If you are familiar with our blog, then you will already know that referral marketing is a great way to acquire new clients and make the process cost-effective. If your program is a success, customers will refer your brand and products to their friends or family, and your brand awareness will increase.
From the point of view of the referred parties, the variety of referral processes has already been mentioned in our guide on how to start referral marketing. But there is more to discover!
In this article, you will find the most popular and commonly used types of referrals. Our goal is to point out the differences and suggest who would benefit most from them. Shall we begin?
Types of referrals – a quick breakdown
There are many types of recommendations that you can implement in your referral program. They are categorized as follows:
- Referral sources
- Method of communication
- Medium of communication
We classify the types of referrals this way, but you could create your own system. Each of them is briefly described below. It is important to mention that you can mix up the types that you provide, as no rule says you have to stick to just one!
Referral sources
In this category, you will find three referral types. It is worth noting that these referral types are very popular among B2B referrals. Let’s start with reputation based referrals.
- Reputation based referrals
These referrals are for brands that are well-known. This is primarily based on the assumption that your products are already established and well-received. Typically, these referral types are handled by large companies that have been on the market for years, have loyal customers, and even their “typical” recipients have no problem being associated with their names, logos, or products.
Those who want to take advantage of this referral type should focus on building strong relationships with recipients and raising awareness of their brands. Marketing activities should be differentiated between individual markets rather than homogenized by global companies.
- Experience-based referrals
Many people associate “referral marketing” with recommendations of this type. Referrals in this case are not derived from the reputation of the company, but from direct experiences related to it. People who suggest using products or services base their recommendations on their own experiences. The important point is that in this case (as in most), customers are not the only ones who can make referrals. Products could be recommended by employees or employee referral programs. Even business partners may refer you to others for cooperation. As a result of their credibility and the use of products by trusted individuals, experience-based referrals are very effective. To gain loyal customers, it is crucial to establish lasting relationships and deliver a good user experience.
Experience-based referrals are for brands that deliver the highest quality and provide faultless service.
- Specialized-based referral
The last type of referrals are based on specialities. In this case, the referrer knows in which niche you operate but they still have a general lack of knowledge about your reputation and most likely they are not your permanent customers. Such referrals are based on what they have heard from others. It is important to show why the recommendations make sense at this level and show no dissonance to any of the referrers.
It is worth mentioning that if you operate on the B2B market and are searching for such a recommendation, there is no point in only focusing on one type of referral. You should do your best to invest resources in delivering all three.
Method of communication and trigger
The following category discusses types of referrals according to the way they encourage potential customers to join. First come direct referrals.
- Direct referrals
The principles of direct referral programs are very simple, and moreover they are very effective. This type of referral is very similar to the aforementioned experience-based ones. So what’s the point, then?
With this type of referral, your current customers refer your business to their friends or family because they are familiar and satisfied with it and want their close ones to benefit from your products. More than 90% of consumers believe in referrals from people they know. Let’s say that some random influencer recommends a shampoo from brand X on their social media, while at the same time your friend tells you that the shampoo from brand Y is the best and makes your hair look exactly like shown in their ad. It is very likely that you choose the latter because you trust your friends more than influencers. They are your close ones for a reason after all.
With direct referrals, you ask your regular client to recommend your brand by offering them incentives. Once they meet the requirements, both they and their referees may receive rewards.
- Implied referrals
Referrals of this type are often overlooked, which is a mistake because they can bring a lot of profits. In short, what do implied referrals rely on? They are about showcasing your brand but without intrusive promotion. You have to let people know that you are present on the market. A good way would be, for instance, to sponsor a charity event. No one wants to detract attention from the main goal, which is why sponsors are just in the background. However, you will be remembered by the participants, and maybe the event organizer will recommend you too. It is worth presenting yourself in an unobvious manner.
An example of a budget version of implied referrals is to assume you run a florist service and start cooperating with a wedding planner. You can make an agreement that the planner shows your portfolio to future brides and grooms in order to make subtle recommendations this way.
This referral type may be useful for newbies on the market to make some noise about their brand, but on the other hand, if you want to make a name for yourself through sponsorships then it will require a decent amount of money.
- Tangible referrals
Now let’s talk about tangible referrals. The word “tangible” refers to the fact that you should provide value to your customers so they can pass it to referees. This is a method that can not be overused though, because then it loses the sense of uniqueness that makes clients feel special.
Basically, this type of referral is for brands that have been around for a while and have the option to choose the most active customers to pass along extras to.
- Community referrals
Last but not least, community referrals. There are many non-profit organizations that would appreciate your help. Supporting their jobs is one of the best types of help you can provide. You could offer a percentage of your weekly sales or deals such as “If you buy products from category X, we will donate 10% of your purchase to non-profit organization Y”. As a result of whatever sales are generated, your community partner will be motivated to talk about and refer your organization to their constituents. It is a win-win situation.
This method requires sources and customers who are willing to shop for this type of partnership to be possible, so if you have been on the market for a while then this approach could be for you.
Medium of communication
Now it is high time to cover mediums. Referrals can be shared via many platforms, so let’s focus on the most popular ones.
- Social media
Social media comes first since it is estimated that we will spend over 6 years of our lives scrolling through these platforms. They are a big part of our lives nowadays. If you want to use the full power of social media marketing, you should focus on referrals too. This method is often used when your clients want to share their referral codes or links with their friends. They can be very powerful messages, but it is you who should design them. You can do so with a little help from referral program software. With EarlyParrot you can design the communication while creating your referral program. You have various platforms and messengers to choose from, so you just have to focus on delivering valuable content that will grab the attention of your clients’ followers.
Social media referrals can bring you many new customers since people spend so much time on these platforma. Why not use this habit to your advantage?
Your email marketing strategy ought to involve referral communication. You should invite each of your new customers to join your program and remind your client base about it from time to time.
Referral emails need to be clear and deliver the essence of your program. They should indicate how to sign up and what rewards are available to be earned. You can read more about this topic here.
- SMS
It takes a bit of effort and also sensitivity to use this communication channel. You can not overuse text messaging because your customers may feel trapped if you do. Your messages shouldn’t be sent too often, so it is better just to use this channel as a reminder from time to time rather than your main way to keep customers in the loop.
SMS messages are a good way to remind that, e.g., only one referral has to be successful in order for a reward to be given out. If customers give their consent for it, you can also remind your current client base about your program. But as we mentioned, sometimes enough can be enough. Consider how annoying it would be if your phone rang every day with the same message about referrals. Terrible!
To recap
You may feel overwhelmed by the various types of referrals presented above, but don’t be. These lists give you the opportunity to vary referral co-operations and make your programs more attractive to their potential participants.
There is no need to use all of the different types, but rather choose the one that will work best for your business and fit your industry well. You know your environment and customers best, so you know what will grab their attention most. This is just encouragement to try and show you all the possibilities!