How to build the best referral maketing strategy
Looking to start a referral marketing program? We put together everything you need to know about referral marketing and how it works for your business.
Is your business ready to try referral marketing?
As we’ve shown above, referral marketing can work well for businesses in any industry, whether you run an ecommerce business, a B2B, a SaaS company, a subscription service, or even a bank. Of course, not every business is ready for a referral marketing program. Here are some easy ways to tell whether your business is a good fit for a referral marketing strategy:
1. You have established social proof
Referrals are only effective if you have something worth referring in the first place. This means you have positive customer reviews, glowing testimonials, organic word of mouth, and other forms of recognition. By showing that your existing customers love you, you’re using the power of social proof to encourage others to try you too.
2. You offer a great product and strong customer service
It makes sense: If you don’t offer something that solves a problem or meets a need, or if your product is poorly made, you won’t get good word of mouth.
The same goes for your customer service – you’ll need to offer a top-notch customer experience before people will recommend you.
No matter how great the incentive, your referral marketing plan will have a hard time scaling in the long run if people realize your product, or your customer experience, doesn’t meet their expectations.
3. You have a base of loyal customers
Referral marketing starts with your most loyal customers, fans, and brand ambassadors. Since they already use and love your products, they are the most likely to refer others (maybe they do this already!). Plus, the rewards that are baked into referral programs are a great way to show your appreciation for their support.
4. There’s a good reason for consumers to refer you
No, we’re not talking about rewards, although that definitely helps. Aside from offering incentives, your brand should also offer something of significant value.
Products that do something groundbreaking or unexpected, or that accomplish a task significantly better than competitors, generate the most buzz.
A compelling product story or brand story, such as why a product was created or the journeys and challenges involved in development, might also establish your brand as valuable (like how Browndages was the first to create bandages that blend in with darker skin tones).
And if you offer a unique experience that people already can’t help but share? Even better.
Setting expectations in referral marketing
After putting time and thought into a referral marketing strategy, it’s only natural to want immediate results. While everyone wants their campaign to go viral like the examples we’ve shared, it’s also important to be realistic.
If this is your first stab at referral marketing, we recommend reading our other post on what you should expect from a referral program.
1. Don’t expect to go viral
You may not have the next Dropbox referral program on your hands – and that’s okay! Your program can still be successful. Don’t let the referral numbers of other programs throw your expectations.
Instead, focus on providing a standout product and a memorable customer and referral experience, and sales will naturally flow in.
2. Don’t assume customers are always thinking about you
Even the best-laid referral marketing plan still needs constant promotion.
Just because a customer likes you doesn’t mean they talk about you (or even think about you) on a regular basis. This is why you need to promote your program.
Even your most loyal customers are busy with other things, and sending them a friendly referral email or message can be the reminder they need to refer others.
3. Don’t expect the program to run itself
Yes, you can automate your entire referral process, from creating referral codes for customers to issuing rewards. You can even set certain triggers to promote your program. But you still have to do a little work if you want your referral marketing plan to be a success.
You need to occasionally check that your program is still running smoothly, and tweak rewards and promotion strategies if things aren’t going as expected.
If you decide to run a DIY referral marketing program, you’ll have to be even more hands on. It’s important to align referrals to your core business, check for any referral fraud (i.e., self-referrals, duplicate referrals), and make sure you keep track of every referral and reward customers right away.
4. Don’t expect a constant level of engagement
After launching your referral program, you might get a surge of new leads. Congratulations!
In time, however, the number of referrals may mellow out. This is normal. Just like slow sales months, you’ll also have slow referral months.
This is the perfect time to do a little pruning and testing in some areas of your referral marketing program. For example, try offering another type of reward, or promoting your program through other channels. Take note of any changes and see what works best for your business.
Start your referral marketing program
It’s time to start getting more referrals!
The big question is: Will you build a program in-house or use referral software to get up and running? If you have the time, patience, and ability to build your own referral marketing program, then go for it. But be warned: the management and tracking tasks involved can quickly cause headaches once referrals start rolling in.
If you’d rather leave the heavy lifting and any development tasks off your plate, software might be the answer. Referral software handles everything from referral tracking and program promotion to analytics and reporting, creating a smooth referral experience for everyone involved.
Remember: By automating your referral marketing, you’ll be able to compound your existing sales and marketing efforts instead of trying to add more work on for your team.
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