The Power Of Referral Marketing

In the digital era, referrals are incredibly valuable. Approximately two-thirds of consumers make purchases based on the recommendation of someone they know. In a recent study, it was also revealed that people are four times more likely to buy if they're referred by a friend, and that word of mouth drives 20-50% of all purchases. Because consumers are increasingly trusting the opinions of real people over traditional advertising, referral success is at an all-time high.

Referral marketing is a powerful marketing channel that can be strategically used to tap into the power of consumer recommendations for business owners to achieve results.

Referral Marketing: Why Social Currency Works Every Time

A referral marketing technique is a practice of promoting a business's products or services by way of word-of-mouth referrals rather than traditional advertising. In return for generating sales for your business, your referral partners usually get commissions or other benefits.

There is no better audience for sharing your product and vision than your customers, fans, and power users. Using these programs, you get qualified leads from trusted sources outside your sphere of influence.

You derive the most value from your customers through their referrals, not from their initial purchase or upsell purchase. Your customer's satisfaction in each of the other phases in the lifecycle should lead to referrals easily if you provide an exceptional product and experience.

The most common referral marketing channels used by referrers today are:

  • E-mail: A personalized email sent by the referral partner to lead prospects to fill out a prospect lead form
  • Shareable URL: A link you can give your referral partners to copy and paste into their networks
  • Social media: Branded posts that referral partners can share on LinkedIn, Twitter, and Facebook, as well as any other social media platform you use
  • Verbal: Referrals are collected verbally from partners and entered into your CRM by a member of your sales team.

Customers have become increasingly reliant on reviews, testimonials, and other forms of social proof to make buying decisions. Traditional modern marketing techniques cannot compete with the legitimacy and authenticity of referrals. People recommend products or services after having personal experience with them and believing in them enough to share their recommendations.

People who are referred to your brand are more likely to consider purchasing from you and feel a sense of trust in the relationship between you and your new customers.

The Millennial Effect

There are about 80 million Millennials in the U.S., and their combined spending power is $200 billion. The traditional playbook no longer works for this new generation, as is increasingly apparent.

Traditional advertising simply isn't trusted by millennials. Inauthentic, sales-y messages interrupt their day and tell them why they need to buy X product. They are more likely to respond to messaging relating to their interests, telling a unique story, or making a personal connection with them.

They value authentic, personal connections with brands and rely on word-of-mouth recommendations, which demonstrates their preference for personal endorsements over conventional marketing.

Millennials are willing to support companies but don't just support any company. Their engagement expectations differ from other generations. They need to feel a sense of connection with your company as well as believe your product is great. Millennials are incredibly receptive to brands and referral programs that resonate on a personal level.

In today's market, referral marketing has become one of the highest converting channels regardless of the age group you try to reach. Referral marketing is so successful because of the belief in and reliance on social proof, as well as the desire to connect with more authenticity. If you want to generate referrals as part of your marketing strategy, give your customers good reasons to refer you and make them feel like they are helping you in a truly meaningful way.

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Thursday, April 21, 2022
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