referrals that come in, go out, and more.
You can track your referrals and make it easier for yourself to distribute any attached rewards.
Moreover, you can use automation to generate more referral links/codes, which makes it easier for your customers to share them across different channels. It even allows you to send regular reminders to your customers’ social connections as and when required.
Sounds cool, right?
Well, referral marketing software like Viral Loops facilitates everything for you in just a few clicks. It's a system that refines your strategy and makes it work better in your favor.
You might have already scoped out almost everything about your competitors, from their marketing strategy to their products.
Don’t shy away from researching their referral marketing strategy too.
Check out their popular programs that match your business’ niche, and note down what will work for you and what won’t.
Understand how the audiences will react if you were to implement something similar. If any program works for them, it’s highly likely that it’ll work for you too.
Giveaways incentivize customers to refer new leads to your business.
For instance, you can easily host a simple contest where your customers can only participate if they refer a couple of leads to your business.
This means that you’re getting a potential list of emails that might sign up for your services.
There’s only one risk to this: the quality of leads you gain might not be superior.
If customers are randomly selecting their referrals, you might not obtain the leads that you’d truly desire. This might cost your marketing strategy some extra time, wherein you’ll be left to sift out the right fits for your business.
So, be sure to create a contest or a giveaway to encourage more and more customers to refer high-quality leads to you. This works by establishing an entry fee on the conversions you get instead of just referrals.
If your customers enter the giveaway, they’d need to get more people to sign up and buy your product rather than just offering you their email address.
Let’s take this Moo.com giveaway as an example.
Source: Moo
Their strategy works on people’s inherent desire to win something. In this case, it’s $20 for the first purchase a referred customer makes.
No matter the size of your business, you must have a system set up to track the progress of your referral marketing strategy. It’ll help you not miss out on any key details– especially for all referred accounts.
You’d want to track:
If you aren’t already sure where to get started, invest in a referral marketing software. Software systems like Viral Loops can help you keep track of:
And more!
Such software can transform each customer relationship and make your business’ referral program stand out from the crowd.
By implementing these referral marketing best practices, you’ll be better prepared to run campaigns that will offer you the net results the way you desire.
We’ve got one more thing that can help you reach your goals.
Word-of-mouth is a great way to get started with online marketing. If you’re already offering your customers a great product, your customers are probably talking about you with their loved ones.
Create a referral marketing strategy surrounding just that. Harness word of mouth to generate new customers.
If you have any more doubts, don’t overthink it!
Book a demo with Viral Loops, and we’ll show you how easy it is to set up a referral marketing program tailored to your business needs.
Written by:
Nik has launched products in many industries for himself and clients. He's responsible for growth at Viral Loops, and he has worked in marketing since he was 17. Passionate about applying psychology to marketing. Favorite number: 42. Let's connect on LinkedIn
