July 04 2017
Type the phrase “marketing funnel” into Google Images. You’ll see a variety of representations of the typical customer journey endgame.
Some companies label “conversion” or “purchase” as a prospective customer’s final step before the company claims victory. Others go as far as to mention “retention” as an added bonus to conversion.
Oddly enough, only a handful of those marketing funnel images include the Holy Grail of customer actions:
“Advocacy” or “evangelism.”
Think about it:
If a customer is so enamored with your products or services that they refer your brand to their friends, family members, and colleagues, you know two things for certain:
- You’ve earned a loyal customer for life
- You won’t have to spend nearly as much attempting to “woo” the referred party as you would if they were coming to your brand “blind”
But, as we’ve mentioned before, not all of your satisfied customers are going to take it upon themselves to refer your products or services to their peers.
In many cases, even your happiest customers will need a bit of a nudge from you to get them to convert into brand evangelists.
Not only that, but without a system in place to track referrals, you’ll have no idea how many of your customers actually are brand evangelists, or how many of your new customers came aboard directly from referrals.
Implementing a referral program into your overall marketing plan benefits your company in three major ways:
- You provide your satisfied customers with a platform with which to sing your praises
- You can begin to quantify just how valuable referrals are to your company’s performance
- You raise the bar within your organization to the point that making sales isn’t good enough, and you begin focusing on “wowing” your customers every chance you get
So, let’s dig into how you can create a referral program that gets your satisfied customers talking in a way that’s cost-effective for your company.
According to data collected by Social Annex:
- 92% of consumers trust a referral from someone they know (as opposed to other sources of recommendations, such as customer reviews or recommendations promoted by the company itself)
- 74% of consumers report word-of-mouth as a key reason they decided to make a purchase
- Nearly half of US consumers say referrals from friends and family account for the most prevalent and trustable source of brand awareness
Clearly, focusing on generating referrals and recommendations is a no-brainer. Not only are they more effective than most other promotional initiatives, but they’re also much less costly – in terms of both money and other resources.
This isn’t to say that you won’t spend a single penny or expend any energy at all on your referral program campaigns. But, by following these best practices, you can make sure you – and your customers – get the most out of the campaign once it’s implemented.
Make Your Referral Program Worth It
Even if your customers are absolutely in love with your brand, only a small percentage of them will recommend your product or service to their peers on their own accord… so give them something in return!
The common go-to incentive that most marketers think of is, of course, the almighty dollar: “Refer a friend and receive $10 cash once they make their first purchase!”
Depending on the price of the products or services you offer (among other factors), this method may not be sustainable.
And, believe it or not, it might not actually be the most effective method, either. According to data collected by the University of Chicago, non-cash incentives actually generate 24% more referrals than cash incentives.
Some of these incentives are still related to money in some way, though. For example, you might offer your referrer a discount on their next purchase (which, in turn, incentivizes them to make a new purchase), or provide a rebate on a previous purchase. Or, you might partner with other companies and offer your referrers their choice of gift card. While actually doling out the reward will cost you some money upfront, the gains you’ll make in the future are well worth it.
Another option at your disposal is to offer a selection of prizes to your referrers. This can end up costing you less (as the prizes don’t have to be anything extravagant), while still providing value to your referring customers (as they have the ability to choose a prize that best fits their wants or needs).
Lastly, you might choose to offer your referrers experiential rewards rather than cash or tangible objects. These rewards might appear as sneak peeks at yet-to-be-released products or services, or temporary (or permanent, if you so choose) upgrades to current services.
For example, a cable company may provide referrers with three free months of their premium package.
Again, this not only provides value to your most satisfied customers, but it also makes them a bit more likely to make future purchases once their free period has expired.
No matter what incentive you provide your referring customers, there’s one other thing you can do to make your referral program stand out: Reward your referred customer, too.
On one hand, this might cost you a bit upfront as you’ll be providing a discount, rebate, or cold, hard cash to your newest customers without knowing how long they’ll stick with your brand
But, on the other hand, by providing this value up front, you start your new relationship off with a bang. If it’s clear to your newest prospects that you value their satisfaction and happiness over making a few extra dollars in profit, you’ve already given them enough reason to become return customers.
Speaking of providing value to your customers…
Make Sure Referrals Are Authentic
The goal of your referral program is to get your satisfied customers to make recommendations to those in their network who are most likely to find value in your products or services.
Admittedly, it’s the customer’s prerogative to engage with your referral program as they wish. If they “recommend” your brand to their grandparents or other individuals who have little use for your products (all in the name of “earning” a $10 reward), well…bully for them.
But you can mitigate this issue by teaching your customers how to find the best people in their network for providing recommendations. Remind them of their own journey before they came into contact with your brand and their success through your services. Reinforce the value and benefits they earned.
Ensure authentic recommendations by limiting how and when customers make such referrals in the first place.
For example, you might allow only customers who have purchased a certain number of products from your company to officially become referrers. This would alleviate instances of newcomers joining your recommendation program just to grift a free reward.
Similarly, you might allow customers to make referrals only based on products they’ve already purchased. If someone purchases an item from your online store, you’d allow them to share their purchase with their social network. Then, you could either provide them with a percentage of the profits made from anyone who made a purchase using that link (like an affiliate program), or you might create a point system based on the number of successful referrals the link generates.
You want your referrers to make recommendations to people in their network who will get value out of your products or services and who, in turn, have a high probability of becoming long-time customers.
By educating your customers and implementing fail-safes into your program, you can increase the amount of valuable and authentic referrals.
Make The Process Of Giving Referrals Simple
Most people won’t go out of their way just to make a referral and they certainly won’t do so if the process of making the referral is difficult, confusing, or time-consuming.
First and foremost, you need to make it clear that you offer a referral program in the first place. You might include a link to your referral program page on the top or bottom of the website. Or you might create a landing page devoted specifically to your referral program. Or, you could include a link to your referral program’s page underneath a login form.
(A quick side note: Even if a customer has decided to make a referral, they could still change their mind if the next steps in the process are convoluted or take too much effort to complete. So, again, it’s your job to make these next steps as simple and straightforward as possible.)
The next step in the process is for the referrer to fill out information regarding their referral, as well as to whom they’re making the referral. Don’t make your customers spend too much time on this!
While this level of depth is okay for a B2B company’s referral program, you’re better off sticking to the basics
Rather than an open-ended “Comments” section, you might decide to focus your referrer’s attention to specific aspects of your service using dropdown menus or checkboxes. You might ask your referrer “Which of the following parts of our product/service played the biggest role in you making this referral?”
You could also give your customers the option of using an email template to send their referrals, complete with copy that has, for the most part, already been written. This way, they have the option of writing their own referral email from scratch, filling in specific areas of the overall message, or simply using the copy you created for them.
As mentioned earlier, you can also allow your customers to make referrals via social media and provide the option of sharing a recommendation on their social media pages at the click of a button.
(The tradeoff here is, though sharing a purchase on their social media is easier than filling out a form, the referral is much less targeted than one created via email and sent to a specific individual.)
You also need to make it easy for referred customers to accept their invitation as well.
This end of the process should be pretty straightforward. Extra steps in the immediate signup process (e.g., requiring them to download your app, input their credit card information, etc.) could cause customers to have second thoughts about registering a new account (Or they simply might put off doing so until “later,” and never end up coming back).
For a referral to “count” to the referrer (and to matter to your company) your new prospect needs to actually make a purchase at some point. But if you force them to immediately take a step they’re not ready to take, you run the risk of alienating them for good.
As with all customer-facing processes within your company, your referral program needs to be as streamlined as possible. Make it easy for your customers to recommend your brand to their network, and they’ll have even more reason to do so.
Make Your Referral Program Fun
A referral should be enjoyable for customers.
Now, it might be tough to make the process of making a recommendation as fun as a New Year’s party or a trip to Vegas (if you figure out a way, let us know!), but there are definitely ways to make filling out a form and clicking a few buttons more exciting than usual.
One way is to gamify your referral program by making a contest out of it.
Perhaps, in addition to the initial incentive you offer your referrers, they could also be entered into a raffle to win a larger prize.
Not only is that a killer contest, but the copy is pretty entertaining, too
Or, you could incentivize referrals by offering a special prize to individuals who refer a specific number of new customers. (Note: If you do this, though, you’ll need to allocate resources to vet the referrals you gain.)
Another option to spice up your referral program is to tie it to a certain event or special occasion. Many companies that sell flowers, chocolate, and stuffed animals, for example, promote their referral programs rather heavily around Valentine’s Day. Others take advantage of the hype created by events like March Madness or the Super Bowl.
Note that your referral program should definitely remain evergreen (i.e., it should be relevant throughout the year). In other words, don’t overhaul it just to tap into a specific event or season. Rather, tweak the copy of your landing page, email templates, etc. accordingly throughout the year. And, of course, keep your referral program – and your copy – up to date!
Tying your referral program into other offers, as well as popular holidays and events, can keep it fresh and attractive to your customers. The less your referral program feels like an afterthought, the more likely your customers are to notice it – and embrace it.
Acquiring new customers can be extremely difficult.
But, by implementing an attractive, easy-to-use referral program, you can use your most satisfied customers as leverage, making the act of finding new customers a bit easier on your company.