Think about it for a second, if you wanted to buy a product, who would you trust more?
Is it something you read on Google, or is it a friend you know who has used the product before?
Would you trust a stranger more, or would you trust a family member?
The answers to these questions are pretty simple—it is easier to trust someone we know than someone we don’t know.
The same goes for business.
Customers are more likely to trust product reviews than advertisements. This is the essence of word-of-mouth, or referral, marketing.
Referral marketing can help you improve your brand trust and thus gain repeat customers.
Without a doubt, this is one of the ways you can gain an unfair advantage over your competition.
But how do you go about getting referrals for your business? This is how!
What is Referral Marketing?
Presumably, we’ve all heard of referral marketing, but what does this term really mean?
Well, referral marketing utilizes an existing network of customers to offer recommendations to other new customers through word of mouth.
Think of it as getting your customers to do the marketing for you and spread the word for you.
Here’s why it works
Before you can learn how to use referrals in your business, you first have to understand why it’s important.
Research shows that word-of-mouth advertising is 5X more effective than paid advertising.
Customers are also likely to spend more money if they were referred, and they are also twice as likely to refer someone else than if they were acquired via other channels.
Compared to customers acquired through other channels, those from referrals are 30% more likely to convert.
Simply put, when customers receive a great experience with a service or product, they are even more likely to share the news with others.
Up to 50% of potential customers would choose to make a purchase based on word of mouth compared to other sources of information.
Six main factors are the foundation of any word-of-mouth advertising.
● People share what comes to the top of their minds first.
● People also share what makes them feel and look good
● People will also copy what they see those around them doing
● People will share things that matter to them
● People don’t share information. They share stories.
The Unfair Advantage
Imagine two businesses that sell the same product. Now let’s assume they are similar in every way apart from one. One of the businesses excels in referral marketing.
Who do you think will win more customers?
The answer is obvious – It’s the business that utilizes referral marketing the best!
Customers are actively looking for referrals when shopping.
This helps them make a better choice when deciding on what to buy.
Hit the six main drivers of referral marketing above, and you have a tool that can help set you ahead of the competition.
Bonus: Try This!
If you are new to the market and the market you operate in is crowded, one of the ways you can grab attention is through giveaways.
Because we all know that people love free stuff, right?
While this may cost you initially, it allows customers to trust you and pass the word around. You can also sell your products at a fraction of the price.
It creates a win-win situation and allows you to gain a decent following to whom you can market in the future.
Bottom line: customer recommendation marketing is a great way to build your brand and expand your reach.
Whether you use it as an incentive for current customers or promote it aggressively through social media channels, there are many ways that this strategy can help grow your business.
As we’ve learned in this article, adding a referral programme will increase sales too!
So, if you haven’t already implemented one of these strategies into your company’s marketing plan – now would be the time!