Ever purchased a product or a service solely because someone you knew suggested it? You’re not alone. Ninety-two per cent of customers trust earned media, such as customer referrals and reviews, over other advertising forms. What does this translate to for brands? Significantly lower marketing and advertising cost, as they enjoy high and continued returns without pumping in a lot of money.

Because my friend recommended this.

And then, of course, all the biggies are doing it. While Google and Amazon may have dipped their feet in the referral sea, brands like OnePlus dived right in, making customer referrals the centre of their marketing strategy.

How customer referral programs address marketing pain points

While customer acquisition is the standard goal, a robust referral program can help you tackle other marketing objectives – right from creating the right pre-launch strategy to one-upping competitors.

When the Chinese smartphone company, OnePlus, stepped into the Indian market, which was at the time dominated by Apple and rife with multiple smaller-but-economical brands, referral marketing helped OnePlus make all the right noise. The invite-only approach created a feeling of exclusivity. Complemented by an affordable price range and transparent criticism handling, the brand sold a sweet 1.5 million units in the first year alone and also significantly reduced inventory risk. Their launch marketing budget? $300.

Differentiating your brand in a commoditised market is a pressing challenge today. When Uber wanted to trump industry competitors and traditional taxi services, it leveraged the referral program beautifully, to go viral. The ‘Office Heroes’ campaign targeted corporates, wherein Uber announced a referral bounty of Rs. 600-10,000 for the hero that referred the most customers. It even had a solo ‘referral’ link for first-time users for onboarding.

Benefits of referral marketing

Reaching customers outside your radar

While you may have diligently charted a target audience assessment, you’d be surprised by whom your existing customer may refer. Referral marketing puts the ‘audience search’ job directly in the hands of existing customers, thereby significantly broadening your reach.

Less effort in customer conversion

Nudging a new prospect to become a customer includes reinforcing the brand across multiple touch points, and this takes longer to build trust. With a referral program in place, your potential customers hear directly from the existing one and are more likely to join the bandwagon with a positive opinion and as a believer from the beginning.

You spend on the customer, not on marketing

It’s a classic two-birds-with-one-shot situation wherein you acquire a new customer and make an existing one happy through rewards. The money that you may have otherwise spent on advertising, which may not engage prospects the way a recommendation from a trusted person does, will go directly to the referrer. This further strengthens their relationship with the brand.

Lower cost and effort of acquisition

You eliminate multiple steps by putting the reigns in the hands of brand advocates. Plus, if you automate the program, you need not even be proactively involved in the process.

Tips to boost your customer referrals 

Start at the product stage

Nurturing brand stalwarts largely depends on them being satisfied with your products since no one will refer a product they don’t like or believe in. Ensure that your product is at its best version, before even considering customer referrals, or, in fact, any form of marketing.

Remember, people refer people

It’s often how the faces and voices behind your brand make the customer ‘feel’ that makes a difference. Take, for instance, the Zappos case. When a Zappos customer wanted to return a pair of shoes bought for his father who then passed away, not only did the customer service executive expedited the process but also sent in a bouquet of flowers. It’s this extra mile that does the trick.

From exceptional customer service to personalised engagement, forge happy relationships with your customers before inviting them into the referral program.

Offer an irresistible incentive

A brand evangelist would not mind advocating your brand to family and friends. But to make that a surety, throw in something of value to them. From extra credits to a chance to win a hamper, the reward is the nudge they need.

Monitor social media for surprise customer referrals

Often customers tag friends on your social media, recommending your product. Keep an eye out for such conversations and don’t forget to thank them, maybe throw in a little reward too.

Thank them after the deed is done

Once you onboard a new customer via a referral, don’t forget to thank the referrer. This will only further iterate that you care about every customer and are grateful for their patronage.

Word-of-mouth marketing is as old as the Silk Route, and if could bolster trade between continents in ancient times, it can surely boost your branding and sales effort in today’s era.