All about Referral Marketing: what it is, its benefits and 6 ways to apply it in your strategy

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All about Referral Marketing: what it is, its benefits and 6 ways to apply it in your strategy

Recommendation Marketing is a marketing strategy that transforms customers and “brand promoters” into a sales channel, by indicating the product or service to their network of contacts. Referral Marketing goes beyond organic leads, with tactics and metrics to encourage new leads.

Marketing is about communication , especially the communication of values.

The Marketing can happen even if a conscious investment is not made in that area. If you create a valuable product or service and market it, people are likely to start talking about it.

The Marketing Specialist’s job is to influence this process, making sure everyone knows how much your product or service is worth.

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E-mail*Thus, Referral Marketing (or Recommendation Marketing) constitutes a set of strategies to encourage your client to tell their friends and family about your business, becoming another sales channel.

We have all told our friends about our shopping experiences.

In this process, the role of the Marketer is to intensify this “word of mouth,” ensuring that more people are talking about the amazing products and services they have purchased.

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This implies implementing  Gulf Email List some incentives. The challenge is to ensure that these interactions are always timely, useful, and relevant.

People like to show off their good experiences. And this is a simple way to advertise your business.

Companies that use Referral Marketing definitely enjoy the benefits. Not only is it more profitable than Traditional Marketing, but its reach is quite remarkable; and shorten the sales cycle .

Customers often tell their friends that they think they will be interested in your business. This means that you don’t have to strain to find these people.

If every referral becomes a customer and everyone shares about your business with all of their friends, it will essentially create a new community of customers.

Consumers trust their friends more than salespeople.

“But how to use Referral Marketing?”

The Referral Marketing application process has become much more efficient and simple due to the various software and platforms for this purpose, such as Buzzlead.

In addition, these softwares and platforms can be implemented in your marketing strategy without generating friction with the programs you already use.

Haven’t you discovered the full potential of your own customers’ sales yet? You are facing a very profitable sales channel that should not be left to chance.

Why Invest in Referral Marketing?
According to a survey by Buzzlead Hairy Research (in Portuguese), 92% of consumers worldwide say they fully trust the recommendation of a friend or family member, above any other form of advertising.

Even so, many VPs of Marketing put this strategy aside and stop encouraging their potential “selling clients.”

Startups like Dropbox, Uber, AirBnb, PayPal, Netflix, Amazon Prime, and Evernote have long used Referral Marketing as their main acquisition channel.

But do not spread panic! Recommendation Marketing works for any type of company (B2C, B2B), for any type of product and at any stage of maturity.

As well as the best growth hacking strategies , recommendation marketing also relies on the analysis of consumer behavior.

According to Aristotle, “man is, by nature, a social animal.” So, talking well about what we like or badly about what we don’t like is something natural for us, it is enough to just talk with the people around you.

Dave Mcclure, one of the two most active startup investors on the planet, created a basic growth structure called AARRR. That means:

Revenue (income)
Referral (Reference)

When faced with the challenge of selling more, we are tempted to think that we are always at the top of the funnel . Attract more traffic, go viral, generate more traffic, etc.

So a smart solution may be closer than it sounds and cheaper than you think.

Benefits of a Referral Marketing strategy
Investing in Referral Marketing can be very smart, but it cannot be left to chance. Some of the benefits you can get from a strong referral program are:

Super segmentation: “nobody recommends diapers for someone who doesn’t have babies.” This quote is from Jonah Berger, author of the book Contagious. In other words, the work to define and locate your ICP (Ideal Customer Profile) is almost done. This is usually the main point that leads companies to the valley of death in the first years of activity.
Lower CAC: The Customer Acquisition Cost can be a stone in the shoe for the fast growing. With Referral Marketing this can be reduced. Whoever refers lends their credibility to the company. This causes the referred person to be more advanced in the purchase process when they make contact.
Lesser sales cycle: it is a consequence of the previous item. By lending your credibility and serving as a product use case, the friend who refers your company already does some of the marketing and sales work for you. Therefore, when a new customer signs up, the closure tends to happen faster.
The importance of creating a spiral funnel
Allison Pickens, at RD Summit 2017 (Our Sales & Digital Marketing event), said, “Your customers have more power than ever.”

And this is true. Referral Marketing is an example that customers have more and more power and influence over the success of your company.

In addition, there are more and more options for products and services to consume and the opinions shared among consumers have an important influence when making the choice.

Therefore, it is essential that your business becomes a great customer experience.

You can do this by offering a product that easily solves your audience’s problems. Thus, people who have had a good experience will share it with others. It is quite simple.

When this starts to happen, you will have created a spiral funnel.

The spiral funnel can be defined as the moment when your customers, those who have already bought and passed through the bottom of the funnel , recommend your business to others, bringing them to the top of your sales funnel.

And that leads to a continuous movement. Why?

A satisfied customer can be responsible for generating up to 3 leads!

Your Marketing must start with your customers. After all, your customers already use your products or services. If they don’t like what they consume, they would probably go elsewhere.

With this in mind, offer incentives for them to comment on how much they like your business.

When a customer calls a friend and takes them to buy your products or use your service, reaffirm why they chose your company.

That motive can be anything you like. From a friendly salesperson, to a large number of options that you have available for a certain product.

When you discuss it with others, you are encouraged to continue buying your company’s products and spread that your company offers value, quality and many other benefits.

In this way, consumer feedback can be compared to a downhill snowball that increases as you go.

When a person visits your company through Referral Marketing, they are more likely to comment on their experience with other people, both positive and negative.

When a customer decides to share their experience with five friends and then those friends tell other friends, exponential growth in sales occurs.

That is what you want to experience in your business!

Similar to the Spiral Funnel, you end up turning every happy consumer into an unofficial seller.

Applying Referral Marketing in a simple way
Referral Marketing is more than one person recommending your company to another.
Creative professionals have already realized the need to expand this interaction, increasing the influence of Referral Marketing to reach more people.
Therefore, there are countless things that you can apply in your business to stimulate word of mouth about what you market. And it doesn’t have to be expensive or complicated!
These are 6 ways to apply Referral Marketing to your company in a simple and very effective way:
Contests aimed at recommending friends
Like Huckberry , you can also increase your lead base by creating contests aimed at referring friends.
You can encourage your customers’ indications by having them compete for one or more prizes based on the amount achieved. One reference, ten, one hundred, one thousand! You choose.
Thus, you can offer discounts, products or services that are of interest to your target audience . This is a great way to reach a lot more people with Referral Marketing.

Seasonal campaigns
Using seasonal events or holidays is also a great way to get lots of directions.

Nature box understood this and asked its distributors to offer a “50% discount”

before the last Super Bowl. Using one of the most important American events for your marketing strategy increased your profits significantly.
Take advantage of events to generate “word of mouth” about your company. It doesn’t have to be something big, just something timely!
Seasonal campaigns + Nomination contest
Why not put these two great ideas together? You can also take advantage of seasonal campaigns to launch guidance contests.

You can introduce your clients to products and services that may be useful on vacation, for example.

Huckberry takes advantage of this period to offer a free first class vacation and carry a bag full of Huckberry gear.

What did the customer need to do to compete? Recommend to your friends!

4. Take advantage of Viral Marketing
Dollar Shave Club is a great example of how a business can use Viral Marketing to advertise their services or products and achieve great results with Referral Marketing.

Dollar Shave Club created an honest and super fun video that has millions of views on youtube.

In the first 48 hours after the video was posted on YouTube, more than 12,000 people signed up for the service. By the end of the week, that number had doubled to more than 25,000.

Although this is also the result of the excellent Viral Marketing campaign, the truth is that each of these 25,000 clients was indicated by someone who had a pleasant experience with the Dollar Shave Club when consuming their video content .

5. Social gifts
You can also generate leads by giving your customers the opportunity to give gifts to their friends.

You can send codes or links for your customers to share with other people. Thus, these people can win products, discounts or free trials on some of your services.

Social gifts, despite not offering anything directly to your consumers, are presented as a great way to be generous to someone.

6. Use an influencer or client as an ambassador
As the main point of Referral Marketing, the best people to promote your company are those who already love what you do and sell.

These people are not just satisfied customers, they are ambassadors for your brand!

Therefore, you must figure out how to use these referral symbols for the current generation.

A good way to do this is to invest in influencers. They will spread your brand and introduce your company to thousands of people. For them, social networks play a fundamental role.

In addition, you can look at your customer base and even employees and find micro influencers capable of driving your sales.

Remember: your customers are your best salespeople.

Recommendation Marketing and Inbound Marketing
By combining Referral Marketing with Inbound Marketing , the strategy becomes even more efficient.

See this example from SBTUR Viagens in Brazil, which uses RD Station Marketing in its Referral Marketing strategy:

From the moment they implemented our platform, the company reduced CAC by 86% and increased referrals per user by 89%.

To achieve this they used:

Landing Pages to capture directions with the clients themselves.
Automation flows for nominees so they can learn more quickly how it works.
Automation flows so that the indicators know the indications received.
Forms to collect indications at various key moments and on the screens of our system.
Referral Marketing in SaaS
The recurrence element is an additional element to achieve results with Referral Marketing.

In SaaS business models, some additional opportunities appear. It also occurs in companies with high buybacks or even when the relationship with the customer lasts a long time.

The lifetime value of the customer (Lifetime Value or LTV) greatly increases the number of indications per capita, one of the main indicators. This makes the strategy more profitable, as the customer makes much more than a recommendation along the way.

There is also a tendency to reduce churn (cancellations) and increase the average ticket. Customers who refer friends tend to use your product together.

The metrics of a referral program
To build your Referral Marketing strategy, you must measure some essential metrics:

Customer Acquisition Cost (CAC): How much do you spend to acquire new customers. The prizes for the indicated and indicator must be lower than what you spend in your other acquisition channels.
Lifetime value: it is the total value that a customer leaves in your company during the time they consume your products or services. By knowing your LTV, you will be able to know how much you can invest to acquire a client. Don’t forget to consider your margin when measuring LTV.
Referral rate: refers to the penetration of your referral program in your base. To improve this rate, ask yourself: how many of your customers are satisfied with your product? What is the award that most attracts your consumers? What are the key moments to ask for an indication?
Indications per capita: measure how many new contracts each of your indicator clients can generate. Recommending friends is related to satisfaction with your business and the point of contact from which you request the recommendation. Therefore, this is a fundamental metric for the optimization of your Referral Marketing.
Total indications: is the total number of sales generated by this channel.
Investing in referral marketing is one of the best things you can do for your business
There is no doubt that there is a great opportunity with Referral Marketing. This is a channel that is literally overlooked in many Marketing plans and there is a lot of money on the table generated in this way.

Using Referral Marketing can provide great business opportunities for your company, large or small.

You want to make sure your customers know that they can benefit from telling their friends and family about your brand.

Try all the suggestions in this article and get to the next level with a good Referral Marketing strategy!

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