With changing times, building a business has become all the more confusing. Business think-tanks theorize and spell out best industry practices. While their insights drove their revenues upward, it can not necessarily be arithmetically applied to every business. It is rightly said “Success leaves a trail”, and replicating the marketing triumph of successful brands can help your business duplicate their achievements as well.
However, a cookie-cutter approach is not a surefire way to help your business live up to its true potential. For instance, a marketing campaign that is produced by Nike cannot be utilized for an email auto-responder software.
Moreover, marketing strategies of yesteryear are no longer relevant today. Content marketing took the spotlight in the year 2016. In the year 2017, influencer marketing took the driver’s seat. As we step into the start of 2018, there is a lot of buzz around referral marketing. It is bound to take the center-stage because of its widely acclaimed low-cost implementation system.
Hospitality companies are already ahead of it, and they use it as one of the main sources of traffic, and there are many hospitality marketing agencies can help you set your referral system.
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This newly uncovered secrets and trends will help you understand the power of referral marketing. Before we dive deeper, you must know what is referral marketing? As you may know already, human beings are social creatures and talk about their daily affairs with their colleagues, families, and friends. You discuss films, movies, soccer and toothpaste from your everyday life.
Referral marketing is simply word-of-mouth promotion that your existing customers naturally engage in their everyday lives. It operates subtly even if there is no deliberate push initiated by the company. It does not possess the superstar visibility like a super bowl; studies have shown time and again that referral marketing is wildly effective but grossly underrated. Dropbox, a $10 billion internet mammoth has based its business on the phrase “give us a customer, get free space.” Similarly, Airbnb has taken off its revenue from the ground to touch $20-$25 billion dollar valuation by majorly relying on a bespoke referral program.
Astonishingly, despite such glaring business examples, many entrepreneurs fail to make friends with this insanely powerful marketing strategy. In a research conducted by Wharton Business School in 2010, amongst every company who took the survey, only 36% of them had a well-drafted word-of-mouth marketing in place. Out of those, who have used this subtle marketing tool, 86% witnessed a growth in their revenue in a span of two years.
On the consumer side of thing, startling revelations were made as per the survey conducted by National Harris Poll Survey. In a study of 2000 consumers, it was found that “82% of Americans say they seek recommendations from friends and family when considering a purchase, while 67% say they’re at least a little more likely to purchase a product after a friend or family member shared it via social media or email.”
Look below for an eye-opening stat about word-of-mouth marketing. This result has overturned many marketers’ decision and branding layout for the entire year.
4x your revenue by cutting your customer acquisition cost
In the usual course of business, the most profitable and business-wise marketing strategy is to acquire new customers in order to move the needle on the profit. As sound as the strategy is, it can prove to be a costly affair, if not a guaranteed success. Although a lot of negative factors may be minimized by filtering and segmenting the market using demographics, age, and taste. However, this process can be long and tedious.
Alternatively, a word-of-mouth marketing virtually eliminates guess work and guarantees a higher revenue. When an existing channel of communication is utilized, the investment cost of setting up is completely removed. Moreover, the conversion rates are higher because the targeted customers are well aware of the brand, and the product.
In case of new channels, a company has to decide how to reach out to new clients. This is where referral marketing truly shines. Multiplying customer base becomes a piece of cake. There are tricks to reach customers easily. A promotional message can be added to the receipt that you send to your customers to promote add-ons or combo offers to boost sales.
To make it an effective strategy, it is best to roll out promo snippets when a customer is browsing on the website or during add to cart or at the end of the purchase page. The idea is to optimize sales by persuading the customers during their most positive emotional phase of interaction; typically when a new purchase is made or about to happen.
Simple to set-up and even simpler to implement
With the explosion of technological innovation, the process of setting up your referral program is a child’s play. There are millions of marketing software that makes the system efficient and effective. As a result, many eCommerce businesses are incorporating the referral system without having to learn about coding or revamping their websites.
Due to increase presence of an online business, the software’s come with pre-set automation, hence putting the system in place is as easy as a tap of a finger. eCommerce businesses extensively track their customer’s behavior, therefore merging the same with a referral program is a walk in the park.
Emailers- Businesses biggest secret weapon for massive revenue
eCommerce business is taking over the globe. Every brand is operating digitally. Many established online enterprises already have a drip email or trigger mail for certain events in the purchase cycle. For instance, a prospect who has added the product to the cart, or a buyer who has recently made a purchase. There is a hidden fortune in these mailers especially transactional emails.
As we all know, customers always check the mail receipts. After a purchase, the invoice is one promotional space that you can opt to push the scheme of referral marketing. Adding a promo-code for a referral or an incentive in the form of cashback or discount on further purchase will inspire already convinced buyer to invite his/her folks to jump on the bandwagon.
Also, referral marketing boosts revenue by improving repeat businesses. In the situation above, promotional offers like cash-back and discounts not only gets your new clients but also firmly guarantees further purchases by existing clients. Word-of-mouth marketing builds a relationship between the brand and buyers. It is mutually profiting relationship where both the parties enjoy the benefit of being involved.
Referral marketing pinpoints agent of influence
In the world of finicky customers and ubiquitous marketing message, it is extremely difficult to retain customers and shape their opinion. Nowadays, customers are bamboozled with millions of messages in form of news, print, media, and advertising. Referral marketing helps you identify key referrers. By tracking customers who are floodgates to massive referral business, you can identify the diamond from the rough.
Generally, a high-value referrer possesses a lot of influence & power which translates into a larger social media following. In essence, influencers are your highly motivated employees who you do not have to pay a fixed salary. However, a minute incentive or a recognition will make a substantial difference.
In a nutshell, referral marketing has the power to pierce through a dollop of chaos and strike chords with your loyal customers. When sharply executed, it can power through inefficiencies by levering on our natural tendency of person-to-person sharing.