Did you know the famous grooming brand “Harry's” accumulated more than 65,000 leads within 1-week with just a referral program? That’s how amazing referral marketing can be if you execute it well.
Referral marketing relies on the brand value as well as your product. So, if your product is referral-worthy, with a good strategy, you can boost sales ten times!
You might be thinking that’s not possible at all, right? Stick along to the end, and you’ll realize how effective this strategy can be!
Key Takeaways
-
Referral marketing is a super tactic to make your loyal customers become your brand’s voice and promoter.
-
It has one of the highest conversion rates compared to other marketing tactics.
-
Implementing a good referral plan at the right time is the most effective way to incentivize your loyal and potential customers.
What Exactly is Referral Marketing?
Referral marketing is an incentive program where a business offers extra benefits to users to refer their friends or family to use a product or service. This type of marketing tactic increases the customer base or brand awareness through small rewards.
For example, you incentivize your users with a referral program that offers referrers a one-week premium subscription to your product. Just imagine even if you get 10 new users through this program it’s already a successful campaign!
Most of the popular SaaS brands you see nowadays have this type of referral program included in their services. Starting from the No-code website platform Dorik to the kanban-style list-making service, Trello, every major company has some kind of referral incentive.
So, if you are still neglecting such a massively valuable marketing strategy, then you’re doing something wrong.
Still hung up on why you need it? Well, the next section will definitely make you think.
Why Should You Use Referral Marketing?
An inclusive referral program not only increases your brand awareness but also encourages your loyal customers to be proactive with your product!
Imagine you’re in a neighborhood where you sell grocery items. Your product and price are the same as your competitors. However, one day, you announced that from now on, if anyone comes to my shop who has been referred by an existing customer, I’ll give a 5% discount.
So, naturally, your customer base will increase exponentially. While you might be losing a small portion of your revenue, think of it as CAC (customer acquisition cost). That’s how you can establish your strong foot in the competitive space!
An Organic Method of Advertising
Referral marketing is all about an organic boost that brings users to your platform willingly. No false promises, just purely built around the community and the sheer brilliance of your product.
Without a great scalable product, you can’t expect a referral program. So, with a simple referral marketing strategy, your product can get tons of organic traffic!
👉 Related Read: Boost Your Conversions with Great Web Designs!
Very Low Acquisition Cost
If your referral marketing strategy is launched at a great time, you won’t even require a behemoth budget. All you require is a loyal customer base, creative planning, and the right time for execution.
Higher Customer Retention
In most cases, the referred users have the tendency to stick to the platform more than the average customers. Even research from last year acknowledges that there is almost a 37% retention rate compared to average users.
Who doesn’t love to have higher customer retention?
Earning Trust & Credibility
Your users almost work like a miracle worker to spread the good word about your product. So, referred users obviously have the initial trust as their close ones have recommended your product.
That’s why referral marketing can raise more awareness about your brand.
Types of Referral Marketing Strategies
Referral marketing is an ocean, and you can get lost in the vastness of it. Navigating into the depths of different referral marketing strategies is equally crucial as executing them.
Here are some of the types of referral marketing strategies:
-
Direct or Word of Mouth: This is obviously the most effective type of referral marketing. There’s nothing greater than having your loyal users recommend your product to others naturally. Always focus on the direct referral program at first.
-
Email Services: You might think what’s the point of having email services for users? Almost
-
Online Reviews: Your incredibly loyal customers can surely share some positive reviews on your website, right? While there are more paid reviews nowadays, you can’t really underestimate the power of reviews. Leave a platform open where your customers can freely share their thoughts about using your product.
-
Social Media Sharing: The most effective yet sensitive tool to wield in this day and age. For some, it’s a daily necessity. If you have your marketing game all sorted, then you can easily leverage social media influencers to be your voice. Curate a killer headline and
👉 Similar Read: Examples of the Best Marketing Newsletter Sites!
Difference Between Affiliate Marketing & Referral Marketing
Imagine affiliate marketing as having a commission-based army in your arsenal! The influencers and affiliates will get a commission from you when they drive a sale.
On the other hand, referral marketing is more organic and self-driven as it’s more personal. Otherwise, why would you suggest a product to your familiar faces if you don’t love it yourself?
However, don’t think of affiliate marketing as cheap because there are some great recurring affiliate programs!
So, what matters is your product, platform, and customers. Depending on those factors, you can choose between any of these two marketing tactics.
👉 Read our blog to learn How to Create an Affiliate Marketing Website.
How to Implement a Referral Marketing Strategy?
Did you know that referral marketing can be dated almost to the Ancient Mesopotamian timeline? Many think it’s a cutting-edge strategy that was introduced very recently. However, referral programs have always been a part of marketing strategies.
So, if you have curated at least one marketing strategy before, it won’t be that hard for you to follow through. Take a look at how to implement one:
Step 1: Make a Proper Referral Program Plan
Ideation and creativity are key to making a mind-blowing incentive program. To be honest, the ideation stage has become quite easy now that you can use ChatGPT for marketing!
Research your market, learn about your competitors, and make a moving plan. Consult with industry experts and get down to every detail, from the reward for your referee to retaining your newly acquired customer. Don’t leave any stone unturned!
Step 2: Identify Your Long-term Customers
Having a separate landing page for your referral program is surely a great thing to have. However, targeting your most loyal and long-term customers can make your strategy work like a magic potion!
Customers will come flocking to your website if your long-term users start referring! So go through your data and target your loyal customers for the pilot project.
Step 3: Launch at the Right Time
Timing is everything. It can make or break your brand in an instant. Don’t just create your referral program. Launch it as soon as possible. Wait for the most optimal opportunity and then execute it.
Incentives. Timing. Execution. These are the main factors to consider before the launch.
Step 4: Measure the Success Rate
Three cheers for you! A successful launch is a battle won but also a call for future findings because the success of your website needs to be measured.
From the newly acquired customer data, find what was the referral rate, and conversion rate. Analyze the data and see if it aligns with your expected results. Use analysis tools to find out how you can improve the rates of Customer Lifetime Value.
5 Best Examples of Referral Marketing
There’s no shortage of great examples of referral marketing strategies. Here are our top five picks because we found them most insightful:
1. Dorik
Dorik is an AI-powered no-code website builder, popular for its partnership program. It offers up to 40% commission (then 10% recurring commission) to the referrers for each successful referral! On top of that, it also offers a direct $50 cash reward for referring 10 new customers.
We’re sure you’ll hardly notice such a generous program!
Learn more about how to create a website with AI.
2. Canva
We all know how easy it is to use Canva to make graphic designs! But do you know that the platform also has a referral program? Not a cash reward system but a credit system that can be used to unlock premium elements on the platform.
The uniqueness lies in encouraging users to refer others and unlocking premium features. Plus, the aesthetic design and greetings are enough to make the new customers happy!
3. Trello
Want to try out one free month of Trello Gold? Just refer to a friend! The simplicity of onboarding others with just a link and getting one month of premium service for free is genuinely fulfilling.
It’s easily accessible by others, and does not require any additional information other than email! A great way to expand the customer base.
4. Todoist
With exceptional management services, Todoist has become the go-to app for many. So, its referral program is a bit premium.
If you refer your friend with your unique link, then you’ll get a reward of 2 free months of the Pro plan when your friend upgrades! Basically, you’ll get the benefit when your friend purchases the Pro plan. It creates the referral cycle on the move and engages more users to upgrade.
5. Airtable
A cloud-based collaboration and project management tool that has a rewarding referral program. A very simple $10 credit to your account for every referral that can be used for any pro plans on the website/application.
Compared to other platforms that offer direct premium service for a limited time, you can choose your preferred plan after saving the credits. Totally innovative and simplistic approach from this awesome tech company.
👉 Read More: How to Create a Job Board with Dorik & Airtable!
What are the Common Challenges with Referral Marketing?
Unveiling exceptional referral marketing comes with its own unique challenges. Understanding them can lead you to have some foresight of what to do and what not to do:
Implementing Transparent Strategies
In every country, the protection of privacy and personal information of any user is taken seriously. As a result, you need to adhere to local laws when implementing your referral marketing strategy.
You have to add an unsubscribe button and highlight all of your company’s details on every page. The same rules apply if you’re considering email marketing. You can’t spam the users. Otherwise, you’ll be trapped in the Spam Act!
Creating a Referral-worthy Product/Service
Did you evaluate whether your product is actually referral-worthy? More often than not, marketers just execute plans left and right without thinking about the outcome clearly.
Furthermore, critically evaluate whether the incentive/reward you’re offering is actually appealing enough for new customers. Otherwise, there will be no customer growth at all.
Maintaining Customer Satisfaction
When your referral tactic has worked flawlessly, it’s the beginning of a new journey to retain those customers. As they are referred by your existing users, it’s important to shower them with great services.
Or else, both your old and new customers can get dissatisfied and leave your platform. So, maintaining customer satisfaction should always be prioritized!
What types of incentives work best for referral programs?
Cash rewards, premium subscriptions, and gift cards, are the most popular incentives for referral programs. The reward system mostly depends on your brand positioning and customer base.
Additionally, custom Canvas Picture Prints can be a unique and appealing option for your customers.
Are there any legal considerations for referral programs?
Yes, to implement a fair referral program, you have to adhere to local laws and regulations. Moreover, you have to be transparent about your users’ data, privacy, and anti-spam laws.
Bottom Line
With the closing bells ringing, you have first-hand experience with how referral marketing can change your brand. You not only acquired knowledge about the fundamentals but sailed through the intricacies of the whole process.
All that’s left for you is to embark on a new journey; the citadel is waiting for your command. Ideate and initiate your own creative referral marketing magic!
