Affordable Internet Marketing Through Referrals

affordable-internet-marketing-through-referrals

[This article was first published in May 2016 and has been updated, revised, and expanded.]

There are likely no other proven ways to create prospects that are favorable to your brand and ready to buy than through referrals. Even on the Internet.

When someone we trust recommends a product or service that we need, our natural tendency is to give that referral our first consideration. That's the innate power of referrals.

So, Got Any Recommendations?

We've all been there.

A friend calls us up or we're in a conversation at work, and the topic of good restaurants or must-see movies comes up. You ask for a recommendation and your trusted friend or co-worker gives you an enthusiastic referral.

Now if you're like most people, you're already strongly inclined to anticipate a good meal or a memorable film. Your expectations have been set and you are, quite likely, already "sold" on your friend's recommendation.

That is the power and magic of referrals. Often known as recommendations or word-of-mouth, a referral - formal or casual - packs a punch when it comes to lead generation.

Have you ever seen those statistics on how much it costs to gain a new customer or client? The actual cost is going to vary all over the business universe, and the marketing and lead-generation strategies used will determine much of the actual cost. But the point is that it costs something to gain a customer.

According to data compiled by First Page Sage,

The average customer acquisition cost for e-commerce businesses is $70
The highest customer acquisition cost is for jewelry e-commerce businesses at an average of $1,143 per customer
And the food and beverage industry has the lowest cost with an average of $53 to acquire a new customer.

Getting new customers costs money. Sometimes lots of money. Unless they come to you through a referral.

The Brave New World of Referrals and the Internet

One of the greatest democratizing changes in the world of marketing has been the Internet. Because so much of what is accessible to business owners - and prospective customers - is essentially free, the costs involved in Internet marketing can be nominal.

In other words, "affordable."

Affordable Does Not Mean Cheap

Affordable Internet marketing is certainly a relative concept for business owners. Aside from what can be done online for free, marketing on the Internet is no longer "cheap and easy" for many businesses.

Owners of smaller businesses would like to think that it really can be affordable, but they've also been disappointed too many times to really believe that it's possible any longer. And if it is too "affordable" then they run the risk of having cheap and ineffective tactics sucking up their limited time and resources.

The good news is that, yes, Internet marketing can be affordable and the better news is that combining the power of the Internet and social media with the value of qualified referrals is a winning combination.

An Effective Referral Strategy Requires a Process

John Jantsch notes in the introduction to his book The Referral Engine:

There was a time when marketers would simply create a product or brand, broadcast a compelling message, and send the sales folks out to hunt down new business. Over the past few years, in large part due to the explosion of online tools and networks, customers and prospects are now active participants in the creation of products, services, brands, positioning, messages, and subsequent buzz—for good or bad.

He goes on to describe the process - the set of systems - he recommends for creating an effective program for eliciting referrals consistently.

The power of traditional advertising and elaborate marketing campaigns is on the decline and word-of-mouth referrals are what drive business today. People trust the recommendation of a friend, family member, colleague, or even stranger with similar tastes over anything thrust at them by a faceless ad agency.

The reach and ubiquitousness of the Internet and social media make "word-of-mouth" referrals far more common.

Yet, most business owners believe that having customers refer them is entirely out of their hands. But science shows that people can’t help recommending products and services to their friends—it’s an instinct wired deep in the brain.

And smart businesses can tap into that hardwired desire.

Turning Customers into Brand Champions

In today's digital landscape, competition for online attention is fierce. Paid advertising costs are on the rise, and organic reach on social media platforms is declining. For small and medium-sized businesses (SMBs), securing a foothold in the digital marketplace can feel like a daunting task.

But what if there was a way to leverage the power of the internet to attract new customers without breaking the bank? Enter referral marketing – a cost-effective and highly effective strategy that utilizes the trust and advocacy of your existing customer base.

Why Referrals? The Power of Word-of-Mouth

As we've noted already, people are more likely to trust recommendations from friends, family, and peers than traditional advertising. According to Nielsen, recommendations from people we know are trusted 92 percent of the time, far exceeding endorsements from celebrities or online advertising. Referral marketing taps into this inherent human behavior, transforming satisfied customers into brand champions who spread the word about your business organically.

Benefits of Affordable Internet Marketing with Referrals

There are numerous advantages to incorporating referral programs into your overall digital marketing strategy. Here are some key benefits:

Cost-Effectiveness: Unlike paid advertising, referral programs only incur costs when they generate new customers. This makes them a budget-friendly option for businesses of all sizes.
Increased Brand Trust: Referrals come from a trusted source, boosting brand credibility and encouraging new customers to try your product or service.
Improved Customer Acquisition: Referral marketing can significantly increase customer acquisition rates without the need for constant marketing spend.
Enhanced Customer Loyalty: By rewarding referrals, you incentivize existing customers to become brand advocates, fostering stronger customer relationships.
Valuable Customer Insights: Referral programs can provide valuable insights into customer behavior and preferences, allowing you to refine your marketing strategies for better results.

Creating a Winning Referral Program

Designing a referral program that resonates with your audience and drives results requires careful consideration. Here are some key steps to follow:

Define Your Goals: What do you want to achieve with your referral program? Is it increased website traffic, lead generation, or brand awareness? Aligning your program with specific goals ensures it delivers the desired outcomes.
Target the Right Audience: Not all customers are equally inclined to participate in a referral program. Identify your ideal referral source and tailor your program to resonate with their specific needs and motivations.
Offer Attractive Incentives: What will entice your customers to spread the word? Popular rewards include discounts, free products or services, loyalty points, or even charitable donations on their behalf.
Make it Easy to Participate: Don't create a referral program that's cumbersome or confusing. Ensure a smooth referral process with clear instructions and easy-to-use referral links or codes.
Promote Your Program: Don't leave your program hidden in the shadows. Promote it across your website, social media channels, email marketing campaigns, and even in-store signage.
Track and Analyze Results: Monitor the performance of your referral program through analytics tools. Track metrics like referral clicks, conversions, and customer acquisition cost (CAC) to measure program effectiveness and identify areas for improvement.

Beyond Incentives: Building Brand Loyalty for Sustainable Referrals

While incentives are important for initial program adoption, sustainable referral marketing goes beyond simply offering discounts. Here are additional strategies to cultivate a customer base that naturally advocates for your brand:

Deliver Exceptional Customer Service: Positive customer experiences are the foundation of successful referral marketing. Focus on providing exceptional customer service that builds trust and loyalty.
Develop a Strong Brand Identity: A strong brand identity creates a sense of community and belonging. Customers who identify with your brand values will be more likely to become vocal advocates.
Engage with Your Customers: Build genuine relationships with your customers. Respond to comments and feedback on social media, personalize your email marketing, and actively engage with your audience to foster a sense of connection.
Request Feedback and Respond Proactively: Actively solicit feedback from your customers and demonstrate your commitment to continuous improvement. By addressing any concerns and implementing positive changes, you show customers that their voice matters, increasing loyalty and advocacy.

Integrating Referrals with Your Digital Marketing Mix

Referral programs aren't standalone strategies. They work best when integrated seamlessly with your overall digital marketing strategy. Here are some ways to achieve this:

Promote your referral program on social media platforms: Encourage engagement by sharing success stories of satisfied customers who have benefited from your program.
Incorporate referral links in your email marketing campaigns: Offer exclusive referral rewards to your email subscribers as an incentive to spread the word.
Highlight customer testimonials and reviews: Showcasing positive customer experiences can further encourage referrals.
Leverage content marketing: Create valuable content that resonates with your target audience and positions yourself as an industry leader. Shareable content like blog posts, infographics, and videos can attract new customers and incentivize existing ones to refer their network.
Run targeted online advertising campaigns: Use paid advertising platforms like Facebook Ads or Google Ads to reach new audiences with compelling messaging that highlights the benefits of both your product or service and your referral program.

Examples of Successful Referral Programs for Inspiration

Several companies have implemented successful referral programs that showcase the power of this strategy. Here are a few inspiring examples:

Dropbox: Dropbox offers a free storage space incentive for both the referrer and the referred user. This program's simplicity and clear value proposition have contributed to its widespread adoption.

Uber: Uber incentivizes new user signups through referral codes shared by existing users. This program effectively leveraged a network effect, leading to exponential user growth.

Airbnb: Airbnb incentivizes referrals by offering travel credit to both the referrer and the referred guest. This program taps into the social aspect of travel, encouraging users to share their positive Airbnb experiences with friends.

Affordable Growth with Referral Marketing

Referral marketing offers a powerful and cost-effective way for businesses of all sizes to leverage the power of the Internet to attract new customers and grow their bottom line. By building a strong brand identity, delivering exceptional customer service, and fostering a community of loyal advocates, you can unlock the true potential of referral marketing and achieve sustainable online growth.

Ready to Launch Your Referral Program?

At BroadVision Marketing, we can help you design and implement a referral program that aligns with your unique business goals and target audience. Contact us today to learn more about how we can help you turn your satisfied customers into brand champions and fuel your digital marketing success!

A Great Resource for Affordable Internet Marketing

Using content and inbound marketing can do wonders for your business. But, achieving your marketing objectives with a content marketing strategy takes time.

It won't happen with a few blog posts or some other great content. People will need to consume your content for a while before they contact you. Yet, without your content compelling them to contact you, your goals may never be met.

The good news is that you don't have to figure it out alone. One of the best investments you can make with your marketing budget is to partner with a solid firm like BroadVision Marketing.

Click on the button below, or call BroadVision Marketing at 707-799-1238.

BroadVision Marketing Blog