Get the desired boost to your business with the ground-breaking advantages of referral marketing!
Referral Marketing is the hottest topic in the marketing sphere today. Many organizations are making a beeline towards this very lucrative marketing strategy and reaping great rewards.
But how does it impact? What impact can it create for your business? We are here to tell you just that. So, here is the ultimate guide to referral marketing.
What is referral marketing?
Let’s start by providing all the basic information related to referral marketing.
- Referral marketing entails rewarding customers to promote a business’s products or services to other prospective customers.
- Earlier, the word-of-mouth reviews and suggestions from existing customers used to happen naturally and were not influenced. But now, through referral marketing, organizations can use this channel to their advantage.
- With the advent of the internet, it has now become easier to influence consumer behavior by referral marketing through various social media platforms and forums.
How does referral marketing work?
Even though quite a number of people understand the importance of referral marketing and what it means, they still don’t understand how it is implemented practically. Essentially, referral marketing involves the following steps: –
- Existing customers of the organization are offered lucrative rewards if they refer or suggest the product or service they availed to other prospective customers.
They get a referral code or link for the same. For every converted referral, they get a pre-determined reward from the business.
As the number of converted referrals of an individual increases, he or she gets a bigger reward. This way, the customer has incentivized to target the right audience and increase the converted referrals faster.
- Social media platforms and forums are the main avenues of referral marketing. The existing customer can use these platforms to either refer the services to friends, or other prospective customers through social media posts or forum discussions related to the service area.
Many platforms also offer ways to optimize referral marketing efficiency to organizations after analyzing how marketing’s performance has been on their respective platforms.
- Organizations also offer incentives to customers to share their positive experiences related to the services of the business on their websites.
It is ensured that the individual is an existing customer of the business and not posting false experiences.
- Many times, organizations also offer rewards to customers who avail of the referral codes or links provided to them by the existing customers.
This creates a win-win situation where both the referrer and the referee benefit. But of course, the business is the ultimate winner!
The major advantages of referral marketing for your business
Why is the world going gaga over referral marketing? Because of its innumerable benefits. Let us present to you the miracle that is referral marketing.
1. It relies on the most trusted marketing strategy in history
Word-of-mouth has historically been the most effective marketing tool. It is a proven fact that people rely the most on the opinion and suggestion of the existing customers of a business.
Human beings are social animals. They are ingrained to share their own positive and negative experiences with other people. Whether intentionally or unintentionally, people tend to act and make decisions based on the experiences of other people.
Thus, positive referrals by existing customers create a powerful impact in the minds of prospective customers, who then tend to act in a similar manner.
Thus, there is no other marketing strategy that touches upon the basic psychology of humans like referral marketing.
2. It is specifically aimed towards the target audience
Although the usual marketing strategies try to reach their target audience, it is challenging for them to do so accurately.
However, referral marketing has the significant benefit that the existing customers refer the organization’s services to only those people who need that service.
They usually ascertain this by finding social media or forum posts that discuss similar services or the need for them. Also, since they are rewarded only for converted referrals, they try to find out the prospective customers accurately.
3. Much more cost-effective than other marketing strategies
A significant advantage of referrals marketing is that only those referrals are rewarded, which produce new customers.
The existing customer may share as many referrals as they want, but they only get rewarded for those specific referrals which convert into new customers of the business.
This ensures targeted marketing since the existing customers try their best to reach the target audience to get converted referrals.
Also, since prospective customers are more likely to view referrals from people they know, thus, referral program has much less wasted effort than all other prevalent and traditional forms of marketing.
It also ensures that there are significant cost savings for the business, as the marketing targets only the audience that the business wants.
4. Referred customers are very likely to remain customers
Referred customers become customers because they have received suggestions of the business and its services from trusted acquaintances.
Since they have already formed a positive opinion even before engaging with the business, they are more likely to remain for a longer period than a non-referred customer.
This also is significantly cost-effective for the business, as it is always cheaper to retain existing customers than engaging new ones.
5. Passive marketing strategy for the organization
In traditional marketing, businesses have to remain engaged in marketing efforts year-round. This wastes valuable time, effort, and money, all of which can be much better utilized for further growth and expansion of the business.
Referral marketing has the great benefit of not needing much of any of those. Once the simple steps of setting up a referral platform and a rewards program have been put into place, not much is left to do for the business. The customers themselves do most of the work. Thus, it is highly efficient and cost-effective.
It’s time to use the power of referral marketing to your advantage.
Now we come to the main crux of the matter. You now know what referral marketing is. You even know how it functions and its various advantages. But will it have a great impact on your business? The short answer is YES. This is the ultimate marketing strategy, which can hurtle your business forward at supersonic speeds. Don’t let other companies get the edge ahead of you. Invest today in referral marketing and let the business soar!