Referral Marketing To help Boost Your Business

Referral marketing is one of the cheapest marketing strategy with a very high sales conversion rate

Did you know that referral leads convert 30% better than leads generated from other marketing channels and have a 16% higher lifetime value? (Source)

This strategy has been around from time immemorial, we have taken advantage of referral marketing throughout our life

We have taken referrals from friends, families, and even strangers online i.e. reviews on Amazon, Yelp, etc. From trying a new restaurant, planning your vacation, finding a job, and so on

You can use this strategy in business to encourage your network as well as your existing customers to refer you to new customers and increase your business

Benefits of using referral marketing

Cost-Effective:

Referred customers have a lower cost of acquisition when compared with other channels of marketing

Most of the time, you only have to ask your existing customers or your network to get a referred lead

Ask, and you shall receive

An important thing to note here is that your existing customer must be satisfied with your product and service to refer you to their network

Not only the product and service but also your interpersonal relationship with your network can impact your client acquisition through referral

So you will have to analyze which department you lack if you are not getting referral

Higher Conversion:

Referrals come from a trusted source to the referred lead

The existing relationship between the referrer and the referred lead helps in establishing trust and credibility from the beginning, which increases the chances of sales conversion

A referral acts as social proof that the person who referred you had a positive experience with you and your product or service, establishing that it can satisfy their needs and provide solutions to the problems faced by the potential customer

Customer Loyalty and Retention:

There is a high level of trust, when someone has given your reference to their network

Asking for a referral can help you gauge the trust and whether your customer is satisfied with your product or service

With the referred lead, the initial trust and credibility established can help you nurture a long-term relationship and increase loyalty

Targeted Leads:

Referral leads are pre-qualified by the person who refers you

Your customer likely knows what the referred lead needs and suggests the best possible solution to their problems i.e. you and your product

Categories of Referral Marketing

We can separate referral marketing into two categories

1. Free Referral Marketing

Referrals that you receive without paying or giving any incentive to the person referring your service to their network is free referral marketing

These are referrals you receive from word-of-mouth, satisfied customers, engaging and building relationships with your audience and network both online or offline, organic search traffic

2. Paid Referral Marketing

This method involves quid pro quo transaction, It can be in the form of paid advertising, paid sponsorship, business or personal relationships where you have to return the favor, giving incentive to the person who refers

This technique can give a quick turnover as you don’t have to invest in building a relationship with the referrer

You have to use a mix of both these techniques to maximize your return, as the former requires some time to develop, whereas the latter can give you instant results at a cost

Referral Marketing Programs

1. Customer Referral Program

As the saying goes “Birds of a feather flock together”

The same applies to your existing clients and their network

They can give referrals from their industry, location, demographics, community, etc.

Their experience of using your products first-hand will help you build instant credibility in the eyes of the referral, increasing the chances of conversion

Most of the time referral leads are pre-qualified by your existing clients, saving you from wasting your precious time on unqualified leads

Engagement and building a deeper relationship is an important pillar to maximize your customer referral program

2. Partnering with Other Businesses

This a mutually beneficial strategy, since you have your set of clients and other businesses have their clients, you can cross-sell your products or services to each other clients without any conflict

You can partner with complementary businesses, e.g. if you are an investment advisor, you can partner with a tax consultant and get the benefits of referring clients to each other

3. Networking Events

Engaging with unknown people and forging a meaningful relationship over time will help you increase your business by leaps and bounds

Networking events are such places where you get to meet strangers having a common goal or interest, interact with them, and form relationships

I have been a part of organizations like BNI and Rotary Club and can attest that you can get a lot of referrals from these places

Examples of networking events are events organized in your locality, or community, meet-ups, trade shows, industrial conferences, executive summits, BNI, Rotary/ Lions Club, etc

4. Social Media Marketing

Platforms like Facebook, Instagram, Linkedin, Pinterest, Twitter, YouTube, etc. are valuable in creating engagement with your audience

Sharing engaging content, and relevant posts, and educating your audience will build trust and credibility

Encouraging your customers to share their experiences can boost trust and credibility as well so that more people can refer your products and services

5. Sponsorship Programs

For this, you can tie up with celebrities or influencers to have a greater outreach to their network

You can even create an affiliate program so that affiliate marketers can join your program and sponsor your product on their blogs or social platforms

How to Improve your Referral Marketing Strategy?

1. Using Referral Marketing Software

A referral marketing software can help you keep track of the referral programs you are using and streamline the process of acquiring customers from referrals

They can help you analyze which campaign is working and which is not so that you can make changes to improve your program

You can use referral marketing software such as Referral Rock, ReferralCandy, Ambassador, etc. Alternatively, you can use an Excel sheet

2. Increase Engagement with Your Network

Whatever type of referral program you use, there is a requirement that you engage with your referrers

You have to create a relationship even if it’s a paid referral program

Always be on the lookout for an opportunity to add value to your network, it can be to reduce costs, improve profit, or maximize the effectiveness of your product and service

3. Give Incentives and Reward

Giving incentives and rewards in your customer referral program or to your network can accelerate lead generation through referral marketing

Some ideas for incentives and rewards are

Credits and Points, which they can use on renewal or repurchase can result in customer retention and increase loyalty
Cash rewards for referring potential customers
Gift cards and exclusive privileges for conversion of a referred lead

4. Taking Referrals Seriously

There should be an ease that should be associated with referring you and your product, as nobody wants the person they referred to complain about the lack of response or poor service, so be careful that you attend each referral with utmost urgency