How and Why Referral Marketing Works

Referral marketing is a form of marketing based on the simple act of a person referring your product to someone else. The advertising of your product is made through the power of recommendation, which is why it is also known as referral marketing.

Referral marketing works because it is based on trust, where one person finds a product credible, and another person who trusts them will by proxy trust the company they are recommending. People are said to be four times as likely to buy a product if it is referred by a friend.

In fact, referrals come mostly from friends and family, but companies also utilize the influencer market, which is also based on the trust that people have in the influencers they follow.

Whether it be a Youtuber or an avid Instagram user, by sponsoring influencers, companies have gained more exposure and sold more products. When it comes from someone you know, you are 92% more likely to want to buy it. Let's say for example Robert Downey Jr. recommends a brand of beer, who would not want to buy beer that Iron Man drinks? It’s almost that simple.

What is a referral program like?

If you have seen brands like Dollar Shave Club or Uber carry out these programs, they basically give you awards for recommending their mobile app to their friends, like three free rides, or discounts, or any other incentive. It works like a charm, especially if the user is particularly interested in using that product.

How to carry out a successful referral campaign

As far as digital marketing goes, you will first want to know who your target audience is. With this, and SEO tactics, those who are more likely to want your products will find you. Then, they can be introduced to your referral programs. However, even though 83% of customers would be willing to refer your product after a good experience, only 29% do. Therefore it is important to give a satisfied customer an incentive to ensure a referral.

To be able to refer with ease, you should make your referral program as easy to use as possible. You should make it simple enough that people who barely use technology can figure it out. You should think about whether they can figure out how to do it, and if it would be a quick process. For example, if you offer a 20% discount on the next product if they share it on whatsapp, and you provide a big button below that says ‘share,’ it works with the web design and gets the message across.

Finally, your team members should know the ins and outs of the referral program. When it comes to online marketing, employee education is a must. This ensures that they can explain it to the customers clearly, and answer any questions they might have.

Pull it off well

Take note from big brands who have pulled this off, and always look at customer reviews to see where you might be able to improve.