Do you make use of referral marketing for your business? Maybe you don’t know exactly what it entails. Or you think it’s not necessary for your business. Referral marketing is one of the most cost-effective ways of marketing that is overlooked by many businesses today.
It would seem like with all the media attention on social media marketing, video marketing, and basic internet marketing, a lot of business owners have totally dropped the ball on referral marketing.
Don’t forget that before the advent of television commercials and newspaper advertisements, there was word-of-mouth marketing. Just imagine the number of products you’ve bought because someone recommended them to you. And if you’ve ever used a discount code from a friend to purchase a certain product, then there is a good chance you’ve been a part of a referral marketing campaign.
Stats reveal that companies and brands that make use of referral programs have seen increase in revenue growth in the past few years. So, if you’re not making use of referral marketing or don’t know what it is, you’re probably missing out on one of the most effective ways of turning prospects into customers.
Now, you may be asking, what really is referral marketing? And is it the same thing with word-of-mouth marketing? That’s exactly what will be covering in this article, and the benefits of using referral programs like Talkable Referral Platform.
Referral marketing
Simply put, referral marketing is where you offer your already existing customers a reward to introduce your business and/or services to their friends. In return, there friends also get a discount off their first purchase with your business. A good example will be sending any of your contacts a personalized referral code to use for Uber. You get a reward for referring your friend and they get discount on their first ride with Uber.
Word-of-mouth marketing
If you’ve ever referred your friends to any good product or service without any rewards or incentives, then that’s word-of-mouth marketing. In the same way, if you had used a product or service because you heard about it from a friend, and you didn’t receive any incentive for it, then that’s word-of-mouth marketing as well.
But, if a friend sent you an email with a discount code for a product, this would be a good example of referral marketing. You now see the difference?
One good relatable example of word-of-mouth marketing is the story behind the Paris media brand, “My Little Paris”, which was founded in 2008. The company successfully grew their subscriber base to 4 million, as at 2017. It all started with one person emailing her 50 friends, telling them she has just discovered a secret neighbourhood. Within six months, they had 10,000 subscribers, and then 800,000 in three years.
That is the power of word-of-mouth marketing. Aside from the fact that the company deliver a compelling content with their newsletters, it’s also about spreading the word about their brand. Each newsletter had a button that says, “share with a friend”.
Referral marketing Vs. Word-of-mouth marketing
Even though referral marketing and word-of-mouth marketing may look alike, there are key differences. Admittedly, both use existing customers to spread the word about a business. However, the main difference is that in referral marketing, you’ll need to offer your customers an incentive to keep referring prospects to your business; whereas in word-of-mouth, everything is organic.
Putting it succinctly, in referral marketing, brands persuade customers to spread the word about their services by offering an incentive for it. While in word-of-mouth marketing, brands don’t have to do anything, as they rely on their customers to spread the word about the brand on their own accord.
Benefits of using referral marketing
Referral marketing is an easy and inexpensive way to grow your business. Take for example, Dropbox achieved a 3900% in user growth in only 15 months, just by introducing a double-sided referral program.
Marketing specialists consider a lot of channels when they’re creating a marketing plan to reach out to the target audience of a business. They create social media channels, paid advertisements, etc. Yet, they forget to leverage the existing customer base of the business, which is a big mistake. If you’re a business owner, and want to consider referral marketing, Talkable is your go-to source referral marketing platform on how to effectively use referral marketing to grow your business.
Here are more reasons why you should consider a referral marketing platform:
- Expansion of your customer base – Regardless of your type of business, you’ll need to continue growing. These days, businesses focus more on digital channels such as social media and paid search to grow their business. Having you considered giving back to your loyal customers by investing in a referral-based campaign? This will help generate more leads for your business, and grow your customer base. The good thing about referral marketing is that it will improve customer loyalty, as well as bring in high-quality customers for your business.
- Referral marketing is most effective – Referral marketing has the best conversion ratio when compared to other marketing channels. Not only will you be generating revenue, but you’ll also be increasing your customer base at the same time. Research show that the new customer base you’ll be generating has a better retention rate when compared to other marketing channels. Also, a lot of B2C businesses have reported that referral marketing was their most-effective marketing strategy.
- Referral marketing is the most trusted channel – People trust referral channels the most because the referral is coming from someone they know. Try to remember the many times you’ve bought products or used a certain service because someone you know and trust recommended them to you. Businesses trying to persuade you to use their products don’t know you better than your friends. It’s someone that knows you that will suggest a likely product that they know you’re going to like. Referral programs result in an exceptional match for businesses, and this is why you should consider it for your audience.
Why you should start using referral marketing from today
Referral marketing is a big sales force for your business because people come to you already pre-sold (by their friend). They have been told you’ve a great product and/or service by someone they know and trust. Now, this is effective advertising, as you don’t have to do anything much to turn them into customers. Another thing, the new customers you generate may likely duplicate the entire process by referring their friends to your brand – more awareness, more customers, more sales.
It can be a lot of ‘headache’ to set up a referral marketing platform on your own. Having a reliable referral marketing partner can make a big difference in your marketing campaigns. Learn About Talkable today and see how they can help your brand create a successful referral marketing campaign. They have done it for a lot of brands, and will do it for you too.