As we already discussed, marketing to buy is something every business should be doing, but it comes with its own set of problems. With the number of advertisements flooding our screens and digital media space being saturated with buying messages, how well your business will do depends on how good you are at picking your target market and persuading them to spend money on what you offer. Learn more about the value of referral marketing below.
Fortunately for you as an entrepreneur, this process has been refined over the years and there are now ways to go about it that are much more effective. One such way is referred to as referral or word-of-mouth marketing. We’ll talk more about that in just a minute.
But first, let us look into the importance of referrals in the marketplace. According to research done by Merkle, around 70% of all shopping transactions are influenced by word-of-mouth recommendations. That means that if someone you know buys something, chances are pretty high they’ve received good feedback from their circle that makes them comfortable buying the product.
One-third of all buyers say they would not purchase a certain item unless somebody they knew bought it first! This illustrates the important role that word-of-mouth advertising plays in selling products. Going out and telling people whether or not to invest in your product is not feasible due to a lack of resources and time, so how can you take advantage of this?
The answer is referral marketing.
Identify your target market
As mentioned earlier, referral marketing is the process of creating an online presence or website that appeals to someone else’s audience. By adding value to another site or product, you can attract new visitors, gain exposure, and promote sales.
By investing in other people’s products and services, they will pay back by spreading your message for you! They’ll even leave their own business for yours!
It’s an effective way to create a more balanced lifestyle, especially if you’re a parent. If you love to read, then start reading books on how to improve your career through education and training, or find yourself a smart-looking sweater and dress up some leggings and sweatshirts for your favorite fashion brands.
The easiest way to begin is to establish relationships with individuals within your community – friends, colleagues, and influencers.
Create a website
Websites are an integral part of most people’s daily lives these days. Technology has made it possible to access information, do business, socialize and watch TV from almost anywhere.
With all that digital content at our fingertips, someone else can make or break your business by creating positive or negative word-of-mouth recommendations for your products and services.
It is important to note that most referrals come from people who you have direct contact with (for example, if you go out for coffee with friends, they might refer you to another restaurant they like). Or maybe they met you in person or online and felt confident about you and what you offer.
Start advertising to see the value of referral marketing
When doing referral marketing, you will want to start with those you already know or have in your circle. This could be through social networking sites like Facebook or Twitter, people you work for, or just general community members that you admire from afar.
By offering help to those that you feel would benefit from it, you can create an endless stream of business. You will need to make sure that you do not overextend yourself though!
Making promises that you cannot keep will only hurt your reputation and chances of getting referrals in the future. Make sure that what you offer is something that you truly believe in and that fits into your life “Obligations” first before looking at possibilities.
Running a giveaway is another way to use referral marketing to gain exposure for your product or service. By giving away free things, they will attract more attention which could result in more conversations and opportunities.
Build a mailing list to get the value of referral marketing
As mentioned before, your business should have you create a mailing list to keep in constant contact with your customers.
This is an essential tool for your company’s success because it keeps people inside your brand circle.
By staying in touch via email or phone, you are creating opportunities to provide value and get more business.
Your potential clients may be looking around at other companies and brands out there and wondering what they can get from yours. By adding them to your distribution list, you will give them an answer!
You could also send them information about products or services that are related to their current projects or purchases.
Distribute promotional materials to see the value of referral marketing
A growing number of businesses rely heavily on referral marketing to succeed in the market. This is when you get paid for referrals to other companies or individuals that use their services or products.
Most people are familiar with this type of business model in the form of reward programs at restaurants and hotels. If you’re a frequent patron, they give you discounts or free drinks or meals!
By adding rewards to your routine, you’re helping promote the restaurant or hotel. They’ll eventually pay you back for all those beverages by giving you good service. (Yes, it’s a win-win situation!)
Businesses depend upon word-of-mouth to spread their name, so offering rewards to others can be a cost-effective way to grow their audience.
Encourage your clients to tell their friends
As mentioned before, referral marketing is the most powerful tool in business. But what does that mean? Creating an engaging social media platform or website is not enough; you have to actively use it!
Running a referral-focused business means making sure your customers feel comfortable telling others about you. You should strive to make them feel appreciated and trusted, so when they do refer someone else for a job, they write a nice review to let people know about you.
This creates a positive cycle that can spread quickly. People will share your company with their network to gain more referrals, which eventually helps you.
It’s hard to get these word-of-mouth benefits if there are too many instances where people feel uncomfortable doing it. This is why it is important to maintain strong relationships with your current customers as well as look for new ones.
Offer a reward
As we’ve discussed, referral marketing is all about offering rewards to others for doing business with you or giving you their contact information.
This can be through advertising online or offline, asking them to write an article for your website or magazine, sending them your product or service as a gift, etc.
It’s not just about getting new customers, it’s about strengthening your relationships with current ones!
Referrals are one of the most effective ways to gain new business because they’re typically very cost-effective. You’ll spend less money per referrer than buying ads or paying fees for advertising on social media sites like Facebook.
And while it may seem weird at first, referring people to your services or products will create a bond between you and each referred person. They’ll feel loyal to you and give you good reviews because of that.
Even if you’re not giving away anything free, you can still use referral marketing to help your business thrive. You could ask your colleagues or friends to do something for your business by leaving a good review online or telling their friends about you.
By asking people to talk positively about you, it creates an environment where more positive comments are accepted.
It also encourages them to spread the word about what you have that your competitors don’t- which is always a nice thing!
By creating a healthy conversation around your products and services, you create momentum that benefits your company in long-term ways.