How Referral Marketing Can Make You Money
Certain contemporary companies have given up the idea of selling their products only in stores, or they’ve chosen to market only through one or two exclusive retailers. You might think this limits physical exposure and pose a restraint to growing sales, but this has not always turned out to be the case.
In fact, this approach saves money, increases engagement, and for not a few firms, ultimately improved the bottom line.
What is referral marketing?
Referral marketing refers to a company’s ability to use customer referrals to increase sales and improve brand image. While it can take a number of different forms, it always uses direct customer interaction to push the brand or a specific product.
In essence, a good referral marketing program will add value to your program, improve engagement, and increase choices. Here’s how:
- Added value. When customers perceive your products or services as highly engaging and versatile, they see added value on their end. Allowing consumers to participate with your products – and the sale of your products – gives them a greater personal stake in the company. This increases their loyalty and adds value to your brand.
- Increased engagement. Going along with the other point, your decision to interact with your customers and derive value from them means greater engagement and interaction. These are things many customers enjoy and appreciate.
- More choices. A referral marketing program will give customers more choices for consumption. In addition to receiving benefits from the product itself, they now receive direct benefits from your company.
This Common Practice & Mindset May be Sabotaging Your Online Marketing Efforts
Benefits of referral marketing programs
Each referral program is sufficiently unique that it’s difficult to generalize about the benefits of this marketing approach. However, it’s possible to enjoy the following benefits with almost any well-developed referral program:
- Major savings. If you’re looking to improve your bottom line (and who isn’t?), a referral program can save you loads of time, money, and resources. It enables your marketing department to push off some of the heavy lifting to the customers who believe in your products.
- More sales. Because you’re marketing products with the help of highly satisfied, trusted customers, you can count on more sales. These marketing partners usually sell to people within their social circles. In other words, they sell to people that already trust them.This helps you to bypass the challenging early step of establishing brand trust. Prospective buyers will trust the person who’s selling them the product, and then develop brand trust after they’ve used it.
- Brand awareness. Even if you don’t see the increase in sales you expected, you will definitely note a bump in brand awareness and exposure. People will begin to see your name who otherwise would not have.Your target market and your marketing partners’ target markets are probably not the same. While there may be some overlap, these partners will be marketing and selling to completely new consumers.
How to develop a solid referral marketing program
Developing a functional referral marketing plan is all about effective planning. Consider the following tips to get you underway:
- Start with a goal. Since any business plan requires a specific goal, your referral marketing program will too. What is your primary focus? It could be increasing sales, engaging with customers, or improving brand awareness. Whatever it is, find it and build around it.
- Set deadlines. The only way you will ever reach your goal and enjoy success is by setting deadlines and striving to meet them. These deadlines should have specific timeframes and force you to stretch a bit.
- Target referrals. While one strategy is to let anyone join your program that wants to, another favors greater selectivity. By targeting the people you link up with, you can make your program exclusive, desirable, and possibly more effective. This lets you obtain the customers you want and helps you avoid wasting time.
- Provide rewards. You need to provide your referral partners with rewards and incentives. These can take the form of money, prizes, discounts, or anything else that possesses value. Make certain you acknowledge and reward your referral partners for helping you out.
- Learn from the pros. If you’re going to be successful at referral marketing, you need to see what other companies are doing. One example of a successful referral marketing company is L’dara.It sells an anti-aging skin product through a customer driven compensation plan. By following this company’s example, you can discover key insights and industry secrets.