Referral marketing is a powerful and important component for every business. Implementing some basic tactics can help encourage and facilitate the referral process which can be a major source of new sales. Ultimately A steady stream of customer referrals can transform a struggling business into a profitable one. Crafting an effective customer referral program takes time, but the return on investment can be startling.
Precision Targeting
Have you every tried using Google Adwords or Facebook Ads just to watch your money disappear, literally before your eyes? Many times this isn’t the fault of the platform, rather your targeting. A great marketing campaign involves two key components, a great message and laser targeting.
Referral and word-of-mouth marketing tend to be much more targeted because people tend to know their friends and social audiences pretty well. This allows your brand message to spread more effectively than with most other marketing channels.
Trust Factor
Trust goes a long way when it comes to convincing someone to buy something. If we don’t trust someone, we aren’t going to listen to them. Consider the last time a salesperson you know is on commission tried to sell you something. You likely had doubts about his authenticity due to a lack of trust. With referral marketing though, the sales pitch is usually coming from someone that you either know well, like friends and family, or it’s coming from someone you have trust in, like a favorite blogger.
Time and time again, studies have shown that people almost always trust these people’s opinions over generic advertisements and sales pitches carefully crafted by the brand themselves.
Reach and Acceleration
Not long ago, reach of the average reach of a typical consumer was limited. For the most part it was contained to the number of people they saw in person each day or talked to on the phone. In this day and age though, the average consumers’ reach is much larger and for many people with strong social followings, it can be enormous. Some consumers now have the power to make or break a business by what they say about it online.
Tracking
Asking a customer for a referral is one thing; delivering on your promise once they’ve successfully referred is another thing entirely. This process can sometimes takes weeks, months or years for a client to come through. Make it a practice to ask each new client how he or she learned about your company and then follow-up with the referrer (and your new client) to administer your referral gift in a timely manner.
Tracking can be difficult when you have a large number of clients. Ease the pain by using a customer relationship management (or CRM) system to stay on top of your referrals.