Referral marketing is an inexpensive and effective way to grow your business. It’s free, easy to learn, and can be done by you and your company.

This guide will teach you everything you need to know about referral marketing including how it works, why it’s important for your business growth, things to consider before starting a referral program, and more!

What is referral marketing and how does it work?

Referral marketing is the practice of encouraging customers to make referrals. It’s a referral program where you provide incentives for your existing customer base to refer new buyers or leads. There are three types: Word-of-mouth, incentivized and advocate referral schemes.

You may be wondering how it can help grow your business? Well according to statistics from MarketingSherpa, 84% of people trust recommendations from friends and family over other forms of advertising like TV ads, social media posts, billboards or email blasts!

And it makes sense since everyone wants what their friend has – they have more faith in that product because someone they know personally recommends it to them instead of some random ad online. Referral marketing taps into this powerful referral program and encourages existing customers to refer more people.

What should you consider before starting referral marketing for your business?

There are several things that you should consider when thinking about this powerful strategy, including product, budget, goals & objectives, and more!

#1 Product

What is the core of your referral campaign? Ensure that the product or service you provide is worth recommending. Make sure you deliver what you promise as a bare minimum. Products or services that deliver value receive a lot of positive reviews and ample referrals.

#2 Budget is your main referral program asset

Keep in mind how much money will go into this project since it may require incentives for participants as discounts on future purchases or other referral incentives.

The referral program should also have a budget for tools like referral software and referral marketing agency.

Do you need brands, logos or graphics? Make sure to include the cost of these as well!

If you have referral contest associated with your referral campaign, be sure to factor in prizes such as giveaways (e.g., iPads), gift cards from Amazon and other popular online retailers, etc. The average consumer will not participate if they feel that it’s not worth their time so make sure this incentive is worthwhile enough to increase participation rates!

You don’t want your referrals being too low because incentives are unattractive – people are lazy! Keep them motivated by providing something that matters to them so can benefit too.

#3 Goal & Objectives

What do you hope referral marketing will accomplish for your business? This is an important step because if there isn’t a well-defined goal then it could end up being very ineffective (or even harmful) to your business growth and revenue. Make sure that your company has clear objectives that are defined from the get go of the referral campaigns!

Referral schemes work by incentivizing customers with discounts or rewards when they refer someone else whether it’s through word-of-mouth, advocacy or incentivized referrals.

It refers to any positive information about a product/service that spreads via personal conversation between two people who trust each other while advocate referral programs incentivize customers to become referral marketers by offering additional incentives for new referrals.

Incentivized referral programs give a reward or incentive when referrers make a referral of their own, so it’s the best way to get more people involved in your referral marketing campaign for better customer acquisition.

Referral Rate

A referral rate is the percentage of customers that are referred to a business by another customer. This can be measured in terms of how many new customers are acquired through referrals or how much revenue is generated from referrals. This is one of the key metrics that you have to constantly watch out for.

The difference between referral marketing and word-of-mouth referral

Word-of-mouth referral marketing is when your customers talk about their positive experience with your company and refer new potential buyers. It’s an excellent way to spread the word that you provide a certain product or service since it comes from someone they trust! The main difference between referral marketing and a word-of-mouth referral program is who delivers the message: referral marketers are paid for referrals while WOMM can be free, but may not always deliver results as effectively due to lack of budget.

Incentivized referral programs vs advocate referral programs

Incentivized referral programs are when your customers refer someone new to your company and they receive a reward or incentive for referrals. This is considered an effective referral program because the customer has more of an interest in making sure their referral works out than just doing it as a favor.

On the other hand, advocate referral models involve bonus incentives that go only to advocates who have referred multiple people which means there’s more at stake since they’re putting their reputation on the line if things don’t work out!

Advocates also tend to be brand ambassadors – loyal fans who will happily share how great you are with others so this may encourage even more positive word-of-mouth referral marketing campaigns!

The difference between referral marketing and affiliate marketing

Referral marketing is very similar to affiliate marketing but referral marketers are rewarded for their referral while affiliates receive a commission. Both forms reward customers with incentives in return for sharing your business on their own personal channels, whether it’s through social media or word-of-mouth referrals!

Why do businesses need referred customers?

Referral marketing is an inexpensive and effective way to grow your business. It’s free, easy to learn, and can be done by anyone in the company!

This guide will teach you referral marketing basics including how it works, why it’s important for your business growth, things to consider before starting a referral program like choosing referral advocate rewards or incentives that are appropriate for everyone involved since advocates may have different preferences when it comes time to redeem them.

It’s also good practice with referral marketers who refer someone new between two and five times per month to maintain their status as tier one referral marketer. On the other hand, if they refer someone new more than six times per month, they should be elevated to tier two referral marketer.

How to create a successful referral program

When creating referral marketing campaigns, keep in mind referral marketers are rewarded for their referral while affiliates receive a commission. Both forms of referral programs reward customers with incentives in return for sharing your business on their own personal channels, whether it’s through social media or word-of-mouth referrals!

What should you do?

If you’re running such campaigns, start by defining the goals and strategy to ensure everyone involved is working towards achieving them.

If you want to see an increase in sales revenue but aren’t sure how many new leads should be generated each month as a result of this campaign – that will affect the program design significantly since different referral advocate rewards may be needed depending on these KPIs (Key Performance Indicators).

The benefits of referral marketing for your business 

Types of rewards you can offer in your program? Here they go!

#1 Cash

Cash referral reward is by far the most common referral advocate incentive. It’s a popular choice because it provides instant gratification for advocates and allows them to spend their earnings as they wish!

If you’re planning on incentivizing your referral program with cash giveaways, here are some tips that will help increase participation rates in programs like these:

– include clear instructions when designing email campaigns so customers know how to refer people to generate sales revenue or earn referral bonuses themselves;

– provide an easy way to track referrals (a unique referral link generated through share buttons) and make sure everyone involved knows where those links should be sent – whether its social media or via WOMM.

#2 Discounts

Discount referral reward is the second most popular incentive type in referral marketing. It’s a great choice for companies who want to offer incentives that are easy for advocates and their referrals to redeem, but still provide some value!

If you’re planning on incentivizing your referral program with discounts, here are some tips that will help increase participation rates:

– make sure everyone involved knows where those links should be sent – whether its social media or via word of mouth;

– include clear instructions when designing email campaigns so customers know how to refer people to generate sales revenue or earn referral bonuses themselves;

– follow up with every advocate after they’ve referred someone new and ask them if everything was clearly explained

#3 Free products

Free product referral reward is a great choice for companies who are looking to get more brand exposure. Since advocates will have the opportunity to share products completely free of charge, they’re likely going to be excited about promoting your business!

#4 Referral fee

Referral fee referral reward is a great choice if your referral campaign targets businesses. If you’re looking to get best customers in the door, it’s likely that referral fees will be an added bonus for them!

If you choose referral fee as your incentive type, here are some tips:

– decide whether or not these funds should grow over time since referral advocates may need more and more money from referrals to cover their own product costs;

– include clear instructions when designing email campaigns so clients know how to refer people to generate sales revenue or earn referral bonuses themselves;

How to execute the perfect referral marketing strategy

The most important thing about referral marketing is having a well thought strategy behind it which sets up clear objectives with measurable results. A plan helps brands like yours attract potential clients more easily by utilizing socials and sharing content online. That’s what is called referral marketing!

Other referral marketing strategies to keep in mind are:

– creating a referral program for your business that’s easy for customers to understand and participate in;

– follow up with every advocate after they’ve referred someone new and ask them if everything was clearly explained when referring people through referral links!

Make sure everyone knows what referral rewards will look like and how much those costs should add up to be.

This means strategizing all of these details before you even launch a referral campaign online or offline! Referral marketing strategies are incredibly powerful because they’re able to generate more than just one sale, but many which can lead into repeat customers over time as well. Just make sure you’re prepared to manage referral marketing campaigns – and the rewards that come with them!

Examples from companies who have successfully used referral campaigns in the past

#1 Dropbox referral program

Dropbox referral marketing campaign is a great example of referral reward structure done right. Dropbox used referral fee as their referral advocate incentive type, and it worked like magic – they got 100 million users in just two years, and many satisfied users.

The reason why this particular referral strategy was so effective for the company could be explained by various factors: 

– referral fees were high enough to motivate advocates (they needed to refer someone new to get $75);

– there wasn’t any limit on how many people an individual customer can refer;

#2 AirBNB referral marketing program

AirBNB referral campaign is another great example of referral marketing strategies done right. This referral fee was a $25 discount for both new and existing happy customers – it motivated advocates to refer more people, but also rewarded them at the same time!

AirBNB referral program could be successful because of the referral fee they chose – $25 discount was a generous enough amount to motivate advocates, but not too much that it would put AirBNBs costs for rewards on top. That’s also a great idea of how existing customer base was used.

Booking.com had a very similar campaign.

Tips on how to make sure customers are happy with their experience when they refer others 

– referral links can be generated through share buttons so advocates will always know where they should send their new leads;

– keep the conversation going with every referral advocate by asking them how everything was explained when referring someone to receive rewards. In other words, make sure everyone knows what referral rewards will look like and how much those costs should add up to be! This means strategizing all of these details before you even launch a referral campaign online or offline – it’s that important! 

Your referral marketing strategy should revolve around happy customers who are a part of your marketing plan.

By building customer interaction in your referral widget or referral app, you can spend your marketing budget wisely and make referral business model your next marketing channel for core business lead generation.

Why content is king in the world of referral marketing

Content marketing is really important for referral marketing as it can impact on providing customers, benefiting current customers, getting more referred leads and growing customer bases! Content is king, so it’s important for referral marketing campaigns to stand out from the crowd.

This way, your referral program may succeed – even if you don’t believe that content can bring you new customers and intensify marketing efforts!

How to create captivating referral marketing content?

How to create captivating referral marketing content? Think about what makes people tick and focus on giving them something that they need or want instead of selling directly to them.

Building relationships with customers will eventually lead to brand loyalty which results in a sustainable referral campaign. Here are some ideas:  write an ebook, publish case studies, record webinars or offer white papers so as not to be pushy and to give customers something of value.

Provide referral program incentives that are attractive for your audience: what makes referral marketing so powerful is the fact that it’s not only about referral codes and cash back, but also about new products or exclusive deals which attract attention with great benefit.

Rewards vs bonuses

When it comes to rewards versus bonuses in referral marketing, referral program managers must determine the type of reward that an individual referral partner receives.

Usually bonuses are larger than rewards and they can be offered as a way to thank referral partners for their efforts or for encouraging them to achieve certain goals in the future (like reaching a specific number of sales).

Rewards may also come in different forms: some people prefer cash-back while others would rather receive discounts on products from your store – just make sure you know what makes each referral partner happy!

Social currency can be a win win win situation for you too, if you count on higher profit margins. You may also want to leverage online forums to raise brand awareness and reach to your target market.

Even if most customers of your business came to you e.g. via Facebook ads or other purchasing decisions, referral marketing works as an entire process for getting to your targeted audience in no time. No matter if you run a business based on a custom built solution, or you are a small business – with referred leads, you can have complete control over how your product or service performs!

Tips for turning visitors into customers and customers into advocates 

#1 Offer them value

You can use referral marketing as a great word of mouth marketing tactics to not only make customer interactions, but also deliver value. A referral program won’t work unless you’re able to provide referral partners with something that they want or need, so make sure your referral marketing strategy includes a sense of value which is important for all parties involved.

At the end of the day, making every referral partner happy will pay off big time and keep them coming back!  If people don’t feel like referring their friends because there’s no incentive, then it defeats the purpose in setting up at all – think about how much money you could be losing out on just by not having enough referrals going through!

Rewards may also come in different forms: some people prefer cash-back while others would rather receive discounts on products from your store – just make sure you know what makes each referral partner happy!  Referral partners are more likely to refer new customers if there’s something in it for them so don’t be shy about dangling referral incentives that attract attention.

#2 Promote your referral program extensively

Promoting referral marketing campaigns is another important factor to keep in mind.

Make sure you have an active referral program set up and use your referral links everywhere on the web! Don’t be afraid of putting referral codes all over your website, social networks and even offline – print them out on business cards.

You can also promote it through other businesses which are similar so make partnerships with companies that serve a similar clientele if possible since they may want to refer customers who visit their store(s) again through your own referral campaign (giving away certificates for referrals).

#3 Determine type of rewards

When it comes to referral marketing, referral program managers must determine the type of reward that an individual referral partner receives. Usually bonuses are larger than rewards and they can be offered as a way to thank referral partners for their efforts or for encouraging them to achieve certain goals in the future (like reaching a specific number of sales).

Rewards may also come in different forms: some people prefer cash-back while others would rather receive discounts on products from your store – just make sure you know what makes each referral partner happy!

At the end of the day, making every referral partner happy will pay off big time and keep them coming back! If people don’t feel like referring their friends because there’s no incentive, then it defeats the purpose in setting up at all – think about how much money you could be losing out on just by not having enough referrals going through!

So remember: always offer great incentives to drive more conversions since getting new customers through referral links can lead into repeat sales over time as well.

The best thing you can do for a referral campaign is to provide people with an incentive which motivates them to share content on social platforms like Twitter, Facebook and LinkedIn – reaching their friends as well and making sure they get familiar enough with your brand!

#4 Identify the best promotional channels

Promoting referral marketing campaigns is another important factor to keep in mind. You should know which channels will work best for your affiliate efforts!

What are the best channels for referral marketing program?

Of course, it depends! Email marketing is great since referral partners are usually your most loyal customers – they trust you and know that whatever offer you have out there, it’s a good one.

You may also try offline channels for promotion. Promote referral links at events or any sort of offline trade show that you attend – referral marketing is a great way to meet new people and stay in touch! You can also mention referral codes when talking about sharing content online such as Twitter, Facebook or LinkedIn with friends, as it can affect lead generation of any grooming company.

There are tons of ways for promoting referral marketing campaigns so think outside the box and use all your promotional channels to reach more customers through referrals if possible!

#5 Make sure you know your target group and their needs

Knowing your customer base and what they want is also important.

Who are referral marketing customers?

They’re usually people who trust you enough to buy from them! You can offer services through online channels like Facebook or Twitter, but referral partners will be most loyal customers – in fact, their friends might not have even heard of your store yet so make sure referral codes allow for easier sharing on social media platforms since that’s the whole point behind referral marketing campaigns anyway: reach more potential clients by using referrals as a way to increase traffic!

Customer referrals can be a huge asset in your referral process and a shining star in your referral marketing software. Next referred customers can keep bringing more happy customer over social media, enhancing your digital marketing strategy and making your existing customers even more loyal!

For example, let’s say Coffee Joe likes going out at night after work with his friends (all coworkers) and he always goes to Cafe Latte during those times because it offers good deals if you come after certain hours of the day. Joe tells his friends about Cafe Latte and they’re interested in coming over for a cup themselves – so referral marketing comes into play since you have loyal customers who are willing to share great deals with their friends!

High performing referral programs base on huge and vast referral marketing work. Social media are a great connector between traditional marketing and marketing tactics to make a referral process easy. Use referral marketing to make the most of your customers acquired in the past (and all their friends!).

#6 Research where from referrals are coming now!

Another important aspect of referral marketing campaigns is to know where referral traffic comes from!

You should pay attention not only to the number of referrals you get but also which channels are the most effective in producing referral partners for example – social media like Twitter, Facebook or LinkedIn may be great ways to reach more potential customers through their friends so make sure you’re checking out what’s working best for your business before starting a referral campaign.

It’s all about research: knowing how many referrals come from each channel as well as seeing how conversion rates can improve with one referral partner over another will help you keep track on results and always have an eye on changes when it comes down to running successful affiliate programs and referral marketing program.

#7 Create captivating promotional materials for word of mouth marketing

Customers are more likely to share referral links if they think it’s a compelling offer – so make sure you create great referral material for your campaign!

Check out other referral program and see what works the best or even try asking your referral partners how they would like to be rewarded with their efforts. You can keep up with different promotions but always remember that having an effective strategy will rely on rewarding customers who want to support you in making new business while generating leads at the same time!

How to go about sharing referral codes?

So, start sharing referral codes everywhere possible: online (where most people spend their free time) as well as offline (trade shows and events). With some creativity and good referral marketing software, any place could become a spot for promoting referral marketing campaigns for referral partners to share referral links with their friends!

You should definitely check out marketing channels for inspiration on how your referral process can look like. Check out Shopify’s referral program as an example of a referral marketing campaign that works by rewarding customers with 15% off new referrals within the first month and later generating discounts for both referral partners and referred clients when they come back together again – not only is this a great way to increase customer loyalty but it also guarantees high levels of ROI (return on investment) from running such campaigns since most people will return after receiving discounted goods or services.

Social media are key in any modern digital strategy, so make sure you’re checking out what networks work best for your business before deciding on a referral marketing software.

The future of referral marketing – what’s coming next and how it will affect you as a business owner?

The future of referral marketing is bright and has a lot to offer for businesses who want to get ahead in the digital world. From other customers that will increase revenue, customer acquisition with social referrals as well as all sorts of referral software – there are plenty ways through which referral marketing can help your business grow!

There’s an abundance of referral partners out there – it just takes finding them and making effective use of every way possible so make sure you’re not missing out on any referral program by running one yourself or taking advantage from existing ones!

Referral and mobile – power couple?

Don’t forget about mobile: more people than ever before have access to smartphones so try looking into how apps play a role in building successful referral campaigns (and don’t go thinking referral marketing programs are limited to desktop only anymore!)

Data and referral – power couple!

Another important aspect of referral marketing is using referral data and metrics. You should pay attention not only to the number of referrals you get but also which channels are the most effective in producing referral partners. Best customers are loyal satisfied customers, often even better than family members. And they can be great for your referral efforts, bringing this valuable social currency into play for your business.

Say goodbye to formal referral program, once and for all.

Referral marketing is a powerful form of marketing that has proven to be very effective for businesses. Referral marketing can work especially well in the 2021 economy, where consumers are more conscious about their spending and want to make sure they’re getting value when they spend on something. This blog post will explore what works and doesn’t with referral marketing so you can get the most bang for your buck!

Affiliate marketing is hotter than ever. With Instagram and Youtubers taking a big slice of the pie, it might feel like referrals are only for the already rich and famous. However, there’s a subtle group of affiliate marketers placing strategic links in their high-volume blog posts. Either through explicitly calling out a product or just linking to it, affiliate marketing is booming without anybody seeing the behind=the-scenes work.

There is, of course, the small ask of getting that post seen by the right audience. So we are talking about referral marketing exploiting SEO. It’s no good writing a blog post and inserting affiliate links. And if you’re not Instagram-famous, search engines remain the largest platform for your blog posts to be read.

Dominic Kent, Founder.

Going the extra mile for subscribers can do a lot for your business. Everytime someone interacts with your company (e.g. via Whatsapp chatbot), they should be left feeling great, even after a complaint. So, being able to fulfil your customer’s needs always results in something good. The main point is that you should always be nice to your loyal consumers, no matter what.

What doesn’t work is not doing anything about something your customers care about. For example, not dealing with their complaints and ignoring their inquiries. By doing these things, you can lose customers and destroy your brand at the same time. No matter how difficult it is, always put your customers first and find a way to deal with their complaints in an understanding and professional way.

Ebnu Sudarso, Co-Founder

Referral marketing has transformations in recent years due to the increase of customer acquisition costs and the decrease price of used customers. Agencies who are looking for a reasonable return on their investment should ideally target new customers, meaning referral marketing will likely become more expensive. Approaches that come out ahead with buying new customers is the use of word-of-mouth advertising, organic exposure within social networks, and active media mix engagement. Ad dos that work well? A single paid placement will normally do better than sustained “word-of-mouth” campaigns – but reliability is questionable for one campaign.

Maciej Biegajewski, LiveWebinar

What would work in referral marketing in 2021?
1. Before kicking off referral marketing, make sure you build your fan base with your existing customers. Not any customer will contribute until he/she is a brand loyalist.
2. CSAT score is an important metric to target your customers for referral marketing
3. Target specific group of your existing customers for referral marketing
4. Keep the incentives useful, genuine by knowing what your customers need
5. Keep your incentives recurring than a one-time thing

Rangarajan Nallappa, Marketing Lead,

1. Don’t build partnerships just based on social media stats

While establishing partnerships with referral ambassadors, don’t just run behind their social media stats such as follower counts, likes, etc.

Pick influencers that are relevant to your business/product, even if their follower base is not too high.

More importantly, pick the ones that have a healthy relationship with their online followers.

2. Respect the referrals

Once a referral reaches your platform, you have limited time to convert them to customers. The best way to do so is by personalizing your message to them.

Give them information on why your online booking platform is a right fit for them and how it can help ease their life.

Also, inceltivize their membership by providing them with discounts and other benefits for availing your services.

3. Don’t complicate the referral process:

Work on keeping the referral process simple and easy to understand. Educate your existing customers about why your product/service needs to be promoted and what they’ll get in return for their effort.

Avoid implementing complex forms, asking too much personal details, etc.

Vineet Gupta, Digital Marketing Team Lead,

There are many ways to use referral marketing. Some of these methods work- and some, despite their huge popularity, just don’t.

The majority of marketers who use referral marketing choose to spread the word about their product through online communities like Facebook groups or forums. They often offer rewards for active members in the group who do more than just commit to joining; they also offer merchandise or free demonstrations with exchangeable referrals (receiving a share when someone signs up).
It’s harder for marketer’s messages on social media sites to be seen because of all the other spamming going on there- so it really depends whether someone wants a wider audience or not.

Julien Roy, Sparkbay

When we talk about 2021 referral marketing trends, influencers will have bigger impact and become more important. Nowadays, influencers are always more effective than you when it comes to selling anything. They have a large number of social interactions and followers for them, which can help you to drive hyper-targeted traffic. Not to mention they also help you gain trust in your customers by stating highly valuable reviews on your product to the audiences. ​In this case, smart marketers will be looking forward to use influencers for their referral marketing strategy

Meanwhile, one referral marketing trend that has to go away is relying on one, single offer only. Today’s savvy marketers always seek to diversify, looking for different products and services to satisfy their target customers. Therefore, they start partnering with new affiliates or diversifying their own offers.

Andre Oentoro, CEO of

Referral marketing still works wonders in 2021. This word-of-mouth marketing is one of the effective ways to acquire new customers almost easily. Although referral marketing happens almost naturally, you can boost it up by making the right strategy to connect with your target audience.
Making viral content is excellent when you want huge coverage and exposure about your brand. When people start talking about you, chances are more people will get in the thread and tag their friends to discuss your product. While this is a powerful tactic, it can go wrong when you don’t do it correctly.
Once your content goes viral, you can undo it or simply neglect its existence when it goes wrong. That’s why you need to be careful before creating new content. Although virality is key to your brand’s exposure, making unethical and provoking content for the sake of getting attention will leave your brand a bad impression, which can’t be changed easily over the years.

Natasha Rei, Digital Marketing Manager at Explainerd

If you are familiar with our blog, then you will already know that referral marketing is a great way to acquire new clients and make the process cost-effective. If your program is a success, customers will refer your brand and products to their friends or family, and your brand awareness will increase.

From the point of view of the referred parties, the variety of referral processes has already been mentioned in our guide on how to start referral marketing. But there is more to discover!

In this article, you will find the most popular and commonly used types of referrals. Our goal is to point out the differences and suggest who would benefit most from them. Shall we begin?

Types of referrals – a quick breakdown

There are many types of recommendations that you can implement in your referral program. They are categorized as follows:

1. Referral sources
2. Method of communication
3. Medium of communication

We classify the types of referrals this way, but you could create your own system. Each of them is briefly described below. It is important to mention that you can mix up the types that you provide, as no rule says you have to stick to just one!

Referral sources

In this category, you will find three referral types. It is worth noting that these referral types are very popular among B2B referrals. Let’s start with reputation based referrals. 

1. Reputation based referrals

These referrals are for brands that are well-known. This is primarily based on the assumption that your products are already established and well-received. Typically, these referral types are handled by large companies that have been on the market for years, have loyal customers, and even their “typical” recipients have no problem being associated with their names, logos, or products.

Those who want to take advantage of this referral type should focus on building strong relationships with recipients and raising awareness of their brands. Marketing activities should be differentiated between individual markets rather than homogenized by global companies.

2. Experience-based referrals

Many people associate “referral marketing” with recommendations of this type. Referrals in this case are not derived from the reputation of the company, but from direct experiences related to it. People who suggest using products or services base their recommendations on their own experiences. The important point is that in this case (as in most), customers are not the only ones who can make referrals. Products could be recommended by employees or employee referral programs. Even business partners may refer you to others for cooperation. As a result of their credibility and the use of products by trusted individuals, experience-based referrals are very effective. To gain loyal customers, it is crucial to establish lasting relationships and deliver a good user experience. 

Experience-based referrals are for brands that deliver the highest quality and provide faultless service.

3. Specialized-based referral

The last type of referrals are based on specialities. In this case, the referrer knows in which niche you operate but they still have a general lack of knowledge about your reputation and most likely they are not your permanent customers. Such referrals are based on what they have heard from others. It is important to show why the recommendations make sense at this level and show no dissonance to any of the referrers.

It is worth mentioning that if you operate on the B2B market and are searching for such a recommendation, there is no point in only focusing on one type of referral. You should do your best to invest resources in delivering all three. 

Method of communication and trigger

The following category discusses types of referrals according to the way they encourage potential customers to join. First come direct referrals.

1. Direct referrals

The principles of direct referral programs are very simple, and moreover they are very effective. This type of referral is very similar to the aforementioned experience-based ones. So what’s the point, then? 

With this type of referral, your current customers refer your business to their friends or family because they are familiar and satisfied with it and want their close ones to benefit from your products. More than 90% of consumers believe in referrals from people they know. Let’s say that some random influencer recommends a shampoo from brand X on their social media, while at the same time your friend tells you that the shampoo from brand Y is the best and makes your hair look exactly like shown in their ad. It is very likely that you choose the latter because you trust your friends more than influencers. They are your close ones for a reason after all.

With direct referrals, you ask your regular client to recommend your brand by offering them incentives. Once they meet the requirements, both they and their referees may receive rewards.

2. Implied referrals

Referrals of this type are often overlooked, which is a mistake because they can bring a lot of profits. In short, what do implied referrals rely on? They are about showcasing your brand but without intrusive promotion. You have to let people know that you are present on the market. A good way would be, for instance, to sponsor a charity event. No one wants to detract attention from the main goal, which is why sponsors are just in the background. However, you will be remembered by the participants, and maybe the event organizer will recommend you too. It is worth presenting yourself in an unobvious manner. 

An example of a budget version of implied referrals is to assume you run a florist service and start cooperating with a wedding planner. You can make an agreement that the planner shows your portfolio to future brides and grooms in order to make subtle recommendations this way. 

This referral type may be useful for newbies on the market to make some noise about their brand, but on the other hand, if you want to make a name for yourself through sponsorships then it will require a decent amount of money. 

3. Tangible referrals

Now let’s talk about tangible referrals. The word “tangible” refers to the fact that you should provide value to your customers so they can pass it to referees. This is a method that can not be overused though, because then it loses the sense of uniqueness that makes clients feel special.

Basically, this type of referral is for brands that have been around for a while and have the option to choose the most active customers to pass along extras to. 

4. Community referrals

Last but not least, community referrals. There are many non-profit organizations that would appreciate your help. Supporting their jobs is one of the best types of help you can provide. You could offer a percentage of your weekly sales or deals such as “If you buy products from category X, we will donate 10% of your purchase to non-profit organization Y”.  As a result of whatever sales are generated, your community partner will be motivated to talk about and refer your organization to their constituents. It is a win-win situation. 

This method requires sources and customers who are willing to shop for this type of partnership to be possible, so if you have been on the market for a while then this approach could be for you.

Medium of communication

Now it is high time to cover mediums. Referrals can be shared via many platforms, so let’s focus on the most popular ones.

1. Social media

Social media comes first since it is estimated that we will spend over 6 years of our lives scrolling through these platforms. They are a big part of our lives nowadays. If you want to use the full power of social media marketing, you should focus on referrals too. This method is often used when your clients want to share their referral codes or links with their friends. They can be very powerful messages, but it is you who should design them. You can do so with a little help from referral program software. With EarlyParrot you can design the communication while creating your referral program. You have various platforms and messengers to choose from, so you just have to focus on delivering valuable content that will grab the attention of your clients’ followers. 

Social media referrals can bring you many new customers since people spend so much time on these platforma. Why not use this habit to your advantage?

source 

2. Email

Your email marketing strategy ought to involve referral communication. You should invite each of your new customers to join your program and remind your client base about it from time to time.

Referral emails need to be clear and deliver the essence of your program. They should indicate how to sign up and what rewards are available to be earned. You can read more about this topic here.

3. SMS

It takes a bit of effort and also sensitivity to use this communication channel. You can not overuse text messaging because your customers may feel trapped if you do. Your messages shouldn’t be sent too often, so it is better just to use this channel as a reminder from time to time rather than your main way to keep customers in the loop. 

SMS messages are a good way to remind that, e.g., only one referral has to be successful in order for a reward to be given out. If customers give their consent for it, you can also remind your current client base about your program. But as we mentioned, sometimes enough can be enough. Consider how annoying it would be if your phone rang every day with the same message about referrals. Terrible!

To recap 

You may feel overwhelmed by the various types of referrals presented above, but don’t be. These lists give you the opportunity to vary referral co-operations and make your programs more attractive to their potential participants.

There is no need to use all of the different types, but rather choose the one that will work best for your business and fit your industry well. You know your environment and customers best, so you know what will grab their attention most. This is just encouragement to try and show you all the possibilities!

Marketers are constantly seeking new and unique promotional ways to boost the performance of the businesses they work for. Usually, the key is to attract as many people as possible in order to acquire new customers. There are numerous marketing methods, but not all of them are effective. 

In this article, we will share with you our perfect recipe for gaining new customers quickly. The perfect duo which will give a new meaning to your marketing strategy is here. All you need is a strong social media presence and a good referral program. You will be surprised how well these two go hand-in-hand together and can change your business forever.

Let’s jump in!

What is social media marketing?

We hear the term ‘social media marketing’ a lot, right? But what exactly is it? It might seem pretty obvious, but it is actually a lot more complex than it may seem. In short, social media marketing refers to the use of social media platforms and websites to promote products and/or services as well as brands, movements, events, people, and much more. 

Nowadays, social media marketing plays an important role in digital advertising as it involves encouraging various audiences to engage with brands and perform specific actions. Companies that want to promote their businesses will usually advertise their activities on platforms such as Facebook, Instagram, Twitter, and now also TikTok, just to name a few examples. 

The importance of social media

Let’s look at some of the key statistics regarding social media for this year:

• Facebook is the most commonly used social media platform worldwide.

Most popular social networks worldwide as of January 2021, ranked by number of active users (source).

• 53% of the world’s population uses social media

• On average, people spend 2 hours, 25 minutes on social media every day

source

• The Covid-19 pandemic led to a significant increase in the overall intensity of digital activities worldwide

source

• Engagement with brands on Instagram is 10 times higher than Facebook, 54 times higher than Pinterest, and 84 times higher than Twitter

• LinkedIn contributes more than 50% of all social traffic to B2B websites and blogs

• YouTube is the world’s second-largest search engine, after Google

Social media marketing is a powerful tool, there is no doubt about that. Now that you are familiar with how much various platforms can do, let’s focus on the key pros and cons of social media marketing.

Good or bad ?

Like with everything, there are good and bad sides of social media. It is important, however, that you try to keep a balance between the advantages and disadvantages. Do not only think about the pros and forget the cons, but also make sure you do not focus solely on that latter and end up not even giving social media marketing a try. Find your golden mean and use social media to its full potential.

Pros:

• low cost and high effectiveness 

You can post content on social media platforms pretty much for free. If your content is interesting and people engage with it repeatedly, it will get many impressions that could lead to a high conversion rate and new leads. 

• huge audience potential 

With so many social media users worldwide, there undoubtedly will always be people who will want to follow you and view your content. You never know who will become your new customer, so why not give it a try?

• more than a marketing medium

Social media platforms are not just about generating profit. They allow companies to explore their target audience, reach new people, monitor competitors, stay visible, and much more.

• allows you to initiate discussions and engage with brands 

When you run social media profiles as a business, you give your customers the chance to reach and engage with you away from your website. This contributes to building greater brand awareness and customer loyalty.

• gives access to plenty of data to analyze

There are plenty of analytics and reporting tools out there that will help you measure the effectiveness of your social media campaigns. You may want to track so-called Key Performance Indicators (KPIs) such as likes, impressions, views, link clicks, website visits, shares, and comments. All of these will enable you to carefully evaluate your performance to see if social media is for you.

• allows you to be more visible online (SEO)

The more content you create, the higher your company will appear in search results. Make sure your content is loaded with the right keywords and essential hashtags. Make it as simple as possible for people to find and reach out to you.

• contributes to building loyalty and makes referrals easy

When brands are active on social media and publish content regularly, their brand image automatically improves and they are more likely to be found trustworthy by customers. Moreover, when people can reach you in more than one place, referral marketing and building a customer base gets much easier.

Cons:

• time-consuming

To create engaging content that will attract potential customers, you need a lot of time. Whether you are trying to build your audience using paid methods or aim at growing your profiles with organic reach, you need time to find the best strategy for your profiles as well as to produce content. Sadly, not every company has the resources for that. 

• requires commitment and dedication

Just like with time, to make your social media profiles effective you need to really commit to the goal and dedicate yourself. It is all about constantly thinking about how to improve, being creative, and staying focused.  

• it is a fast moving environment, so trends change quickly

Trends do change very quickly and it’s important for companies to at least try and stay up to date. It is not easy when new features like filters, sounds, hashtags, and other forms of content are popping up out of nowhere all the time, but with the right approach it is doable. 

• it can not be controlled

People say that once something is uploaded on the Internet, it stays there forever – and that is true. Some companies lack the skills to think before publishing something and then have to deal with a huge wave of hate and often not a small amount of criticism. It is important to think twice before publishing something risky as there is no going back for companies.

• high engagement does not mean contributions towards ROI

Just because your social media profiles get many likes, shares, and comments, does not mean those people have any intention of becoming your customers. Therefore, all your efforts could be wasted for some meaningless impressions.

• security and privacy policies may be an issue

Like with everything that is online, social media carries the possibility of data breaches. The more information that is placed on the Internet, the higher the possibility of being the victim of hackers, invasive companies, or malicious interlopers looking to mine your data in ways that break privacy policies.

Let’s take a step back from social media and look at referral marketing for a moment.

What is referral marking?

Referral marketing is all about you and your existing customers. It is a marketing strategy designed to encourage them to become ambassadors of your company and refer it to their networks. Most of the time, there are incentives included in such strategies to drive interest in participation of promotional methods like this.

Referral marketing focuses on word-of-mouth activities and is a way for companies to grow their businesses at very low costs. In case you’re wondering why you should dive into the referral topic, here are some reasons!

Again – good or bad?

Pros:

• low cost per lead 

It is up to you what to offer your customers in exchange for them referring you to their friends and family. The good news is that you do not have to pay anything to be referred. You could offer something like free samples or discount codes, which many companies do, but it is not absolutely necessary.

• high conversion rates

92% of consumers trust referrals more than traditional advertising, so this gives you a great opportunity to attract new customers without the need to spend money on other ineffective marketing methods.

• more profit

Research shows that referred customers tend to spend 16% more money. Now, surely that’s an interesting thing to know? Because it says that the more referred customers you acquire, the more money your company will make. 

• keeps your current customers happy 

With product samples and discount codes, your customers will love you for allowing them to get something for (almost) free in exchange for doing as little as spreading the word about your company. This will contribute to building brand loyalty and deepening your relationships with customers.

• increased marketing reach at a low lost 

By using your clients as advocates for your business, referral marketing helps you increase your reach.  

While there are certain situations when traditional advertising is off-limits, there are virtually no limitations on your customers telling others about your company. Expanding your customer base through referrals is also possible since most people have a diverse circle of friends.

• automation possibilities 

Once you have set up a good referral marketing program, you are pretty much ready to sit back and enjoy the benefits of it in the form of new customers. Referral marketing does not require constant attention and can pretty much take care of itself.

Cons:

• little control over what type of customers you will attract 

Some people will do anything for freebies and discount codes. With referral marketing, you never know who will join your company and how authentic they will be. It may turn out that your “new” customers are actually existing ones using different email addresses and/or fake names. It is, unfortunately, difficult to spot and monitor behaviour like this.

• not a lot of price flexibility 

When customers recommend your services and/or products, they keep in mind the specific pricing range that you offer and talk about it with new potential customers. For this reason, it may be difficult for your company to increase prices often as your news customers will most likely want to see the same offers as their family and friends did. If you do not keep your prices the same, it could lead to customer dissatisfaction. 

• high competition

In order to successfully launch a referral marketing platform, you should analyze the market and make sure you know where the demand is. Otherwise, you may end up launching a referral program that will not bring any success. 

• you are exposed to criticism 

As your referral marketing platform has the potential to reach a large audience, you’ll  need to be able to handle negative opinions. There will always be people who disagree with you and even take their criticism too far on the internet, regardless of your intentions. You’ll need a thick skin in this industry in order to survive.

• good software is difficult to find 

Finding a referral marketing platform that will meet your demands and needs can be a lot of hard work. You will need to dedicate your time to searching for the best solution out there.

Like two halves of an apple – social media & referrals

Social media marketing and referral marketing are like a match made in heaven. They have much more in common than you might think. Look at the pros of both of them and connect the dots together: 

1. With the huge audience potential offered by social media, your referral program has a high chance of reaching a lot of people and bringing new customers to your company.

2. Both social media marketing and referral programs are low cost and highly effective, giving you a competitive advantage thanks to the possibility to save money on advertising and promoting your business.

3. Both social media and referral programs contribute to increasing your online visibility and make your company grow faster.

4. Being active on social media increases your credibility and gives potential customers the courage to try your company for the first time and perhaps become loyal clients. 

5. Because you are active and engage with your customers on social media in fun ways, as well as offer attractive incentives, your customers will be more than happy to stay with you for longer, which means more profit for you. 

6. Neither social media or referrals require a lot of time or effort once they are up and running as they are marketing strategies that can be automated. This is an important point because it allows you to save a lot of time and focus on other aspects of your business.

Find out yourself

What do you think, then? At EarlyParrot, we believe that social media and referral marketing are best friends and, when used appropriately, can boost a company’s performance significantly.

If you want to dive into the referral marketing topic, check out our blog. You will find many interesting pieces there on how to start out with and fulfill the whole potential of referrals.