14 min read
Jun 29, 2017

Friends with benefits: 3 steps for an effective referral marketing strategy

Here are 3 steps for a successful referral marketing strategy to help you discover, approach, and leverage your most engaged customers.

Suzie BlaszkiewiczSenior Analyst

Marketing is traditionally considered a one-way street: a business promotes something to you, and you buy it- hook, line, and sinker.

Referral marketing, on the other hand, is one of those unique marketing strategies that, if done properly, sees the company and the customer collaborating for mutual benefit. The customer gets rewarded for referring qualified leads from their personal networks (social or otherwise), while the company gets those qualified leads.

The proof is in the stats. An infographic from referral marketing solution Ambassador shows that:

  • 82 percent of Americans seek referrals from friends or family members when making a purchase;

  • 67 percent say that they're more likely to purchase a product that's been recommended to them, and;

  • 88 percent of Americans would like some sort of incentive for sharing a product or service, with 77 percent preferring money over swag.

Customers are eager to refer products and services, and the best way to maximize the number of qualified leads is for you to recruit and leverage this eagerness.

Here are 3 steps for a successful referral marketing strategy to help you discover your most engaged customers, approach them in an effective way, and leverage them to gain new customers.

1. Find out which customers are most likely to refer

The first step is figuring out which customers are the likeliest to refer your product or service. If word of mouth is the preferred referral method for your clients, it can be hard to track without straight up asking your customers about their behavior. One easy way to do that is by sending out an email campaign.

Lauren Beauvais, CMO at IT support and consulting firm Techvera, says, “our referral campaign is mainly through a series of emails to our existing clients. Our main business is managed IT services. Our clients pay us on a recurring monthly basis to act as their outsourced IT department and use technology to make their business more efficient, so we are deeply involved with our customers’ companies.

“Our referral campaign doesn’t simply ask for referrals in each email– we want to get our clients thinking about how we’ve helped their business first and foremost, then find out who our champions are, [and] then ask for referrals intermittently from our biggest fans.”

Beauvais outlines Techvera’s referral marketing strategy using a drip email campaign, giving 10 to 14 days between emails and sending:

  1. An introductory email with a client satisfaction survey, highlighting which customers are most satisfied with its services.

  2. An informational email telling clients about its referral program and the $500 referral bonus for sending new clients, with a link to a referral landing page to fill out.

  3. A call-to-action email asking users to leave reviews of its services and share about it on social media.

  4. A follow-up email asking if there are any additional questions or concerns about its services.

  5. A reminder emailing telling clients about the $500 referral bonus and once again linking to the referral landing page.

  6. A final email outlining the benefits of referrals to the company and reiterating the referral bonus.

This process not only lets you find your most loyal customers, but also helps target the ones that are most likely to act on their positive experiences with your company.

Says Beauvais, “any email scheduling software can really be used to set up this campaign such as Campaign Monitor, Constant Contact, or MailChimp. We use MindMatrix, a platform specifically for IT/MSP companies. We love this software as it allows us to track email opens, clicks, and interest across multiple campaigns and touchpoints.”

Where email marketing campaigns fall short of response, you can also use social media monitoring tools to find people already talking about your product online. Using social media monitoring tools like Brandwatch or Brand 24 will give you an eagle-eye view of who’s saying what about your product online, from where you can reach out to individual users.

Brand24 social media monitoring tool can help you see who's saying what about your brand.

Check out social media monitoring tools to help target your referral marketing strategy.

Check out email marketing software to help with your referral drip campaigns.

2. Find out what will incentive your customers

Once you know who your biggest fans are, the next step in your referral marketing strategy is knowing what type of incentives will drive them to make a referral. As Ambassador notes, 77 percent of those surveyed in its study said that they would prefer money over any other type of incentive. Analyzing user behavior and seeing where there might be potential incentive opportunities ensures that you’re giving customers something that’ll make them more likely to refer.

Divya Menon, Founder and Consultant of Bad Brain marketing and advertising consultancy, says:

“I ran a successful referral program for an entertainment client […] Through some rather thorough polling, I discovered an issue […]: acquisitions in the target audience were tough due to not only ad blockers, but also their skeptical disposition and rather heated/combative nature when it came to all things commercial (explains the high usage of ad blockers).”

She continues:

“During that same stretch of time, I was actively polling the client’s existing user base and identified a boon: their propensity of recommending the product to their network. In a field where word-of-mouth is the holy grail, this was our client’s King Arthur moment. It was evident their existing users were passively recommending the service, but we needed to make that a proactive effort to meet acquisitional goals.

“We knew current users did not enjoy a generous disposable income and their services with the client were typically budgeted for with caution. So, we offered the existing base a flat point system where x amount of referrals results in y period of free service. We provided them with both a promo code and a unique URL so they could cover all their bases through in-person conversations and digital communications.

“Though, like every other company, we collect funneling information during signup, we trust cookies more than self-reported data. The cookies told us a fascinating story about how existing users were spreading this information through everything from Reddit to emails. We were able to use that data to help us dig deeper and find specific threads and links to watch conversations. We discovered [that] these loyalists targeted groups [that] they were somewhat familiar with, using very transparent communication about why they were plugging our client.”

Despite being weary of how it might work, Menon discovered that it did tremendous things for her client’s referral program.

“I was not sure how it would do, as this group might feel that it would compromise their values about commercialism and marketing, but they became our client’s strongest evangelists. There was the added bonus of learning how to communicate better with our target by watching those who participated in the referral program.”

As Menon’s experience shows, digging deeper into customer demographics and activity can give a better idea of what will entice customers, as well as providing better insight into how best to target those people.

With referral marketing, there is always the risk of customers feeling cautious about referring something to someone they know in exchange for a (sometimes) monetary incentive, but if you target them in places where they’re already doing it to some extent, they’re less likely to feel uncomfortable about it.

Typeform is a popular option for surveying customers.

Check out survey software to get a better idea of what would incentivize your customers.

Find web analytics solutions that track users as they talk about your product.

3. Start running and tracking your referral campaigns

Once you’ve identified which customers to target, it’s time to start running and tracking your referral campaigns. Referral marketing software is a key piece of this puzzle in order to keep your referral marketing strategy in check.

Referral marketing software can:

  • Capture leads and allow for referral opt-in

  • Create customized referral templates for various channels

  • Help you set-up rewards programs

  • Track and measure campaign performance

Once you have software that can organize, set-up, and track your referral campaigns, you’ll be better able to optimize your efforts. Social media is another channel that’s especially useful for referral marketing because of the amount of time people already spend sharing things on social media, and it’s ability to be easily tracked with unique referral links.

Matt Edstrom, Head of Marketing at natural skincare line BioClarity, says:

“Due to advertising overload, the majority of consumers have learned to block out traditional advertising channels, instead relying more heavily on the endorsements of their friends, family, and social influencers. While this has been detrimental to the effectiveness of print, TV, and radio advertising, it has opened up tremendous opportunity in the digital space.

“Our best way to get business referrals is by leveraging our target consumers’ own personal network to do our advertising for us via social media. We incentivize our customers to share our product on their personal social media accounts, which allows us to tap into their network of friends and family, effectively amplifying our advertising efforts and earning new business through these personal endorsements and referrals.”

Regardless of whether you’re using email, social media, or an advertising platforms to run your campaigns, it’s important that you’re tracking them properly in order to maximize the effects of your biggest ambassadors.

Ambassador is one example of a referral marketing tool to track campaigns and customers.

Check out referral marketing software to amp up your referral marketing efforts.

Make the most of your referral marketing strategy

Referral marketing is one of the most effective ways to leverage your biggest champions and reel in customers that are four times more likely to buy than those who have not been referred.

While the focus here was on referral marketing from regular customers, there are other types of referrals that you can leverage in order to spread the word about your brand:

  • Influencer marketing sees online influencers or public figures endorsing your products online.

  • Partner or affiliate marketing with other companies providing products or services related to your own offer big opportunities for referrals.

Regardless of what type of referrer you want to leverage, make sure that you’re discovering, offering, and tracking your ambassadors in order to get the most out of your campaigns.

To get you started on the right referral marketing track:

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