What is referral marketing?
Referral marketing is a marketing strategy that gets your customers involved in spreading the word about your business. Instead of creating ads or social media campaigns, your customers act as affiliates for your brand.
As affiliates, your current customers promote your products or services, bringing you more traffic and more leads through these referrals. In exchange, you provide those affiliates with an incentive.
Why use referral marketing?
Below are six reasons why you should choose to use referral marketing in your business marketing plan.
1. It reaches more of your target market
Targeting specific audiences can be a challenge. Even the strongest marketing campaigns can miss some potential customers. Referral marketing enables you to expand your reach beyond the abilities of your typical marketing efforts, and the best part is that your current customers (your affiliates) do the work of marketing your business for you. They’re the ones suggesting your business to those they know who might require your products or services.
2. It’s a trusted channel
Today, most consumers do a lot of research before they make a purchase. They’ll compare the cost of products or services from different companies and read reviews from past customers online.
Part of what makes referral marketing so effective is that potential customers hear about your products or services from someone they know personally. While consumers are generally more willing to trust online reviews over what a company’s website says, they’re even more apt to make a purchase after hearing what a friend or family member (or even a trusted social media influencer) has to say. It’s a strong endorsement for your business.
3. It brings more loyal customers
According to research, referral marketing leads to more loyal customers than traditional marketing strategies. Not only are referred customer retention rates higher, but those rates are more likely to persist over time.
An added benefit of retaining loyal customers is cost. It costs less to retain existing customers than it does to acquire new ones.
4. It’s perfect for social media
People spend a lot of time on social media. Given that they’re already scrolling through their feeds, referral marketing fits in seamlessly and non-invasively.
The customers in your referral marketing program can easily promote your products or services from their pages. A simple Facebook or Instagram post can reach hundreds, if not thousands, of people in a matter of seconds. Any followers in need of your particular products or services will see it and maybe even click through to your profile or website for more information.
There’s a good chance that your affiliate’s social media followers already trust them. As we mentioned earlier, a recommendation from a trusted source can go a long way in gaining new customers.
You can provide more of an incentive by providing your affiliates with a unique code to include with their posts. New customers can use that code to get a discount or freebie (whatever you decide the code is good for). It’s easy, and it puts your brand in front of far more people than you can reach on your own.
5. It’s a cost-effective solution
Unlike many other marketing strategies like pay-per-click and paid social media ads, which can be expensive, referral marketing drives down customer acquisition costs. It does this by making use of your existing customers to spread the word about your business.
While you do provide your affiliates with a percentage or set amount of money per sale, they’re helping to generate more business at the same time. New customers may choose to become affiliates themselves, bringing even more sales and helping you boost your bottom line.
6. It’s easy to implement and manage
There’s a common misconception that referral marketing programs are challenging to implement. While this may be true of some, it’s not the case for all. LeadDyno’s software integrates into most platforms with a single click. From there, it takes a matter of minutes to get things set up.
In addition to being simple to implement, a referral marketing system is easy to manage. A dashboard enables you to monitor your campaigns and your progress. The actionable data it provides allows you to make adjustments or shift the focus of your marketing budget to where it’s needed most.
Grow your business with a referral marketing program
Perhaps you’ve considered the idea of setting up a referral marketing program. If you’re considering referral marketing, the first step is to set up your program. LeadDyno’s affiliate software solution helps you track performance, monitor campaigns, and communicate with your affiliates. It offers one-click integration with most platforms and only takes a few minutes to set up.
Once your program is ready to go, you can begin onboarding affiliates. You provide your affiliates with unique codes that they share with their family, friends, or social media followers.