It’s no accident the words tweet and like have been coined as action verbs in recent years. You don’t need to be a social statistic analyst to know that Millennials thrive on the approval of their peers. We live in a ”tell a friend” culture. How to make that work for your business is what referral programs are all about.
Word of mouth has always proven to be the pillar of successful marketing. A strategy based on rewarding those who tout your brand or service has measurable growth value in any field. Today we will talk about what makes a successful referral program, and how to implement this crucial marketing tool.
Why do you need a Referral Program?
No one wakes up in the morning and says ”Today I want to be mediocre.” Whether You’re just getting your startup off the ground or run a centuries-old family business, you work hard for your customer approval. Surprising customer behavior observation shows that while satisfied customers are willing to make referrals, very few do. Incorporating a systematic process with reward incentives make it less daunting. Plus, with a system in place, you can seamlessly automate the payout of rewards while tracking program performance.
Does it shock you to know that people are twice as likely to make a purchase when a friend lets them in on a new service or product? We all like to follow up and check out the latest about what our peers say. Shared interests and insider knowledge creates a natural platform for brand promotion. Customers that check out a product through friends will have higher brand loyalty and enthusiasm that translates directly into profit margins. It also increases the customer loyalty of your existing customers, by having them invest more your in your brand.
Let’s go over some of the statistics for powerful Referral Marketing that prove just how surprising the ROI data is.
In a Nielsen survey on trust and advertising, the numbers tell the story. When polled about what form of advertising responders trusted, Referral marketing scored the highest across the board in every demographic category. It out did every form of advertising, editorial content, and brand sponsorship:
It’s Not Just a Seal Of Approval
Now that we have a better picture about the stats that propel brand trust we can delve a little deeper. Did you know that 28% of millennials say they wouldn’t try a product if their friends don’t approve of it? A “tell a friend” plan that doesn’t convert is no use at all. You don’t need your name spread around if no one is buying!
Word of mouth is the primary factor behind 20-50% of purchasing decisions.B2B initiatives that incorporate referrals have a 70% higher conversion rate, and a reported 69% faster close time on sales. That seal of approval combines with the one-two punch of a reward. The goal is to set up a positive feedback loop that continually gathers more customers in its ripple effect. Referred customers are 5x more likely to involve other customers. These are the telling numbers that explain themselves as the focus of your game plan.
What Every Successful Referral Program Needs:
- Begin at the beginning. If you want to create brand advocates, your customers have to find your product or service purchases easy to navigate. Honestly survey your website for any interaction issues and collect consumer reaction data. Then tweak whatever needs a fine-tuning to make your customer relationships as smooth and seamless as possible. Make your brand synonymous with convenience as a top priority, before you can offer rewards for referrals.
- Create a trickle-down reward plan. Carefully examine what you’d be willing to offer, and what your average consumer would want to receive. Promote the new project to your “cheerleading squad” wherever you engage with customers. Groundbreaking examples of genius referral programs like Dropbox and Evernote promote different types of point and reward systems that are equally effective. Make sure to roll out your program through social media, your company website, and anywhere else your brand is visible. Bear in mind that successful referral plans reward a “tell a friend” CTA (call to action) with each additional recruit. For example, if Sarah brings in James as a new customer, and James brings Kathy, both Sarah and James are offered rewards for Kathy’s purchases. Focus the CTA as a clear and recognizable part of your purchasing page. It is 4x more likely to be shared this way.
- Collect intel about your plan’s effectiveness. Charting the success in definable numbers can help you quickly pinpoint where to focus and tweak your program. There is software available to track the engagement rates and increased revenue that directly correlates with your marketing strategies. They can also automate the rewards directly to the customer. You will want to see exactly how your audience is engaging so that you can analyze what’s working and what isn’t. There are also marketing tracker companies like Nextbee who can be hired to chart the numbers for you.
Pay It Forward
Its an understood facet of human nature. Everyone enjoys being appreciated. Show thanks for your clients’ trust with tangible rewards. It is a gift that will pay you back in spades.
If you’re ready to create a referral program for your customers, but you are looking for more guidance, contact us today. We’d love to hear from you!