Blog
Events
How to Use Referral Marketing to Boost Your Campaigns

How to Use Referral Marketing to Boost Your Campaigns

When you go above and beyond for your customers, you want everyone to know about it. But telling people how great you think your business is yourself might not have the desired effect. This is just one of the reasons why referrals are so important in sales and marketing.

If you’re not sure what we mean by referrals, this is when your business gets recommended to a new customer. Referrals can come from both internal and external sources. Referral marketing is the specific strategy of encouraging or sourcing referrals directly.

Referral Marketing Explained

You might be asking, “How can you source word of mouth recommendations?”. Well, you can’t force people to recommend your product. Using referral marketing, though, you can encourage and enable recommendations.

You can signal-boost recommendations using your marketing team. You can also encourage partner businesses or vendors to recommend your business while offering the same to them. Before we get into that, let’s look at the different types of referrals.

Types

As discussed, referrals can come both internally, from your employees or partner network. They can also come externally from customers or even paid third-party traffic sources. The types of referrals can be broadly separated into four categories.

Customer

Referrals from your customer base can be the hardest to obtain. They’re also among the most valuable types of referral. Naturally, customers are more willing to trust their friends’ opinions than the words of a marketing team.

Having a clearly visible and accessible referral program can help with obtaining customer referrals. We’ll cover this in more detail later. Broadly speaking, though, the easier you make it for customers to champion your business, the more they will do so.

Customer recommendations are valuable for any business. They’re especially useful to startups, though. A startup with a limited budget needs to rely more on word-of-mouth marketing than big campaigns.

You can integrate this with traditional ideas like email marketing and everyday marketing tools. We’ll cover customer referral program ideas, like a refer a friend program, in more depth later in the article.

Employee

Nobody knows more about your business and its products than your team. Positive referrals from staff can be a valuable asset for both sales and recruitment. When customers know your staff is fulfilled, trust in your brand and business increases.

When potential employees see your team talk about their positive experiences, you’ll attract a higher caliber of applicants. We’re focused on marketing here, but remember that positive referrals can do more than increase conversion rates.

Partner

Your partner referrals can come in different forms. You might obtain partner referrals through guest posts on partnered blog sites. Product reviews and backlinks can also be partner referrals. Essentially, this is any referral that comes from an affiliated business or creator.

If you have a referral program for influencers and content creators, these would also be partner referrals. Successful referral programs often make use of these channels. Recent demographic data suggests that the millennial audience is more likely to engage with these sources.

Cross-promotion

Vendors, suppliers, and business contacts, if you have an established business, then you already have a network of these contacts. Many businesses will be willing to offer like-for-like cross-promotion.

Securing cross-promotion from a large vendor, like Uber, to a major supplier, like Tesla, can be a huge boon to a new or popup business. You can draw the eyes of many potential customers this way.

This means that they promote your related products to their customers while you promote theirs in turn. For example, motor insurers will often cross-promote breakdown assistance companies like AA or Green Flag. In return, these companies often offer discounts to these customers.

Benefits

The best referral program ideas can bring all kinds of benefits beyond new customer acquisition. According to recent data from Finances Online, customers who are referred to your business are more loyal and have higher spending rates. As well as a higher lifetime value (CLV.)

Warm Leads

Referred customers are valuable because you already know they’re interested in your business. If they were referred by a friend, it’s probably because they asked for a recommendation. If they were referred by an influencer, they were likely looking for trustworthy advice.

That makes referred customers warm leads. For a quality sales agent, these kinds of leads are easily developed into high-value, ongoing business. The opportunities for up-selling and cross-selling to these customers are higher too.

Higher Conversion Rates

Warm leads are more easily converted into sales. This means that attracting these kinds of referred customers will increase your conversion rates. It’s similar to attracting organic traffic through affiliates in that these customers are already aware of your services.

When sales agents deal with engaged customers, they find it easier to sell. This can have a positive effect on motivation. This, in turn, gives agents more confidence to overcome blocks and stumbling points with more reluctant customers.

Brand Loyalty

Happy customers are loyal customers. According to Groove, 69% of customers who had a positive experience would recommend a business to others. If a referred customer has a positive experience, this “recommendation chain” keeps growing.

Other recent research has shown that each happy customer will give you not just one but up to nine referrals. As you provide a good experience for these new referred customers, this effect multiplies.

Here are a few more collected statistics from the Finances Online report that really highlights just how valuable referral business can be.

37% higher retention rates for your referred customers than other marketing channels.(Ross)

Referred customers are four times more likely to recommend your brand.(Ross)

Leads from your referred business have 30% higher conversion rates than other channels.(Ross)

This referred business gives up to 16% increased customer lifetime value.(Ross)

92% of customers trust the recommendations of friends or family over advertising. (Chua, 2021)

How to Build a Referral Program

If you’re a startup or a small business, you’ll be building your referral program from scratch. You don’t have to go it alone, though. There are third-party software options that make referral marketing ideas easier to manage.

Brand partnership programs, like Affise Reach, can help even new businesses find and establish lasting business partnerships. Let’s take a look at the core principles you’ll need to keep in mind while planning your referral program.

Build Relationships

Good business relationships can help establish a new business. Knowing the best suppliers and vendors can make the difference between success and failure for startups. It’s also good practice to know who else operates in both your business sector and your local area.

Often, identifying other like-minded businesses can help you develop partnerships that wouldn’t be immediately obvious. Even competitors can sometimes be useful co-operators. If you both work in the same area but have different specialties, for example, the co-operation can work.

When you set up a business, you might not know who these other businesses are. You might not even know how to find that information. If that’s your position, then try researching with assistance from experts and looking for third-party market data.

Make It Simple

When you’re setting up a referral program that enables customer referrals, you need to make it simple and accessible. Customers will respond well to these kinds of programs when they have a simple interface, clear reward policies, and an easy path to referral.

In practice, implementing a system like this requires a few steps. It needs to be simple for your customers, but it might not be simple for you. Start at the beginning with a clear and concise landing page.

First, consider your point of sale. You don’t want to harm your referral marketing program at the start by inserting your request poorly and hurting the user experience. At the same time, you need to make your program clear and prominent.

You can achieve this by including your referral process information post-purchase. Make the initial request eye-catching and make any incentives clear upfront. You may need to provide more detailed information, but you can do this at the signup stage.

Next, make sure the signup form is one click away. Integrate this with your customer account system or CRM software, which an orchestrator process by DataBricks can help. If the customer is new, collect the information you need once, then let them use it again, for example, by letting them claim rewards through the same platform.

Cast a Wide Net

The most valuable referrals tend to come from your most loyal customers. They aren’t the only source of referral business, though. For customer, affiliate, and partner referral programs, it’s often a good idea to make it accessible to as many people as possible.

This means making your referral program promotions a part of your wider marketing strategy. Your social media marketing should include links to your program, Twitter, LinkedIn, Instagram, and other channels.

You should consider including it with your vendor materials, too. When you incentivize based on conversions, you ensure that business from all these sources is filtered to keep the relative costs low. Make use of social gifting for customer referrals.

Monitor & Improve

As your referral program grows, it’s important that you monitor which parts of it are successful. Continue to refine your process as you go to avoid waste. Business intelligence software can help you stay on top of your data management.

Analytic software or ecommerce apps can be important, too. Keeping track of things like your SEO scores can help your partner content succeed. Your app retention rate increases from referred customers, as will your conversion rate.

7 Top Tips For Boosting Your Referral Marketing Campaigns

Above are the basic principles that will help you keep your referral marketing campaign on track. Now, we need to cover some more advanced digital marketing strategies and referral program examples.

1. Incentivize

We’ve mentioned referral incentives more than once already. That’s because offering a referral reward is one of the best ways to increase uptake on your referral program. According to research by Borowski, 52.3% of customers will recommend a business to friends and family if a reward is offered.

These don’t just have to be cash rewards, although that is an option. There are some more cost-effective methods you can use to similar effect. You can also offer a range of services and deals, from giveaways to tiered rewards. Some of the more effective choices include:

Reward points and loyalty points
Store credit or online vouchers
Exclusive discounts
Raffle entries and prize giveaways
Tiered account upgrades
Gift card offers
Referral contests
Mystery gifts
Free products and other perks

This list is far from exhaustive. What you choose could be unique to your business model. As long as it’s something your existing customers want, you’ll see an increase in referrals.

How you implement incentives can be important as well. If you want as broad a response as possible, then you should think about offering traffic-based incentives. This means incentives are offered on the number of referrals you receive, not on sales.

However, if you want higher value, specialized traffic, then you need to offer incentives based on conversions. This will ensure that influencers, customers, or partners are focused on providing quality rather than quantity.

2. Third-party Traffic Sources

As well as organic referrals from customers, employees, and so on, you can also source referrals from third-party businesses. These businesses offer referrals as a service, like a SaaS business, often being able to offer large volumes of traffic at consistent rates.

However, not all of these businesses will offer quality traffic. Many of them charge based on each new referral. So, you’ll need to do a little research if you want to pursue this strategy. Being able to track and manage data on referrals from these sources will also be essential.

3. Seasonal Promotions & Events

You should always be looking to link your referral marketing to your wider marketing goals when you can. If you have a seasonal sale or a brand focus event going on, then you can try offering increased rewards or special offers to match.

Consider using motivational strategies for your partners and influencers, such as leaderboards for conversions. You can combine this with incentives for further effect.

4. Referrals via Positive Messaging

Your referral marketing campaigns can reflect your company values, reinforcing your brand identity. If you believe in a local community cause or a charity campaign, support it openly.

This has a positive impact, of course, but there are also practical business benefits, too.

Current customers who are invested in the same cause will naturally be inclined to promote your involvement. This leads to more positive referrals as more and more consumers look to support businesses that reflect their own values.

Your best customers will respond well to personalized marketing. The best personalization websites make use of all their customer data to build a complete customer profile. Separate this with demographic data and approach your marketing on a more individual basis.

5. Give & Take

Offering win-win referrals can help you secure the referral of vendors and suppliers. Essentially, you both benefit from the continued success of the other, so cross-promoting on a like-for-like basis just makes sense.

In addition, if these cross-promoted products are useful to the customers that are referred, they’ll come out with a more positive impression of both companies.

6. Timing & Method

When and how you promote your program can mean a lot for the success of your referral campaign. We discussed the aspect of how you should promote at the point of sale above. However, the method should vary depending on the source.

How you approach your intended partner businesses can impact your success. For example, approaching a business with a non-personalized referral link might not give the best impression to a major vendor like Amazon.

Remember that you’re trying to encourage co-operation here, so avoid sounding like you’re trying to sell them a product. Applying this method to content creators and influencers can also be effective.

When you partner with an influencer, they should reflect the values and tone of your branding. This way, you’ll ensure the highest level of cross-over between your audiences. This doesn’t mean you have to limit yourself, though.

Finding like-minded people in other interest groups can lead to penetrating new market segments.

7. Repeat Business

Remember those statistics from the start of the article? Referred customers have been shown to lead to higher average order values and higher CLV. This shows the value of referral business, but it should also get you thinking about customer loyalty.

How can you increase customer loyalty? Providing the best possible customer experience is a great place to start. This goes for your referral program, your partner program, referred friends, and any other way you want to source referrals.

If you want to pursue a referral marketing strategy to its full potential, you’re going to have to maintain a customer focus. This means putting the customer experience above everything else and aligning your key marketing goals with this outlook.

Conclusion

It’s important that, once you have your referral marketing techniques in place, you continue to monitor your campaign’s success. Making use of exploratory testing techniques like A/B testing in production will be important for refining your approach.

Remember to follow each of the core principles above and use the more detailed advice to guide your decisions. Ultimately, the success of your referral campaign and reward program will be down to your choices.

Share this article

Written by

Kate Priestman - Head Of Marketing, Global App Testing

Kate Priestman is the Head of Marketing at <a href="https://www.globalapptesting.com/blog/zawgyi-vs-unicode">Global App Testing</a>, a trusted and leading end-to-end functional testing solution for QA challenges. Kate has over 8 years of experience in the field of marketing, helping brands achieve exceptional growth. She has extensive knowledge on brand development, lead and demand generation, and marketing strategy — driving business impact at its best. You can connect with her on <a href="https://www.linkedin.com/in/katepriestman/">LinkedIn</a>.