Everyone knows the power of word-of-mouth advertising. A person doesn’t tend to believe unless he experiences himself or hears about it from his colleague or any trusted sources about any particular product.
Before purchasing any product, it is essential to judge whether it is worth buying or not. Such information can be either gathered from reviews or from a person who has already used it and can advise based on personal experiences. This defines a scenario called referral marketing. Thus, referral marketing, in simple terms, is a promotional activity, encouraging current customers to refer new customers, which may or may not include incentives. This activity can take place organically; thus, businesses can also use dedicated referral programs.
The general effectiveness of referral marketing programs is useful. People at times consult their friends on which TV shows to watch, movies to go, or restaurants to visit. Also, acting as an end consumer, the person can share his stories, the products he buys, as well the brand he chooses. This magnifies when the buying products and experience are exceptional.
When you promote referrals, you are planting seeds. They can spout in surprising places.
The key factor of referral marketing – digital marketing
A key factor in understanding the power and agility of referral marketing is – digital marketing. With data-driven insights that are often measured in real-time. A digital marketing approach helps organizations to understand what’s working, what’s not, and what needs to be changed to create the most effective strategy.
To let organizations know what steps need to be taken to gain the name-brand recognition they’re looking for, the members of the Forbes Agency Council has come up with a list of digital marketing tips.
Following are some of them:
- Creating an attractive content approach –
To construct explicit content that will help to stand out from the competition in the digital media space.
- Focused effort –
This involves knowing the message to be conveyed and concentrated on, the audience for whom the message is for, and the platforms that will help to produce the best results.
- Check on the audience’s niche –
A clear view of what type of audience one wants to reach, what their needs are, and how to provide value for them through the content, gives a better Return on Investment (ROI).
- Impact of word-of-mouth marketing –
Easy-to reach and a budget-friendly powerful tool ‘word-of-mouth’ proved to be too impactful. It is usually propagated by satisfied customers, which can be done utilizing social media and other digital outlets.
- Easy to access data at your fingertips –
Availability of marketing data, or acquiring data that will support the efforts – both apply to digital tools that use analytics to help optimize results.
Power of referral marketing
So far, ‘word-of-mouth’ has been one of the strongest tools of referral marketing and is continually rated amongst the most potent forms of marketing.
1. Targeting with accuracy
The marketing of referrals is highly focused. When people recommend a product to friends, it’s because they think they’d be interested in it. The message is more effectively propagated by word-of-mouth marketing than other outlets.
2. Building trust
While purchasing a product, the user should be thoroughly convinced about it, which ultimately leads to trust. Trust comes when the recommendation comes from a close-one or any trusted person. In the context of referral marketing, sales pitching is usually carried by someone who either you know well, like friends and family, or some other sources such as famous bloggers.
Studies have successfully proven that people almost always trust these people’s opinions over generic advertisements and sales pitching done through the brand themselves.
The other means of referrals include a variety of sources such as news publications, customer reviews, or opinions posted online, influencer views (in blogs), and testimonials, depending on the receiver of the message to trust these sources.
3. Make the most of social media
Reaching out to people on a large scale was done using limited sources. But the world has now changed to all sorts of social media means. Creating impact through visual platforms can turn out to be a great source of referral marketing. Shooting short videos specifying more details and reviewing the products after use can be another way of spreading the word.
4. Other factors
Not only these, but other factors businesses can also try implementing with a vision to encourage referral marketing are –
- Make a share-worthy buying – Attractive and innovative packaging can make a product share worth. Taking snaps and putting it over social media for its unique factor can create a magnetic effect for buyers.
- Refer and earn policies – Create an online feature that can help customers make the shopping experience more enjoyable. Consider an example where gifting credit scores in their account after referring the product or giving away a goodie after the referred customer buys it. It can be either way too, like both the parties earn some profit points after the later purchase the product.
The cost of offering the consumers choices for selling the goods remains less compared with other types of advertisements, thus developing a far greater scope for long-term returns.
For any company, referral marketing is a powerful and essential component. Implementing these simple strategies will help to promote and facilitate the process of referral, which can be a major source of new sales.
For more such insightful content on social media marketing and digital marketing, access our latest whitepapers on digital marketing.