You don’t have to look too hard to find examples of referral marketing which have been successful and there are certainly plenty of marketers who consider it to be a vital strategy when it comes to achieving good levels of sales and conversions.
Referrals are an integral part of our lives and influence many of the decisions we make on a daily basis, from visiting a restaurant to seeing a film based on a recommendation from a friend.
Once you have a fundamental understanding of why referral marketing can be such a powerful force, you can start to build a lead management system to make the most of every opportunity.
Hitting the right spot
It can be very frustrating when you allocate your marketing budget to mediums like Google AdWords or Facebook advertising, only to experience difficulty in getting some tangible in return for your investment.
Of course, these platforms can be a source of success, but the problem lies in the fact that this marketing method is not as targeted as referral marketing, which means that you could be spending money on trying to reach the wrong audience.
Referral and word-of-mouth marketing is often able to boast a higher success rate because it is by design, more targeted because it involves friends and social audiences who know each other and already have a connection.
Another key attribute of referral marketing is that there is often an element of trust already there because we know the person or source of the recommendation, which is pure marketing gold in some respects.
Being sold a product or service by someone you don’t know immediately raises questions of trust and authenticity in a lot of people, whereas that same pitch coming from someone you know will often be more persuasive.
If you are not sure of the premium that marketers and customers attach to the importance of trust, you only have to look at the results of a marketing survey which demonstrate that recommendations from friends or trusted sources score very highly.
Building a referral program
Having established the importance of trusted referrals you will no doubt want to create a referral program that allows you to utilize this goodwill to generate sales.
The first point to consider is that timing is everything when it comes to a successful referral.
It would be inappropriate to ask for a referral from a customer at the point of signing them up as a new customer, so wait until you have developed a relationship with them and maybe the next time they are buying from you, ask them if they know of anyone to recommend you to.
Another sound way of ensuring that everyone is happy with the referral program you have set up, is to devise a scheme which rewards both the referrer and the referee.
If you offer an incentive like a discount or a free gift for referring your company to a friend, this can often transform your valued customers into virtual members of your sales team.
Always thank your customer when a referral is successfully completed and if you stick to a simple plan, you should find that you are able to build up a good database of loyal customers who are happy to recommend you to others.
Tanya Mueller has enjoyed success in a number of marketing roles. She enjoys the challenge of driving sales and likes to share he insights online. Tanya is a regular contributor on a number of marketing-orientated websites.