The psychology of a human being is complicated as well as interesting. When a friend or acquaintance refers you to a product to use, you definitely get a little curious about the said product or service, they make an appearance in your head. Imagine getting rewards by just referring a product or service to your friends or family. Isn’t it amazing?
There are various types of marketing, one of them being referral marketing. Referral marketing doesn’t get much attention, but the industry knows its value. You might not share about any product you bought, but when you get some discount for sharing, your inner “you” automatically press the share button. Referral marketing is the best way to increase sales. Not only do people bring you more customers, but they become loyal to you too.
Every app, shopping website, and literally every business uses referral programs these days. In this article, we will talk about Referral Marketing so let’s get right into it.
What is Referral Marketing?
Rewarding Options for Referral Marketing Strategies
Some Amazing Stats of Referral Marketing
Advantages of Referral Marketing
Disadvantages of Referral Marketing
Some Top Referral Marketing Software
What is Referral Marketing?
Whenever we get a suggestion from our friend or family referring to a particular product, we are more likely to believe them. However, word-of-mouth is still the best referral channel out there, but it is nearly impossible for a company to track that referral. To solve this problem and encourage and reward their customers for referring their products, companies use referral marketing programs.
As a company, you provide a unique referral code to every customer and ask them to share that code and earn some profit. When people share that code with someone and bring you a new customer, they get reward points or money and you get a lead. As already said, this is not as powerful as word-of-mouth, but it is still a good option as people will share your content to earn points that will be a reward and there is hardly anyone who doesn’t like rewards.
Rewarding Options for Referral Marketing Strategies
There are four ways to provide the reward:
- Rewarding both parties: You can reward both the referrer and your new customer. This way, both the people get the benefit and it is a great way to motivate them to bring in more customers.
- Rewarding the referred: Reward the person who is referred by someone. People who feel guilty to make a profit by referring will love this feature. However, you should analyze the audience first, as not the majority of people feel that way.
- Rewarding the referrer: By rewarding the person who referred someone, you motivate the next person to refer someone else. By this method, you don’t have to spend on both parties and the process will still continue.
- No Rewards: You can provide the referring code and reward none of them to share it. Although this is an option, people will not appreciate it much, unless you have great content.
Some Amazing Stats of Referral Marketing
- In a survey, people were 4 times more likely to buy when referred by a friend
- Over 90% of respondents trust referrals from people they knew.
- According to Capterra, 88% of B2B decision-makers rely on word-of-mouth for information and advice.
- Social media drives almost a third of overall traffic to sites.
- Offering a reward increases the chances of your products and services getting referred, the size of the reward does not matter.
- Non-cash incentives are more effective at boosting performance than cash incentives.
- A survey shows every referring customer makes an average of 2.68 invites.
- Companies with formalized referral programs experience more revenue growth.
- Surprisingly, only 30% of B2B companies have formal referral programs.
Advantages of Referral Marketing
- Budget: The first and best advantage of referral marketing is that you don’t have to spend too much money. The money needed for referral marketing is too little than any other traditional advertisements. However, it depends on you how much reward you wish to give to your customers for sharing your content with others.
- Comfort: People are more comfortable buying any product when it is referred to them by their friends or family. Referral marketing is much more effective than traditional advertising.
- Fast Results: The impact of referral marketing can be seen very quickly. It doesn’t take much time for people to share any content. If you are using referral marketing for an app or e-commerce website, then you don’t have to wait too long to see the results.
- Continuous Process: People don’t stop referring until you want them to. A will refer to B and B will refer to C and so on. It is a never-ending process. So, you don’t have to worry about the process. However, you should update the process and the system to better them.
- Loyal Customer: The best thing referral marketing do is to target loyal customers. Even if they are not loyal customers, they are still loyal marketers for you. When people get rewards from you, they will prefer your product over others. These were some of the advantages of referral programs.
Disadvantages of Referral Marketing
- Budget: Although you are saved from spending tons of money on advertisement with referral marketing, you still have to spend some money. You will have to give up some profit to the customer in the form of rewards.
- The sense of Guilt: Some people don’t share their referral code as they think they will be sellouts. Some people don’t like making a profit out of someone without doing anything but a click. They will have a problem with their inner “sense of guilt”.
- Not Efficient Enough: Compared to word-of-mouth referring, referral marketing is just a kid. People are more likely to buy when people heard about the product from somebody. Moreover, people are aware that word-of-mouth referrals are mostly free, so everyone would give their honest opinion. Whereas, in referral marketing, most people prefer to earn rewards only.
Some Top Referral Marketing Software
Now, that you know what are the advantages and disadvantages of referral marketing, you might want to know how you can have this program on your own website or app. This is 2022, therefore, there are services available for everything. You can use any of the below tools to integrate the referral program into your website.·
- Referral Factory
- ReferralCandy
- Friendbuy
- InviteReferrals
- Mention Me
- Ambassador
- Genius Referrals
- Referral SaaSquatch
- Referral Rock
- Revetize
- ReferralMagic
- TapMango
- Talkable
Conclusion
Referral programs increase your sales. However, you might feel annoyed when someone WhatsApp you a download link again and again, which will make them some bucks. But by seeing something time and again, an idea to check that service out develops in our mind. And that’s what the ultimate goal of marketing is.
FAQs
What is referral marketing?
Referral marketing is a word-of-mouth strategy created by a business to tempt current customers to recommend the brand to their friends, family, and contacts. It is a tool to expand and increase the customer base. It heavily relies on the internet and social media.
Do Referral programs work?
Referral programs are incredibly successful as people love earning rewards, so they refer the products and services to their acquaintances, and the cycle continues.
Why Referral Marketing is the best?
Referral marketing is cost-effective marketing and its success rate is immense.
Can you make money on referrals?
Of course, you can. You get rewarded for successful referrals.
What are some of the top Referral software?
Some of the top referral software are:
- Referral Factory
- ReferralCandy
- Friendbuy
- InviteReferrals
- Mention Me
