Referral marketing is one of the oldest forms of marketing. The history of referral marketing dates long before social media, electronic or print media. But despite being one of the oldest forms of marketing, it hasn’t been outdated; instead there has been a renewed interest of late.
Today referral marketing has evolved from its traditional roots and businesses are using it more efficiently with the help of online technologies. The growing impact of social media in customer experience has also attracted businesses to use referrals in alignment with modern technologies. We have put together 5 points that discuss the need for referral marketing, especially for B2C businesses.
Referrals influence customer’s purchase decision
Today customers research on the internet before making purchase decisions. According to a Mckinsey report, customers trust products or services recommended by someone they trust or know rather than advertised. Moreover, the study shows that the influence of referral is greater when customers are buying something expensive or something for the first time.
Referrals can speed-up sales
Using automation tools in referral marketing is gaining a lot of significance these days as they provide analytics and speed-up the referral process. Automating the referral marketing process can help businesses run efficient, measurable and profitable referral programs. Consider automation software like Ambassador. It combines the power of email, analytics and payment gateway to one single platform and allows businesses to enroll, track and reward customers across various digital platforms.
Young customers trust referrals over paid advertisements
Millennial customers are influenced by referrals more than paid advertisements. According to a report by Radius Global, millennial customers put social media referrals as the number one influencer in their purchasing decisions on apparels and electronic goods.
Referrals can perpetuate into a cycle of referrals
If you can give a positive experience to your customers, not only will you retain them but also turn them into your brand advocates. Loyal customers are usually willing to share their opinion on a product or service and make it valuable to others. According to a Villanueva report, customers acquired through referrals bring in twice as many new customers themselves.
Reward strategies can increase referrals
Customers may like your product or service, but they would be much more motivated to promote your business if they are offered rewards. Many businesses have a referral program in place and provide incentives like discounts or special deals to the customers that recommend their product or service to new people.
Referral marketing has a competitive edge that only a handful of other marketing efforts can match. Apart from saving a lot of money on advertisement, referral marketing can create an effective sales network, loyal customer base and a profitable sales cycle. The impact that referral marketing can bring is obvious, so the challenge now lies in creating a referral strategy that works in alignment with social media and automation tools. We will focus on referral strategies in our follow up blog.