Referral Programs For Social Media: How to Do Them Justice
Referral marketing is among the best strategies to use when you want to grow your business.
In short, it’s a method to tap into the goodwill of your existing customers and use it to create new leads and new opportunities – and convert them to new customers.
What Is a Referral Strategy?
A referral strategy is, to put it simply, the good old word-of-mouth marketing, but for the digital age.
Now, word of mouth might possibly be the oldest form of marketing and the goal for any business is for it to happen spontaneously: you want your product to be so good that happy customers are talking about it and recommending it left and right.
However, there’s a lot of noise in the digital world, and a lot of competition.
And until you reach that happy state where your customers will do all the work spontaneously, you need to bridge the gap between your products and the quality new leads you want to be accumulating. You can do it by giving your customers a little push in the right direction – by giving them an incentive to talk about your brand.
And that’s where referral programs come in.
Let’s Look at the Data
Research shows that businesses that have a referral strategy get 86% more growth in revenue as opposed to those who don’t (Shopify). It seems it’s ingrained in people to trust referrals, and according to astudy conducted by Nilsen, 84% of customers found them helpful when they made a buying decision even back in 2013.
It’s hardly surprising, given that when we think about it, we too tend to trust people we know when they say that a product or a service is amazing, and we’re not alone – 92% of consumers are four times more likely to buy something when it’s been endorsed by a friend.
So far we’ve been talking about purchase likelihood, but there’s one more factor to consider before we can evaluate the effectiveness of a referral strategy – lifetime customer value.
It turns out that not only does the likelihood of people purchasing your products increase, statistics tell us that those people come back over and over again, and their lifetime value is 25% higher than non-referral customers.
To put it plain and simple: referrals do work.
So how do you actually use the power of referrals and let them do the heavy lifting in your marketing strategy?
By using incentives that their buyers actually care about.
It’s actually really simple – for example, by referring a product, customers give friends 30% off their first order, and they get $30 themselves the moment said friends make a purchase.
It’s a value proposition that makes everyone happy – both faithful return customers and eager first-timers – and numerous examples show that it’s a fail-proof strategy.
Further down, we’ll illustrate this with examples of social referral strategies that have been already tried and tested to great results, but let’s first look at the basics.
A Breakdown of Referral Programs Basics
Referral traffic is defined as the traffic that comes to your website when redirected from other websites. It’s often considered an alternative to SEO and blogging, which take longer to work, PPC, which will drain your wallet and social media – which can work to your advantage.
In a marketing sense, referral traffic can be considered traffic that will in some way benefit you financially. You get this type of traffic from your existing customers by offering certain benefits, but you can also introduce incentives to your strategy which will be used to bring new customers.
Social referral traffic is considered to be all the referral traffic coming from social media. Therefore, the process of bringing traffic from social media is a social referral.
Let’s see what other types of referrals are there, just so we can compare them to social. Word-of-mouth, online reviews and email referrals all work fine, but social referral brings in the highest profits for the lowest investments, more quickly than any of the others, because it can spread like wildfire. This speed is what makes social referrals so amazing.
When beginning to market a product, you surely promote it on social media because you need all those likes and comments and shares, right?
This is the same thing – you’re essentially using social media as a pool from which you draw people towards your business. Referral programs are both diverse and widespread, but a large majority of them depend on social media and this trend will continue in the following years.
When you want to attract customers, you have to offer them something to ‘sweeten the deal’. It costs you far less than you think it does because it reflects on the way you run your business and it has a positive ROI. Usually, incentives are industry-specific and vastly differ between businesses.
Some of the most popular incentives include:
- An upgrade of the customer’s status
- Credit to be used at your business
- Free or improved shipping
- A ‘thank you’ note
- Points to be used for a variety of incentives
- Cashback incentives
- Discounts on future purchases
All of these incentives are ways to give something back to the customer without spending too much money.
You need to analyze the place your business has in its respective industry as well as the market itself to come up with something that would work as a good incentive to bring in new customers and make your existing customers happier.
Remember, one bad experience takes fifteen good ones to wash out, statistically speaking.
Let’s look at the elements of incentives and how to get them all integrated perfectly into your idea.
First, before you consider the type of incentive you want to add to your business model, think about your business and its place in the market.
What does it fail to offer, that others are already using?
Is the product expensive and rare or everyday and cheap?
What is its unique value proposition?
All of these questions have to give you an answer to the main question – what will make my customers happy enough to spread the word about my business? This applies to both existing and new customers – essentially, you are tapping into their good will to promote your business or product.
Also, you get to choose the direction of your referral marketing. Do you want it to be peer-to-peer, business-to-customer, business-to-business or something else?
Do you want to market it on social media, and how?