Online Marketing & Digital Marketing

How to Create a Referral Marketing Strategy to Drive Sales

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By Laia Cardona, on 2 March 2022

Consumer feedback is a major key to business success. How many times have you gone to a restaurant or purchased a product, because a family member or friend recommended it to you? Believe it or not, that right there is marketing—more precisely, referral marketing–and it proves that expensive advertising isn't the only way to boost sales.

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What Is Referral Marketing?

Referral marketing is an effective marketing tool that consists of customers telling their friends, family, or followers about your brand, product, or service. It is very similar to word-of-mouth marketing, except it often comes with some sort of incentive for the person doing the referral.

With referral marketing, the work is taken up by the customers, and it happens organically.

Why Is Referral Marketing Important?

It's human nature–we tend to trust recommendations when they come from people who are close to us. If you provide a solid service or a top-tier customer experience, you're more likely to earn a good reference, potentially leading to new customers and a network of recommendations. Referral marketing can not only increase sales but also add value to your product or company through your clients and yourself.

There are two main reasons for creating a referral marketing strategy:

  • It’s free: Word of mouth marketing costs you nothing! You should already be investing in your brand and product, which is what will earn you the referral.
  • It’s precise: Your customers will refer to people that are likely to be interested in what you offer. Your audience is there and they will move on their own.

Referral marketing is also a very clear way to know whether your product, website, or brand actually is valuable to the people who use it. While referrals aim to be positive, a bad review can also speak volumes of what the clients need and how you can improve your services. If you do get a bad referral, take it as an opportunity to learn more about your customers' needs.

How to Get Referrals

So, how exactly can you start getting these free, positive referrals? To start, you could make a referral program, i.e. set up an orderly and systematic way for customers to make referrals. This not only can incentivize your current customers, especially if you offer some sort of discount or freebie, but it's a great way to track the success of your referrals.

The true key to referrals, however, is excellent customer service. This is essential. Including a chat on the website, a phone number or email to contact, and improvement or satisfaction surveys are very basic and should be easily accessible to your customers. If and when a problem arises, a positive customer service interaction will let the customer know that they are your priority and that you will do everything in your power to help. This allows you to gain their trust and makes a referral far more likely.

Let's look at some referral marketing strategies you can use to increase your sales.

4 Referral Marketing Strategies That Drive Sales

  1. Reward your customers: A great way to motivate customers to share about your brand is by giving them incentives. One example of this would be offering discounts or coupons to users if they invite other people to register or make a purchase. It usually takes no time to do it and the reward is almost immediate.

  2. Giveaways: People love giveaways. The thought of winning something is thrilling and it usually takes no more than a few clicks, retweets, or mentions on social media. Launch a giveaway on Instagram or TikTok and ask the clients to tag friends and mention your account.

  3. Make a good impression: Whether online or in-store, the first impression is very important. Make your customers feel like they can trust you and that they're valued. A thank you note, automated follow-up emails, neat presentation, or positive employee interactions can work wonders. In addition, you can encourage the customers to share pictures on social media and tag you.

  4. Track referrals: To track results, use a platform that tracks referrals. Some apps, such as Refersion or Referral Factory, offer tracking services. This can help you understand if your program is working.

Following these steps will surely make a difference in your referral marketing strategy.

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Laia Cardona