What is Referral Marketing?
Whether it’s a restaurant, a job opening, a movie, or a travel destination, we’ve all made referrals about something to someone.
That’s because we are social animals, as said by Aristotle. In the book “Sapiens” there is a very interesting passage that says that when we learned to communicate, we already told each other where there was danger and where there was food. We were already making recommendations to help our community.
People (a.k.a. we) like to share good experiences. We enjoy feeling like we just found the pot of gold at the end of the rainbow. And we have a primitive need to share those achievements in order to feel part of the community.
So the job of the brand is to offer an amazing experience and to make sure that everyone knows how valuable the product or service is. By doing so, you benefit from Referral Marketing, a strategy that encourages customers to tell friends and family about your business, becoming another sales channel.
Keep this in mind: consumers trust their friends more than they trust vendors.
So companies that use Referral Marketing definitely reap the benefits: It’s more cost-effective than traditional marketing strategies because it’s totally organic, and 59% of companies with referral programs have higher lifetime value clients.
Trust is the essence of this strategy
Referral marketing works for one simple reason: trust.
Real people’s opinions, especially when they’re connected to your inner circle (family and friends) have way more influence over generic ads and sales pitches. It’s like the story of the restaurant. You can look for reviews on apps and websites, but you’ll probably stick to your friend’s recommendation after all.
Psychological studies show that humans are somewhat hardwired to trust each other. In one study, brain regions associated with positive emotions and decision-making lit up when people interacted with close associates to play a game fairly. This means our trust in people can help us make decisions, such as buying products.
Having a good referral program can help build longer-term relationships with your most loyal customers, and also creates a funnel for new qualified leads.
How to apply Referral Marketing to your business (with examples!)
One option is for you to just sit and wait for your clients to write inspiring reviews and referrals. Yes, it can happen. But it will be slow and unsteady, which doesn’t bring relevant results. So you need an on-point campaign and strategies to drive people into spreading the word about their experience with your brand.
In order to make it a continuous program, we have to come up with different ideas and approaches, increasing the influence and reach of word-of-mouth. And it doesn’t have to be expensive or complicated!
These are 5 ways to apply Referral Marketing in your business in a simple and effective way.
Offer valuable rewards
Referring products and services to friends and family at the trade of some perks such as discounts and small prizes is one of the most common tactics within Referral Marketing. From small businesses to industry giants, basically anyone can adopt this strategy at low costs and high returns.
Tesla has been doing referral campaigns for quite a while now. That’s probably one of the reasons its customer satisfaction rate is 89 out of 100. It states on its website that its goal is to build the best clean energy products and help Tesla owners share their excitement and experiences with others.
As a Tesla owner, you can earn awards when your friends and family use your referral link to order eligible Tesla products. Plus, they make it really simple. You just need to download the Tesla app to start sharing your referral link and track the status of your awards in the Loot Box.
Make the most of seasonal campaigns
Seasonal events are a great opportunity to create unique campaigns and get more referrals. Think about Christmas, New Year, Valentine’s Day, Summer… you name it!
Most sports leagues have referral programs within the duration of the season. Take for example the season ticket referral program by the Tri-City Americans. For every ticket purchased by a new referral, they offer one entry to win a specialty jersey – which is super exclusive.
Web3 projects are also onboard the referral marketing train. Infinito Wallet used the Christmas season to spread the word and celebrate their 2nd year anniversary. It was a short-term campaign with only 1,000 slots available, where they were giving away $2 INFT for each user and $1 INFT for every friend the user referred to.
The best about using those commemorative dates is that it doesn’t have to be something big, just something timely!
Find Brand Ambassadors and Influencers
The best people to promote your brand are those who already love what you do and sell. These people are not just satisfied customers, they are your brand ambassadors!
Sometimes, a brand ambassador can also be an influencer. From a micro-influencer to a major one, they can spread your brand for you, introducing your company to sometimes thousands of other people.
Just by showcasing your product, an influencer can drive as many sales as a 50% off sale.
Just make sure the influencer actually loves your product/brand before you start your campaign. Because people can always tell if the relationship between your brand and the ambassador is real or not and they will judge you for it.
Share it on Social Media
Social media is THE place to create a referral campaign. Everyone is already connected to their peers with similar interests and demographics. This means that you’ll most likely reach the ideal customer when you get a referral and increase your chances of conversion.
It could also increase brand awareness and potentially go viral.
“How?”
The average internet user spends up to 145 minutes on social media every day. This gives you the time and opportunity to get your message out there. To make the most of it, remember to make it simple and easy to share.
You can send codes or links for your customers to share with others. This way, customers can get free products, discounts, or trials of some of your services.
Try something new with Gamification
How about trying something new and fun with elements of gamification?
The reason why most games are so addictive, is because they are designed to boost serotonin, the hormone that makes us feel happy. You can add those game-like features to your referral programs in simple ways, such as creating a point system or a progress bar.
Harry’s popular referral program shows a progress bar where customers can check their progress, just like level up bars at some games. Progress bars are often used in tiered programs where the more referrals, the higher the reward.
Other gamification ideas include:
- Badges and achievements
- Leaderboards
- Contests
- Milestone rewards
How web3 projects are redefining Referral Marketing
Since web3 projects are heavily based on communities, it only makes sense to think that referral campaigns would work in this space. You already have a loyal and engaged community, now you can simply ask them to support and help spread the word about the project.
Referral programs can fuel community building.
There are tons of examples, but let’s take a look at Numbers, a decentralized photo network for Web 3. They released on May 19th their first referral program, which consists of a code that users can share to get rewards. With no referral limits, both the Referrer and Referee receive bonuses NUM Points immediately once all conditions are met.
Binance introduced their referral program at the beginning of their brand, in 2017. That was one of the major drivers of its growth, and the program is still currently ongoing.
They set up their program to turn its users into brand advocates, rewarding both new and existing users. You can earn commissions by inviting your friends to join the Binance community and every time someone registers through your link, you will receive a commission on fees whenever the new user trades on any of Binance’s Spot or Futures.
Bonus tips to build an effective campaign
Now that you’ve come this far, you understand the concert and the benefits of Referral Marketing and you are ready to build your own campaign – that’s great! But first, you should take a look at these tips:
Make a plan: Ask yourself questions like “What duration will the campaign have?”, “How will the message be delivered?”, “What is my goal with this strategy?”, and so on to have a clear roadmap of how your campaign will be.
Design and UX must be a priority: Have you ever tried to sign up for a program that was so badly designed it made you quit the experience altogether? Simplicity is key. Make sure you have easy-to-understand rules, simple sign-up methods and a fast and accurate reward system.
Reward with value: Give your customers what they want. The right campaign will motivate them to become even more in love with your brand. Remember: this is your chance to build real brand loyalty.
Distribution is key: Promote your campaign across multiple channels and make it easy for customers to discover.
Measure and test: Make sure you are analyzing the right data and following the right KPIs. You can see how many customers sign up for the program, how many referrals they make, and which platform they use, for example..
Find the right partner: You don’t need to do it all alone. We have the experience to make your referral campaign a success. Just schedule a call with our team and let us build an amazing plan together!
TL;DR
Referral Marketing is a classic case of a win-win for all parties: You are happy with your experience, you share it with your friends and family (who also have a great time), and the brand increases its revenue and wins more loyal customers.
Keep this in mind: consumers trust their friends more than they trust vendors.
But you need an on-point campaign and strategies to drive people into spreading the word about their experience with your brand. Plot twist: it doesn’t have to be expensive or complicated!
Check 5 ways to include Referral Marketing in your marketing strategy:
- Offer valuable rewards
- Make seasonal campaigns
- Find Brand Ambassadors and Influencers
- Share it on Social Media
- Try to include Gamification
The concept of Referral Marketing is super simple, what makes the difference is the creativity and understanding of how to amaze your client, either with your products/service or with your program rewards.
