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Referral Marketing

Humans are, by nature, social creatures. We naturally share our experiences with our friends. Referral marketing works because consumers trust the opinions of real people far more than they do those of the brands themselves.

referral marketing


Any kind of business can take advantage of referral marketing. This kind of marketing strategy can be very effective for businesses like small single-owner and entrepreneur companies all the way to large corporations. Many businesses that offer products or services can implement referral marketing campaigns.

Mention Me is an award-winning referral marketing platform that fuels business growth. Our world-class programmes have delivered more than 4 million referrals totalling $1.5bn+ in revenue for 450+ brands around the globe. Learn More

Referral marketing (also known as word-of-mouth marketing) is a powerful tactic and one of the best marketing drivers for sales and conversion. Referral marketing is exactly what it sounds like: the process of one person referring a product, and the referee purchasing that product due to that recommendation.

Referral marketing leads have been shown to convert 30 percent higher than leads generated from other marketing channels. And referred customers have a 16 percent higher lifetime value than their counterparts.

Referral and word-of-mouth marketing solicit niche, targeted audiences, as like-minded people tend to hang out together. As a marketer, this allows your brand message to penetrate a target market more effectively than it would using most other marketing channels and tactics.

In order to run a successful referral campaign, businesses have to tell their customers about it, entice their customers to spread the word, ensure the process is as easy to use as possible, and make sure team members can adequately address any customer questions or concerns.

When creating a referral marketing program, make it as simple to use as possible. Think about your mom, your grandfather, even the average fifth grader: would they be able to figure out how to refer their friends? Would it be quick and easy? If the answer is no, go back to the drawing board.

Uber owes much of its success to its referral programs for passengers and drivers. Uber offers a mix of free rides and discounts to people who refer the app to their friends, both for riding and for driving. At one time, Uber offered $30 in credits to those who referred new riders. Today the referral is $5, but is subject to change. Referring drivers can be a bit more lucrative, and varies depending on whether or not the driver signs up with his own car or a rental car. The referral bonuses vary by country, but can be as high as $1,750!

The team went back to the drawing board and decided to build upon the enthusiasm of the initial users. If the company could get 75,000 to sign up and provide feedback in just one day, it figured that by giving these people an incentive to refer their friends, they would. Thus, they unveiled a two-sided incentive-referral program.

As referral marketing continues to be a key driver for acquiring new customers, brands are looking for more ways to incentivize existing customers to invite their friends. While traditional online referral marketing programs continue to be fruitful, brands are starting to think outside the box to develop new ways to prompt their customers to refer friends.

As brands are looking for unique referral program ideas, some are turning to their packaging. Unboxing has become a trend over the past few years, and there are even YouTube channels dedicated to influencers opening packages from brands.

Everlane is a brand that uses boxing as a marketing tactic. Items arrive wrapped in environmentally friendly craft paper with a thank you note that encourages people to share a photo of their purchase on social media.

Based between NYC and Madrid, Leigh is a freelancer with a background in e-commerce marketing. Having spent her career in startups, she specializes in strategizing and executing omni-channel campaigns.

Referral Rock automates every step of the referral process so a business can scale and consistently measure the success of referral marketing programs. This robust, user-friendly software has the flexibility to be used for customer referrals, employee referrals, partner programs, and affiliate marketing programs. It can also accommodate any reward type and structure your business wants to use (including tiered and multi-step formats). So, whatever your partnership and incentive needs are, Referral Rock has you covered.

About this software: Talkable offers a referral marketing platform for ecommerce marketers to generate new customers and increase sales. The platform is completely flexible in terms of who the campaign targets, how it looks, who is rewarded, and how they are rewarded. Talkable has a one-click installation with Shopify and Magento.

About this software: SaaSquatch is a trusted referral marketing partner for the Fortune 500 and is built primarily for SaaS companies. With SaaSquatch, you can design and integrate referral program touchpoints to fit across all of your marketing channels, fully customize your program to fit your brand, and engage customers to encourage sharing.

Our take: SaaSquatch seems to have fewer third-party integrations than other referral marketing software options. The software tool also seems expensive and geared towards larger businesses, compared to other options.

Our take: Friendbuy is another one of the referral software veterans alongside Ambassador. It seems heavily geared towards ecommerce businesses. It also looks widget-based, so you might not be able to tweak the program to fit your needs if you need a more complex setup (say, a tiered or multi-step program).

About this software: ReferralCandy is a customer referral program web application for online stores to boost sales. ReferralCandy is an ecommerce plugin that helps with word-of-mouth sales. Set up your program and customize your rewards without getting developers involved. (Some of the top Shopify stores use this plugin to successfully increase referral traffic and revenues.)

About this software: Referral Factory is designed to help a variety of businesses create referral programs quickly. They offer 1000+ templates for a quick launch, or you can start from scratch for more customization options. Create a referral program in over 20 languages, and for mobile as well as desktop.

Our take: For a relatively new referral software, Referral Factory looks promising. Based on the examples shown on their website, though, it looks like the software is geared towards basic referral programs only.

Extole offers plenty of customization, reward, audience segmentation, and data options that enterprises want in a turn-key referral program. It also provides detailed profiles of all your advocates, so you know which referrers are bringing in the most revenue.

Referral software is a digital marketing tool that helps you track referrals your customers make, and automate processes associated with running a referral program. Thus, it lets you leverage and keep track of the word of mouth your customers generate.

Referral marketing software tools help you run successful referral campaigns. A great line of success is if the program can run automatically and generate referrals without much action on your part. You automatically track which customers make referrals, and reward customers when their referrals result in sales. It also generates detailed referral program metrics, so you can make informed decisions on how to refine your program.

But without a referral marketing strategy, customers may forget to share your brand with friends, meaning referrals can be unpredictable and infrequent. How to create an engine where customers keep generating valuable word-of-mouth?

Companies like Dropbox, Uber, Tesla and PayPal have all achieved significant results with a referral marketing strategy. Their success is proof that a strong referral marketing system can strengthen existing customer relationships, bring in new leads, and grow your business through trusted recommendations.

We may be a little biased, but the benefits of referral marketing are incredible. While it usually takes some time, building relationships and trust with your existing customer base is well worth the wait.

Referral marketing enables scalable word of mouth to happen. Because you are encouraging your biggest brand advocates to recommend you to others, a referral marketing campaign puts you in front of a large pool of people you might not otherwise have access to.

This means referral marketing involves a natural filter. Your current customers share your brand to their friends and family members, already filtering the people they think would benefit from your products and services.

You can also engage with existing referral program members by giving them shout-outs on social media, and showing appreciation for their support. A little public praise can be the exact engagement a customer needs in order to keep referring.

One especially powerful feature of referral marketing is that it has the potential to create a cycle of sharing. Previously referred customers are four times more likely to refer their own friends, in part because they want to pay it forward.

And once your referral program is up and running, it functions as a performance marketing channel (as you only pay when you see results). After the initial setup costs, you only have to pay out rewards when you get a new customer.

While the perfect referral marketing program depends on your business and market, there are a few best practices that can guide the way and optimize your referral experience. Here are the referral marketing strategies we find most valuable:

Why not use this to your advantage? Many referral marketing campaigns are shared on social media every single day, and these posts reach many sets of eyes all at once. If you make it easy for existing customers to share your brand on social media, you can increase your chances of being seen by potential customers. 041b061a72


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