This is ReferralHero, the most stunning and delicious icing on any marketing cake. Pull out those cake-decorating tools, load them up with the freshest referrals around, and try not to lick the mixing spoon.
When I experience something amazing, one of the first things I do is reach out to my friends and tell them about it. I’ll send them photos of myself outside a cool restaurant, or package up a cupcake from my baking adventures.
Whatever it is, there’s a powerful urge to connect with the people I care about because of it. As a marketer, that’s a power I want to tap into, and referral marketing lets me.
Again and again, studies have shown that people are more likely to listen to people they know when choosing what products to buy. A recommendation can make someone 4x as likely to buy!
But those kinds of returns don’t happen out of nowhere. Even the best referral programs need a well-thought-out strategy. Let’s dive into my guide to finding yours!
What is Referral Marketing?
If you’ve ever recommended a product or company to a friend, you’ve participated in word-of-mouth or referral marketing. Your business’s leads can grow exponentially when you find ways to make your customers tell their circles about you.
As lovely as it would be to have people spread the word unprompted, that’s seldom the case. You can put a little zip in their step by offering a reward.
This is a low-cost, high-impact way to advertise your brand because it encourages your existing customer base to do the hard work for you.
Benefits of Referral Marketing
Word-of-mouth marketing is extremely effective, and a strong referral program can make it a no-brainer for your customers to generate. However, that’s not the only benefit of this style of marketing.
Each time someone refers your company, you’re stacking up
- Social Proof - We are hardwired to put value into what others are doing. If all your friends are using a product or service, chances are you are too.
- Social Currency - People use social currency to enhance their image. This means that they are only going to recommend things they believe in - otherwise, they won't look good. By recommending your brand to their friends, they inherently show it in a good light and generate social currency for you!
- A Target Market - If someone is invested enough in your product to recommend it, they’re your ideal audience. By tapping into their network, you’re accessing more people just like them - your target niche.
- Customer Loyalty - Referring your company means people are thinking about why they like it, increasing their loyalty. What’s more, the person they refer will usually be more loyal and valuable than a customer you found organically.
Over time, you’ll be able to “cash in” all those benefits for an active, dedicated base of customers who are as excited about your product as you are.
Top Five Referral Strategies
In order to make the most out of a referral program, you need to have the perfect strategy. Every industry is going to have its own quirks, but there are a few core concepts that work no matter what.
Choose The Perfect Reward
Let’s face it, most people are only going to get invested in referring your brand if the incentive is something special.
This is a great opportunity if you let it be. The perfect reward will get your customers excited, while also getting them more invested in your brand.
Gifts like early access to products, discounts, and branded merch make your referrers feel appreciated while bringing them back for more. If you want to give them memories for a lifetime, planning a referrer-only event might keep you top of mind.
Another way to make your gifts work for you is to offer a two-pronged reward. If both the referrer and referee get something, that boosts your chance of success.
For example, Koho offers $20 to both people involved in a referral. This makes it feel like the referrer is giving their friend a gift, making everyone feel excited. It also incentivizes the new customer to make a purchase.
Make It Easy
If people have to do a lot of work to start referring people, they're probably just going to click away.
Make sure to make your referral program easy. Offer branded social share links that are pre-filled with a personal message about why customers should check out your brand.
If you set them up with a custom link, all they have to do is pass that link along to friends and go about their day. Easy-peasy!
Offer friends an easy way to see how much their referrals earned them. A leaderboard showing the top referrers and the rewards they’ve earned is a great way to keep them engaged.
Leverage Social Media
When it comes to reaching people’s networks, you can’t beat social media. It’s a whole community of people sharing things they care about.
If your customers share your referral program on their accounts, you’re reaching hundreds, if not thousands of people. This gives your referral program a lot of visibility.
Providing a quick and easy way to share your program on social media, as well as offering fun materials for posts, makes your company as simple to spread around as a funny meme.
What’s more, you can use the campaign to drive people toward your own social media pages to boost engagement and expand your reach even further.
Utilize Referral Software
Manual processes can be slow and tedious, and your customers don’t want to wait on a response for their referrals. Automating processes with referral software like ReferralHero can help streamline everything from the referral link creation to tracking every referral.
We can also show referrals directly in the platform to make it easier for referrers to track their progress. You’ll have access to analytics that can help you optimize your process even more.
Find Partnerships
This strategy is all about connecting with your customer’s community, so why not reach out to your own community while you’re at it?
You can collaborate with another brand in your niche to create a contest or promote each other’s companies. The goal is always to expand your circle, and there’s likely loyal customers from one company that would love to hear about the other.
Another type of collaboration is one with a brand ambassador or influencer. These deals can function like a boosted version of your regular referral program, using software to track link clicks and leads that come from their posts.
The only downside to these kinds of collaborations is that your regular incentive will likely not work. You’ll need to come up with a separate agreement.
However, it’s a great way to get the ball rolling and see what’s possible through referrals.
Industry-Specific Strategies
What works for a bakery isn’t going to work for a B2B manufacturing company. The types of deals are different, the investment from customers is different, and the needs of the company are different.
It only makes sense, then, that the strategies would be slightly different too.
Small Businesses
If your company is on the smaller side or just starting out, you likely have less of a marketing budget to work with. That’s where word-of-mouth marketing works so well.
A more traditional referral program would be a great fit in this situation, and having software like ReferralHero can help you get it right the first time. With solutions for online and in-person referrals, it will cover all your needs.
Make sure your reward is related to your business itself, like a discount or branded merch, so you keep customers coming back again and again.
Another great option is getting involved in the community by visiting or sponsoring local events. The more people see you, the more likely they are to listen when their friends bring you up.
E-commerce
Online businesses present their own challenges when it comes to building community. Your customer base could be from anywhere, and they’re far less likely to think of you while out and about IRL.
This is where social media marketing and timely pop-ups can come in handy. Consider baking your referral program into a thank-you page to capitalize on the good feelings.
In the example above, you can see how the page lets people know about the referral program when they’re already engaging with the brand and makes it easy to share their link online.
SaaS Businesses
Because SaaS businesses operate on a subscription model, they are in a unique position. Every customer who is referring your company will, presumably, be planning to keep subscribing to your service.
Focusing on rewards like discounted subscription fees, free months, or upgrades, you’ll be able to keep your customers invested in continuous referrals.
Again, make sure your referral links are easy to find and send out, and make it simple for people to track their progress toward more free stuff.
By working on online channels like emails, social media, and direct messaging, you can keep your audience invested to the very last click.
B2B Businesses
Due to the long sales cycle and professional atmosphere, B2B referral programs are their own beast. The people you interact with likely aren’t the ones making the final decisions with money, and they don’t have the time to dedicate to sharing your company.
Make sure everything is as simple as possible. Your contacts won’t have time to fill out long forms or deal with complicated processes.
Every process should have clearly defined rules and agreements. This is a deal between businesses and should be treated as such.
Consider offering referrals in return for leads. The goal is to make every interaction as mutually beneficial as possible.
The Bottom Line
It’s easy to see referral programs as a one-size-fits-all solution to lead generation, but there’s a lot of strategy and planning that goes into them.
Before your team starts on the journey, they should take the time to examine their target market, think about the sales cycle, and choose the right tools to make magic happen.
If you know what your industry requires, and how your customers think, you’ll be serving up a delicious cake of referrals before you know it.
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