Through the years we’ve seen some wonderful advancements to how marketing is done. From taking advantage of technological advancements to social media and search engine optimization, it is safe to say that the trusted ways of getting products in front of prospective buyers are changing significantly before our eyes.
Despite all the changes, however, there is one age old marketing strategy that will never get out of style regardless of technological advancements. In fact, so profound and effective is this style that instead of going extinct, new technologies will have to find a way to accommodate it and adapt to it.
We’re talking about none other than referral marketing.
The Underlying Appeal of Referral Marketing
Let’s begin with a fact. Did you know that referral marketing in all its glory has been found to generate three to five times more conversion than any other marketing strategy? This shouldn’t be a surprise of course, seeing as referral marketing has a key element in it that very few others do – familiarity and trust.
No business is an island. To thrive, every business need customers but it doesn’t just end there. Having customers is great, but to grow you have to ensure that your customers are able to relay their experiences with you to others.
Leveraging Word of Mouth
No amount of direct advertising can come close to word of mouth. Why is that so, you ask? Because believe it or not, people tend to trust those they know or look up to on a personal level than they trust businesses and corporations that are nothing but third parties to them.
So in this way, when a friend, family or co-worker tells us about their experience of a product or service, we tend to take them more seriously than if we read it on a banner or listen to advertisements on the radio.
Earning trust as a business is hard, but it is something that you must do if you intend to grow. Referral and particularly word of mouth referrals are a powerful way to achieve this right from the very start.
The Importance of Referral Marketing
From the above, it is obvious that referral marketing has a lot to offer for your business. Below we take a look at some of these benefits in detail.
Drastically Improve Sales
As mentioned earlier, referral marketing is renowned for its high conversion rate, particular when compared to some other marketing tactics. In case you’ve been trying different approaches to get your sales number up to no avail, it may be time to try some referral magic.
Luckily, referral marketing doesn’t even have to be so difficult to pull off. Not only can you get people to refer your products through strategic incentives, but you can also be sure that at a point, if you do focus on quality, you will start to receive natural referrals.
Increase Brand Awareness
At BusinessDirectory.com we believe that the one of the best parts about referral marketing is not only that it is capable of helping you boost conversion, but the fact that it can also offer some wonderful long-term benefits thanks to its weight and sustainability.
What do we mean by this? Well simply put, what we’re saying is that not only does word of mouth referral help the customers to know about you and nudge them to buy your products or try out your services, but it also makes sure that you stay on their minds.
Mild advertisements can get you on a customer’s mind for a day, but referrals from trusted family and friends ensure that you remain on their minds for a long time.
The ultimate goal of brand awareness is brand loyalty. Getting people to know about you is the first step, which is what is called brand awareness. Brand awareness goes past just having a purchase or two.
It is having a purchase from customers who patronize you particularly because it is you, not just due to coincidence or convenience. They love what you stand for and what you have to offer.
Ultimately, this should transform into brand loyalty wherein they’re not willing to consider any other alternatives because they’re sure of the value they receive from you. It has been found that customers obtained through referrals are more likely to cultivate a high level of brand loyalty than those obtained elsewhere.
Repeat Business and Automation
Another appealing aspect of referral marketing is its sustainability. It is highly easy to rinse and repeat, so much so that with the right approach, you can easily set up a referral system that will continue to bring in sales for you for years to come.
And not only will it bring in new customers, but your existing customer base will also be there, willing to buy more and more as time goes on. Leveraging the power of referral business is simply a no brainer for suitable businesses looking for sustainable growth.
Types of Referral Programs
- Direct Referral: Customer referral programs are ways to incentivize your customers to share good news about your products. One of the ways to achieve this is by running a direct referral program wherein you offer a reward in return for every successful referral.
- Implied Referral: Implied referral programs allow businesses to target related businesses and services in hopes of getting a share of the customer base. For instance electricians could target real estate offices and agents with brochures. Implied referrals are more subtle than direct referrals.
- Tangible Referral: Tangible referrals occur when businesses offer products or services free of charge as a way to encourage their customers to buy more. This usually serves as a free “taste” of the service or product to give potential customers a feel of the quality you have to offer.
- Community Referral: Lastly, community referrals happen when businesses partner up with nonprofits in hopes of favorable image for their brands.
The most appropriate referral program for your business is based on market type, size of business and convention. Ultimately, it is worth looking into which one will work best for you and giving it a try. Referral marketing works and it is something every business should look into as much as possible.