Your business is doing well; customers visit your website often and sales are high. You may think you don’t need to make any changes, but not so fast! Anyone who doesn’t make changes actually moves backwards. Even if your business is currently doing, that doesn’t mean it couldn’t be doing even better.
Have you ever considered referral marketing? It doesn’t require much input, yet can be more profitable than any other marketing strategy. The largest players on the market have referral programs. You are probably familiar with those run by Uber, Amazon, or the recent star Clubhouse. If referral marketing wasn’t profitable, none of these providers would be investing in it. And yet, thanks to recommendations, Uber is already present in 85 countries worldwide and provides 40 million rides each month in the US alone. This probably wouldn’t be possible without word-of-mouth marketing, as referrals are sometimes known..
Did we catch your attention with these numbers? Hopefully. Now let’s talk about some situations when you should start your own referral program immediately.
When you need a referral program
Here are three situations that may indicate a need for action. And by action, we mean starting a referral marketing program. Bear in mind that you might already be facing one of these situations now in your business.
If your clients ask about it
Clients are a good source of inspiration, and they often suggest a great solution themselves. Social media comment sections can be a major help if you’re active on them. When many customers find one solution or one provider’s page and like it, they will ask others for the same. So if your customers ever mention referral marketing to you, then go for it. No wonder they are interested; after all, referral marketing is all about the rewards that they can earn for active participation.
Asking for feedback is also a very good move. You can ask clients directly if they have heard of referral programs, if they ever participated in any, and what their conclusions are. Find out whether or not they’d like to participate in yours, if it were to be created. Customers can be a really good starting point for arranging new marketing activities, so keep in touch with them.
If your sales are not great
Suppose you have noticed that sales are falling, and business is not as good as it once was. Or you are at the beginning of your company’s journey, and it is difficult for you to break through against the competition. Then it is worth thinking about a solution that can bring a lot of results, yet is relatively cheap.
By creating a successful referral program, you will be able to stimulate sales not only by encouraging your current customers to make purchases but also by attracting new ones. How? You have to set up all the metrics and rewards, plus create the communication and referral links. Then you can invite clients to participate and allow them to share their unique links with friends and family. And that’s all.
If you’re not gaining many new customers
If you notice that you’re not acquiring many new customers, it’s time to act. Perhaps other marketing channels are failing, or your CTAs are not convincing enough. Even the most loyal customers won’t always remember to recommend your website, so it is worth reminding them. You can send emails for this purpose once every few months. A “thank you” to clients for participating in the program should also be included in the message. It’s also worth reminding those who have clicked on a referral link if their purchases have not yet been completed.
Additionally, the mere fact that a referral link exists will spur referrals. After all, clients being able to earn rewards is often a strong enough motivation by itself.
Now you know when it might be necessary to set up a referral program. Let’s talk about 6 reasons why you might like to introduce such a solution to your business.
Building a community
Referral marketing is a great way to increase team spirit among your customers. The feeling of unity is an excellent way to make your customers friends of your brand. Year after year, the importance of belonging is increasing. New companies appearing on the market only stimulates the competition. Clients have to pick companies that are the best choice for them. This is where building a sense of belonging comes in handy. People by nature like to belong somewhere – usually in a family, a class at school, or a work organization, for example.
A 2016 study found that 85% of marketers and community builders believe that the presence of a branded online community can improve both the customer’s experience and their level of trust. A community can mean a Facebook group, a loyalty program, or a referral program, etc. Thanks to participation in one, clients are not only rewarded but also stay in touch with the brand. It is therefore a good idea to expand your communication to something more than just notifications about referral rewards.
It’s worth mentioning here, that thanks to sharing referral links, your clients can feel like influencers or even like a part of your company. This builds attachment to your brand even more, and encourages customers to not only recommend your website but also come back to it more often themselves.
Usually, new marketing activities are associated with new expenses, like paying for ads on Facebook or Google. But referral marketing is different. Your customers are the driving force here. You don’t have to pay them, so your only cost is for the rewards you offer. These aren’t much compared to the results they can generate.
A well-designed referral program can bring you up to 5 times the conversions as without. Conversions mean profits for your business, and all this just for the price of offering discounts to participants, for example. Isn’t it a win-win situation?
What’s more, those clients who came to your page thanks to referrals tend to stay longer. From day one, they will have a positive attitude towards your business and be more willing to trust you. Such customers have an average lifetime value of up to 16% longer than others. This allows you to create a separate funnel and thus maximize your ROI.
By analyzing the costs of such an investment, you should find that they are disproportionately small compared to the profit. One of the costs that you will have to consider is the cost of a referral program software. EarlyParrot offers a free demo, however, a small investment is needed if you want to go all out and run a few campaigns. Don’t worry though, as the costs won’t burn a hole in your pocket. When creating a program, remember about having an appropriate reward system, e.g. collecting points to earn a given reward. The better tailored to your audience, the better the results will be. Keep an eye on and test which solutions have the best impact on sales and which rewards will maximize ROI.
Monitoring results automatically
Installing referral software will allow you to track all your campaigns. No matter how many programs you run, you can see how many active users there are, how many new users came from referrals, and how many referrals led to purchases. By having all the data at hand, you can eliminate bottlenecks. It’s also easier to spot your stars – the referees who make the most hype about your brand.
By installing referral software, you can better focus on analyzing traffic and improving communication. Automating the program also saves time, as most of the processes are basically completed by themselves. You just need to design it properly at the very beginning. If you choose the right platform, it will be a piece of cake. Installing EarlyParrot and integrating it with your landing page takes less than a quarter of an hour, and it doesn’t require any specific knowledge. What’s also great about this platform is that it works with most external platforms like Shopify, WooCommerce, and Magento. It also supports PrestaShop, WordPress, AWeber, and many more. It also comes in handy to support list building, since it works with MailChimp, for example.
Increasing brand awareness
If your customers start talking about you and sharing their opinions,more and more people will be aware of your presence on the market. Consequently, increasingly more people can choose to visit your website when there is a need that you can fulfill. The more people know about you, the better. This is how referral marketing works. If you offer a discount not only for the referrer but also for the referee, it will work even more effectively! You will be remembered as a site that has not only a specific and excellent offer, but also where one can make cheaper purchases. The more satisfied customers are, the better.
Importantly, if people hear about you from a friend, they will be trusted more than an advertising spot on TV. It is proof of authenticity, and about 86% of customers believe that is the key to their hearts. The more authentic a company is, the more people want to support it. And the more supporters, the better sales results.
Growing your reach
It seems quite obvious that your clients recommend your friends; these friends become clients, and they then recommend you to their friends. And so the news is spread out into the world. Word of mouth works in your favor (if people talk positively about you, of course). Referral marketing is a well-oiled machine that drives itself and increases the number of people interested in your offer. It will really pay off when it allows you to reach even the most difficult segments. After all, even the most demanding customers have friends with whom they exchange insights and news.
Even if your initial customer base isn’t too big, it’s still a good start. A few are better than none anyway. Even in the case of a low entry-level, the snowball effect will work, and you will be on the lips of many potential customers in no time. And all this thanks to a brief moment spent on creating the program.
Reminding clients why they have chosen you
Let’s assume that a given customer recommends your store, for example. Your regular client praises the wide range of products available, fast order fulfillment, and high level of after sales service. This reminds the client themselves why they like visiting you so much. And perhaps they’ll come back and make some more purchases too. It is essential that regular clients not only attract new ones, but also visit your page to make their own purchases.
As a result of discussions on this topic, customers will not only remember that they probably need something from your website, but may also be reminded that they have a discount to use or have just gained one because of a referral. So they may visit your store and make even bigger purchases since they have a coupon.
You have already learnt about the reasons why you should become interested in referral programs. Perhaps you are even ready to create your own. So what’s next? You need to install the appropriate software. As previously mentioned, EarlyParrot might be just your cup of tea. It is quick and easy to install, has many integrations that work for SaaS businesses and eCommerce stores, plus it can help with building email lists.
What’s more, the process of creating the program is a piece of cake. The program tells you what to do and when, as well as highlighting which aspects need to be corrected. You can customize the appearance of emails and share pages. And don’t worry, the EarlyParrot logo is nowhere to be seen, so customers will have no doubts from the branding that this is your program.
If you want to check it out first, you can get a demo and test the platform. If you want to find more information about this tool, you can read the knowledge base or take a look at the EarlyParrot blog. You can also schedule a meeting with an EarlyParrot rep to dispel any possible doubts.
Over to you
You now have the background knowledge about why it’s worth investing in referral marketing and what to do if you have already made the decision to proceed with it. Now it’s all up to you. If you need more tips on how to start a referral program then read our post. You can find some tips and tricks for beginner referral marketers there, which should help with planning the implementation of your referral marketing strategy. So now it’s time for nothing but action.
Get the demo and start your referral program today!