Why Referrals are the Most Valuable Form of MarketingArlen Robinson
Many marketing methods have stopped being effective due to search engine algorithm changes and the growth of social media. But there is one method that rose to the top, and that is referral marketing. In this article, you’ll learn why it is one of the best forms of marketing you can adopt in your business.
Referral Promotions are Based on Trust
One of the reasons why referral marketing is exceptionally effective is the trust factor associated with it. While most marketing methods deal with cold leads, referral marketing works with people who have warm relationships with other people. It differs from a business owner who promotes his product or service. When you have a referral system, you enlist the help of your customers and website visitors and ask them to improve your website for you. But they don’t just promote it haphazardly. Instead, they contact the people who are closest to them to promote the business, which pertains to the customer’s inner circle, such as his family and friends. These relationships are already established, so the recommendations are more effective. Think about it. Will you believe a piece of advice from a stranger more than your family and friends? I don’t think so. The recommendations from family and friends will always be more productive. This is the reason why referral marketing is more effective for businesses. It is because it leverages existing relationships instead of forming new ones. You no longer need to prime the prospects. Your customers can go ahead with the pitch.
They Have an Opportunity to Grow
Another factor that makes referral marketing effective is the chance to grow. In other forms of advertising, you only get to promote your products and services once. And you have to pay extra if you want to get more exposure for your business. However, this is not the case for referral programs. When you set up a referral program one-time, it can help you promote your business for a lifetime. All you need to do is funnel your customers into your referral program. Tell them that you have some rewards if they can recommend you to other people. This type of marketing is effective in getting more traffic and sales.
What makes referral programs unique is its ability to attract more people. It has an incremental nature to it. The problem with other forms of marketing is its focus on closing sales. Because of this, the acquired customer usually stops upon purchase. He may recommend the product to other people, but he is not that motivated to do so. In referral marketing, you give the customer that motivation so that they will surely promote your business to other people. Also, it doesn’t stop there. The referrals that they get also has the same ability to promote the business. Because of this, word slowly spreads about your business until it reaches enough people to make some decent sales.
They Can Invite People to Try a Product or Service
One of the reasons why some potential customers forego the idea of buying a product or service is the fact that they don’t have a vision of what they will experience if they do so. This reason is especially valid for products with vague benefits or highly technical features. While you may sell some products with niche jargon, it is still not enough to get people to buy. You need to be able to relay the experience on how your product or service can solve their problem before you can invite them to buy your product or service.
For this, trials are made. This is when a customer can get a feel of a product or service before they buy. They do it in the food industry where customers get a free taste of the product before they buy it. It is also prevalent in the cosmetic industry, where small samples are given away. It is also the same for movies. Trailers are made to give you a feel of how the film will turn out before you even buy the ticket. Now, if you will fuse a trial with your referral system, the result can be phenomenal. This is where you encourage your traffic to promote your business, and they get a trial as a reward. This is effective, especially if you need to get people to try your products and services. You must already establish your sales system. Your potential customers should already know what they will get; they just need to try it.
They Can Improve a Brand’s Social Proof
One of the things that you’ll notice is that social proof is no longer optional for online businesses. Other people need to see that you are trusted before they buy your products and services. They need to know that you know what you are talking about, and you can help them solve their problems. However, you don’t have to tell them about this. Other people have to do it. It is far more effective if another person recommended you for what you do. It is all because people are already so used to self-advertising. A business looks more legit or credible if someone who is not affiliated with the company recommended it.
Because of this, referral marketing can also help you drive more leads and sales to your business. With every referrer that talks about your brand, you get an instant social proof boost. This will help you to promote your products and services easily. And in some cases, you may not even need to do it. Since your referrers are already promoting you, you no longer need to do anything. You can just wait for your business to grow. This is the secret behind the growth of most online apps. Take Airbnb and Uber, for example. They are apps that don’t own any property, yet they can dominate their niche. More than having good ideas, these companies did great because they leveraged their referral marketing platforms. They allowed their customers to do all the promotions for them.
They Can Increase Customer Lifetime Value
Another factor that makes referral marketing a desirable marketing method is its impact on customer lifetime value. When a customer purchases a product or service from a website, it is usually important because it fills a need. Most of the time, they only buy again if they need the same product. But this is all because of their positive experience in the past. When the customer trusts you and considers you when they need something in the future, this means that the customer has a high customer lifetime value. This means that there is a higher probability that the customer will stay with your business for a lifetime. Companies ideally want to increase this because it is always easier to convert an existing customer than a new one. An existing customer already has a relationship with your product and service. They also know who you are and what you do. You no longer need to explain yourself or convince them to buy. You are already like an old friend to them. They already know and love you. And they trust that you will deliver in the future.
Referral marketing has a positive impact on customer lifetime value. You see, it is driven from more than customer experience. Social proof also has something to do with it. As more people talk positively about your brand, more people will likely buy from you again in the future. Referral marketing helps in driving your social proof through the roof, and it can help you increase your customer lifetime value.
They Can Attract Influencers
Another factor that you’ll love about referral marketing is its ability to attract influencers. Influencers are great because of their ability to impact other people’s decision-making practices. They are more than content creators; they are lifestyle creators. They inspire others to adopt a particular type of lifestyle by encouraging them through the way they live. In the same way, they can also drive people to purchase certain products and services. This is the reason why you should try your best to get them to promote you. It is well worth your time for one promotion that can result in a multitude of leads and sales if done well.
You can also tailor your referral marketing system to your target influencer. You can do this by creating exclusive referral systems. This is where you create a referral page that is dedicated to the influencer’s target market. On this page, you don’t only emphasize the reward; you also highlight the working relationship that your business has with the influencer. You see, an influencer’s followers only take action because they know, like, and trust the influencer. So you need to show that you are affiliated to get them to take action. This is far more effective than merely asking the influencer to mention you. They are probably saying multiple brands every day, with most brands only getting ignored. Aim to stand out by having an exclusive referral program.
It Can Even Attract Good Marketers to Participate
Did you know that you can transform your referral program into an affiliate program? You don’t even need to create your plan from scratch. You can use the existing details that you have done for your current referral system and just copy it into your affiliate system. You only need to find referral software that can help you do this. There is software that allows you to create a referral and affiliate program.
But if you want another option, you can always opt for a separate affiliate system. You can look for software such as a WooCommerce affiliate plugin to help you. These apps can easily be integrated into your existing system, and it can help you set up your affiliate program in a few clicks.
Why should you set up an affiliate program? Well, you may find that merely having your customers promote you is not enough. There are times where you need some help from expert marketers. Fortunately, you can invite them by having an affiliate program. This is different from a typical referral program because you give away a percentage of your sales for every successful referral. It may seem that you are on the losing end, but it will pay in the long run. You will find that you can get more sales because the customers usually have a high lifetime value.
It is Perceived as Authentic
One of the reasons why referral marketing is the desired marketing method of most businesses is its perceived authenticity. I have already mentioned that the power of this system lies in its circle of trust. Referrers usually promote the company to the people who are closest to them. Since the promotions are done without the goal of selling, the advertisements are seen as authentic and not sales. This is the power of referral marketing, and it is one of the reasons why it drives more sales than other methods.
It Can Benefit Even Brand New Websites
Do you have a brand new website with no traffic, subscribers, and sales? Don’t worry. Referral marketing is here to save the day. A new website called Best Drums Set Labs utilized this method early in their business, and they found that it can have lasting benefits to a company. It helped the business took off and even helped them to stop shopping cart abandonment.
It is Easy to Set Up and Implement
If you have not yet implemented a referral system on your website, you probably think that it is complicated. But it is not. If you have the right tools, you’ll find that setting it up is a breeze.
Today, there are now several referral systems that you can use to promote your business. With this, you no longer need to track your referrals manually. You can easily see where each referral belongs, and you can pay referrers accordingly. Also, you’ll find that processing payments can be quite a chore once your referral network grows. It is better to have a referral program so that you can easily track referrals and pay them with one click.
Also, the implementation is straightforward. Most of this software will help you create your referral page on your website. From here, all you need to do is promote your referral system, and you are ready to go.
There are so many benefits that referrals can bring to your business. So if you still don’t have a system that helps you to attract them, you are missing out. You should have learned from this article how it can help your business. However, it is not too late, and you can start now.