Referral marketing, or word-of-mouth marketing, excels at creating sales and conversions. Referral marketing is at work anytime someone makes a purchase at least partly based on someone else’s opinion of a product or service. It works because people trust the opinions of people they know and respect, even if they are skeptical of traditional advertisements.
Referral marketing is not limited to the opinions of friends and family, but also includes the opinions found in news publications, customer reviews, and product testimonials.
According to Richard Lazazzera, a content strategist at Shopify, referral marketing works for three reasons:
- Precision Targeting
- Trust Factor
- Reach and Acceleration
Let’s dig into these concepts.
Referral marketing is inherently targeted because people tend to know their social circles well, and are able to share products and services they know will be well received. They likely share many interests with people in their social circles, so if they like a product enough to mention it, it is likely it will be received well by their friends.
A Neilson Trust Study showed referrals are by far the most trusted form of advertising. 84% of people said they trusted referrals from friends, 68% said they trusted consumer opinions posted online, and 67% said they trusted editorial content posted online. Compare that to only 48% that said they trusted search engine advertisements.
Reach and Acceleration
Social media has made referral marketing more powerful than ever. Not long ago the social reach of the average person was limited to the people they talked to in person or on the phone, but now people are only a Facebook post, Tweet, or Instagram pic away from instantly sharing their thoughts and opinions with hundreds or thousands of likeminded people.
How to Implement Referral Marketing
Now that we’ve looked at why referral marketing is effective, let’s move on to implementation.
Provide an Exceptional Experience
Depending on your business this may be customer service, or a buying experience, or even the user interface for your software or hardware. The most important thing for referral marketing is creating an exceptional experience that your user will want to share and talk about with other people.
Make Your Products or Service Shareable
If you are running an ecommerce store, this could mean focusing on creating packaging that provides a share-worthy experience. (A cottage industry of “unboxing videos” has actually sprung up on YouTube over the last few years.) Apple excels at this. The process of unboxing any of their physical products is designed to be compelling and beautiful.
If you are running an event or conference, this could be encouraging users to tweet or post to Instagram with an official hashtag.
Implement a Referral Program
If you are running an online store, you can encourage users to share your products by setting up a referral program that rewards customers for sharing your products with their friends. Here are a few companies that have referral program systems you can tap into for your store:
Reviews and Testimonials
If you run an online store, make sure to implement a review feature on your product page. A few good reviews assure a potential customer that actual people have enjoyed your product. If you are not an online retailer, you can list testimonials from clients about their positive experiences with your company.
This is Just the Beginning
I hope this has given you a good foundation to get started with referral marketing. If you would like help with referral marketing, social media marketing, or web design, please don’t hesitate to contact us for a free consultation.
This post is based on an article by Richard Lazazzera – Referral Marketing 101: 7 Tactics to Launch Your Own Referral Campaign