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Referral marketing: How to turn referrals into your best, repeat customers?

If your company does not have a "Refer a Friend" strategy yet, this article is just for you. It's time to bring in new clients and return the existing ones.

Hrachuhi Arakelyan

Jan 10, 2021 · 5 min read


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Getting a potential new customer via a referral is one of the best possible ways to secure new business. The person who referred them is already a customer. And clearly, they love what you do (otherwise, why would they have referred you?). And inevitably, people who are the friends of your best customers are frequently… people with the potential to be more ‘best customers’ too! In this article, we will explain what is word of mouth marketing, what is referral marketing and why it is one of the best options for growing your business.

👯 Why is customer loyalty important?

Various market studies put the value of word-of-mouth referrals as anything between five to 12 times more valuable than acquiring customers through standard new business acquisition means, such as advertising or direct mail. This is because, unlike advertising or other marketing tools, your business is being recommended by someone that your new future customer already knows, trusts and are like-minded (people like them). If your friend loves something, the chances are that you will too. In fact, 28% of millennials are reluctant to even try a new product, if their friends don’t approve of it.

💰 Do customer referrals really work?

Yes, and they are more effective and successful than many other forms of marketing! Why pay to advertise, when you have a loyal army of customers, who love what you do?! Using them to spread the word is a cheap and very effective way to acquire new business. If you have a customer loyalty program, you can incentivize your current customers to recommend you automatically. For their trouble, they get extra loyalty points or another small incentive, and you get a new potential customer, who is primed and ready to get to know your business! Not only that, but people who have been recommended by a friend are four times more likely to buy from you, than those who come to you by other marketing routes.

🙌 They act as a new customer acquisition tool:

It’s simple. People who love what you do tell others about what you do - either digitally and online or by word of mouth. That third party endorsement of what you do by a trusted individual, can bring you more loyal, more receptive customers than most other forms of new business marketing - and is frequently a much less expensive option.

🔁 Customers who have visited the business via a referral are more loyal:

It may come as a surprise, but studies have shown that customers who come to you from a referral are more loyal to you, if they become a customer. As many as 37% of referred customers will stick around, particularly if you have a great loyalty program to keep giving them a reason to return.

😎 Customers like to be asked to make referrals:

Yes, it’s true. People feel flattered when you ask them for referrals. It signifies that you like and trust them and want to build a better relationship with them, if you are asking them to reach out to their friends and family on your behalf. Turning your best customers into brand advocates who spread the word about the great stuff that you do really is a win-win!

💸 And of course - more customers = more sales:

After all, that’s the end goal for all businesses, surely? And, if you have a referral program that incentivises the customers who make referrals (with bonus loyalty points or a small thank-you gift), then of course, you’re not only going to benefit from the revenue that new customers bring - you have the potential to increase the spending of your existing customers too.

📝 How to start the right referral program for your business:

Maybe it’s time to start a new customer referral program. Maybe it’s time to overhaul your old manual customer loyalty scheme. A modern, digital loyalty system can properly track and measure customer loyalty and referrals, both on and off-line.

Think about who your customers are.

  • What age are they?
  • How do they communicate and interact?
  • What social media do they use?
  • How will you incentivize referrals? Money off? Bonus loyalty points? Free upgrades or a free gift? If you aren’t certain, why not ask some of your best customers?
  • How will you measure success?
  • How will you track those success metrics?
  • Will your referral program integrate into your business and any other marketing automation and software that you use? How easy will it be to implement and run?

When you know the answer to these questions, you can start researching to find out what is the best referral program software for your business.
*By the way, here at RetentionForce we provide tutorials and help with any customer referral program, we are ready to assist you to set up your referral a friend strategy from the very start. *

💻 How to get more referrals in 2021

Of course, traditional word of mouth is a great tool, but the days where friends exclusively, well, actually spoke to one another in real conversations are becoming a thing of the past. These days, most friends and family keep in touch using social media, SMS messaging and other, online communications channels. Businesses too need to be conscious of this and ensure that their customer retention programs operate not only when a customer is physically present, but also when they aren’t around in person.

And of course, any referral marketing software needs to integrate with the systems and processes you have in place.

RetentionForce’s referrals program integrates seamlessly with their other marking automation tools, to give users a fully flexible and configurable customer management suite that they can grow in line with their business. It’s ‘set it and forget it’ setup means that once it’s been configured to your business needs, there’s really nothing more to do than wait for the referrals to come in! You can easily track Net Promoter Score, to see who your best brand advocates are and make sure that they are recognized when they next visit. In fact, the comprehensive reporting means you can clearly see not only how many referrals you are getting from, but also the most successful channels (messaging, social media etc.,) to ensure that other marketing activities can also be even better, using the knowledge you’ve gained. The good news is it has a free plan, along with a free trial. Subscribe for free, and explore how and why it’s one of the best referral marketing programs out there, while it’s integration with other marketing automation modules and an outstanding customer loyalty program means it’s easy to scale and grow alongside your business.

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Written by

Hrachuhi Arakelyan

Co-Founder/Customer Happiness Manager at RetentionForce