Wednesday 23 April, 2014
Referral marketing is a type of marketing that focuses on leveraging current customers to get them to refer new customers. Referrals are increasingly important for online marketing. On social media sites and elsewhere people listen to what their friends say. When a trusted source recommends your company, their friends listen.
Referrals will happen naturally when a happy customers talks about your company, but not much. If you want it to happen more often, you need to offer a reward. This is why so many businesses offer a referral reward program.
Offer an Incentive
Referral reward programs are based on incentives. Your customer gets a reward for referring others. This could be cash, a gift or a discount. It might be access to exclusive content or free membership to a paid membership service.
Cash seems like the most valuable reward, but this isn’t always the case. The key is to figure out exactly what your customers want. In the case of Dropbox, which has an extremely successful referral program, the incentive is more space. Decide what your customers could use and base your incentive on that.
Creating a Successful Referral Reward Program
Choose an incentive, create your program and announce it. Make sure people know that they’ll get a valuable reward for referring others. As much as possible, automate your referral reward program. Again, take a look at how Dropbox or PayPal do this. When it’s automated, your customers can do it themselves, taking the work of managing the program out of your hands. Make it as quick and easy as possible for them to do and you’ll get more referrals.
Double Incentive Reward Programs
A great option is to reward both the referrer and the person they refer to you. This is called a double incentive reward program. For example, give the referrer credit at your online store and offer the new person their first month of your service free. What this does is instill loyalty and goodwill with your new customer before they’ve even used your service.
You can be even more proactive with your program by reaching out to those most likely to tell others about you. These are your key influencers, also known as ‘brand ambassadors.’ You can reach out to them with special offers, encouraging them to tell others.
It’s easy to identify key influencers. First, try looking at those who have already talked about your company to others. Look for people who are active on social media or in blogging and often talk about the products they use. Try to establish a relationship with them and they’ll do your marketing for you.
Make Your Program Sustainable
When setting up your reward program, make sure you can afford it. Just in case it takes off, you need to be prepared to offer all of the incentives you’ve promised. Remember that the whole purpose of your program is to build relationships and instill loyalty.